How to make an employee redundant


It is never easy letting staff go, but sometimes the needs of the business demand that staff costs be reduced or different structures be put in place to achieve business aims.

As the employer, you are entitled to have a firm proposal in mind before consulting with staff about a decision that may affect their ongoing employment. Nevertheless, it cannot be fixed until after you have discussed it with the employee and considered whether there are alternatives to making them redundant.

Employees must be given a genuine opportunity to affect your final decision, which means that they must have access to the information that you are relying on to ground your proposal. Furthermore, they must have the opportunity to meet with you, in order to discuss the proposal for change and to raise alternatives to the proposal, or other ideas for retaining their employment.

The following is a suggested process you can follow to ensure you deal with the affected employee(s) fairly. Naturally, this summary cannot cover every circumstance that may eventuate. So if you get stuck, seek specific legal advice for your situation. This process should be not construed as providing you with that legal advice for your specific situation.

1Write a letter to the affected employee(s)

This is perhaps the most important step to get right as it sets up the rest of the process on a sure footing. Crucially, the letter must explain the position(s) you are proposing to make redundant and the reasons why the proposal is being made.

The key points that need to be included in this letter are:

  • what your proposal is (i.e. what roles would be made redundant and whether any new roles would be created);
  • why you believe the proposal is necessary (i.e. what your reasons are for removing each of the roles you have specified and, as the case may be, why new roles need to be created). If relevant, enclose with your letter any information that supports your view of why the proposal is necessary. Your proposal needs to be based on genuine business need rather than to move a problem employee out of the business. Remember that redundancy should be focused on whether a position is needed, regardless of the person occupying that position;
  • include any supporting documentation (e.g. if you cite financial reasons for your proposal, you will need to provide sufficient financial information to back up those reasons);
  • what will happen to the affected employees if the proposal proceeds (i.e. that you would consider whether there are any alternative roles for them, and if not, that their employment would end by reason of redundancy, in which case they would receive their contractual entitlements);
  • that you wish to propose a time to meet with them to get their feedback on the proposal and that they can bring a support person to that meeting if they wish. Give as much time as possible between the point when you provide the letter to the employee and the moment you meet with them to get their feedback – the more time you can give an employee, the greater the likelihood their feedback will be constructive. I recommend an interval of at least three working days; and
  • that you have not a made a final decision about whether to proceed with the proposal. You should emphasise that you will not be making a final decision until you have heard from them and considered their feedback.

NEED A TEMPLATE?

To make things easy for you, I have drafted a template letter that you can download right now for a small fee and reuse as much as you need. It has extensive guidance to help you complete it and includes a finished example. Click the button below to get it now.

2MEET WITH THE EMPLOYEE TO GIVE THE LETTER

You do not need to give the employee formal notice of what this first meeting is about – you can simply invite them to a meeting with you saying that there is something that you wish to discuss with them.

At this first meeting, read through the letter you have drafted outlining the redundancy proposal as if it was your script. You may not read the letter word for word, but use it to guide you through the key points. Then give the employee a copy of the letter.

Answer any general questions that the employee may have, but do not allow the employee to start giving you their feedback at this point. If they do that, cut them off and say that you do not want to hear from them until they have had time to consider the proposal and can meet you at the second meeting when they will have a support person with them.

The key thing to emphasise at this meeting is that you are only making a proposal and that you want to hear from them before you make any final decisions about whether to proceed with the proposal.

3MEET WITH THE EMPLOYEE TO GET THEIR FEEDBACK

At this second meeting, you will open by restating the proposal as outlined in your initial letter and then ask the employee for their views on the proposal.

Try to listen actively, taking notes and asking questions of the employee where necessary if you need to clarify something. But remember the emphasis of this meeting is to hear what the employee has to say about the proposal and any alternatives they may have in mind.

Once the employee has said all they want to say, close off the meeting by thanking them for their views. Tell them that you are now going to take some time to consider if what they have said will affect your views on whether the proposal should proceed.

4Take time to consider what the employee has said

During this time you may consider the following:

  • Does anything they said in their feedback change your views on whether to proceed with your proposal?
  • Has the employee identified any alternative roles that you could accommodate so that they remain employed?
  • If you reject any suggestions made by the employee, you must have fair and reasonable grounds for doing so.

5WRITE A SECOND LETTER GIVING YOUR DECISION

Having carefully considered the employee’s feedback, you are now in a position to record in a further letter to the employee your decision about whether you will proceed with your proposal.

The letter should include:

  • a summary of the feedback that the employee gave and your response to that feedback;
  • an explanation of why none of the employee’s feedback convinces you not to proceed with the proposal, should you decide that. Alternatively, you should record what aspects of the employees feedback you accept and how that has made you reconsider your proposal or modify it in any way; and
  • advice to the employee of what the decision means for them – in particular, whether they will be made redundant, or whether there are any alternative positions that could be offered to them or which they could apply for, and the timeframes for them to let you know if they are interested in accepting/applying.

A word on alternative roles

If you cannot think of any other suitable positions for them, you should record that. But note that if there is a vacant position that the employee can do, even if that means you will need to give them a reasonable amount of training, they are entitled to be offered that role first before you go advertising it.

You can however advise the employee that you are giving them notice of termination that is subject to whether they accept an offer of a vacant role or are successful in applying for a different role in the business.

A word on selection processes

If the employee is one of two or more staff who occupy the same type of role, and not all of those roles are being made redundant, you will need to select which of those staff is going to lose their jobs and which will be able to slot into one of the remaining positions.

In this event, you cannot give an employee notice of termination of redundancy until you have carried out this selection process. It is possible to propose selection criteria as part of your initial letter in step 1 above. It is best if you can use objective criteria (e.g. “last on, first off”).

As part of the consultation process, you can then also get their feedback on whether they consider your proposed selection criteria fair and advise the employee in this decision letter the outcome of the application of those criteria.

However, if you have not consulted with the employee about the proposed selection criteria by the stage of writing this second letter, you should outline your proposed criteria in the letter and get their feedback on whether those criteria are fair or whether some other criteria should be used before moving to the final step.

NEED A TEMPLATE?

To make things easy for you, I have drafted a template letter that you can download right now for a small fee and reuse as much as you need. It has extensive guidance to help you complete it and includes a finished example. Click the button below to get it now.

6MEET WITH THE EMPLOYEE TO GIVE YOUR DECISION

At this meeting, you can use the letter that sets out your decision as your script to guide you, just as you did with the first letter.

After giving your decision, hand the employee the letter. Assuming your decision is to dismiss them for redundancy, you should then go on to discuss arrangements for leaving, such as whether they will get paid out their notice period in lieu (which must be done by agreement or because you have a right to do so in the employment agreement) or whether you want them to work out that period of notice.

Alternatively, if there are other roles available that they will be offered or invited to apply for, you should give them a timeframe for acceptance/applying. If the employee does not accept, or is not successful in applying for, an alternative role then the notice of termination you have given under the decision letter will take effect.