Making someone redundant is never an easy decision, but it can be the best option for a business that is struggling financially.
This guide will walk you through the process of making someone redundant in the UK, including what steps you need to take to ensure you are complying with the law.
It’s important to note that there are alternatives to redundancy, so be sure to explore all of your options before making a final decision.
Cutting edge payroll software
- Powerful and easy to use
- HMRC & RTI compliant
- Used by payroll pros
The CRM platform to grow your business
- Great for entrepreneurs
- Powerful data analytics
- Manage sales and data
Powerful web builder and advanced business tools
- Great for startups
- Powerful web page builder
- E-commerce available
Supercharged content planning
- Great for marketing
- Better than lists or sheets
- Manage social media
Create a new website in 10 minutes. Easy.
- Launch your website fast
- Powerful data intuitive
- No coding skills needed
What is redundancy?
Redundancy is when an employer terminates an employee’s contract because the role they were employed to do is no longer required.
This could be because the business is downsizing, relocating, or changing the way it operates.
What qualifies for legal redundancy?
In order for a redundancy to be legal, there must be a genuine business need for the role to be discontinued.
This means that the employer must be able to demonstrate that the role is no longer needed, and that this is not just a way of getting rid of an employee.
| Examples of non-compliant or illegal redundancy include: |
|---|
| Making an employee redundant because they have been absent from work due to illness |
| Making an employee redundant because they are pregnant or on maternity leave |
| Making an employee redundant because they have made a complaint about discrimination or harassment |
Important compliance points
There are a number of compliance points that employers need to be aware of when making someone redundant.
- For example, you must give the employee a minimum of two weeks’ notice if they are being made redundant
- You will also need to consult with any trade unions or elected representatives before making a decision
- Treating employees in a consistent manner is also important, so be sure to apply the same criteria to all employees who are at risk of redundancy
Alternatives to redundancy
Before making someone redundant, it’s important to explore all of the options.
- For example, could the employee be offered a different role within the company?
- Could their hours be reduced, or could they be given a period of unpaid leave?
Making someone redundant should always be seen as a last resort.
What is the process for making an employee redundant?
If you have decided that redundancy is the best option for your business, there are a few steps you need to take to ensure you are doing it correctly.
Firstly, you will need to consult with the employee to discuss the situation and see if there are any alternatives that could be considered.
If you do decide to proceed with redundancy, you will need to give the employee a minimum of two weeks’ notice.
You will also need to calculate their redundancy pay entitlement, which is based on their length of service and weekly wage.
How to communicate the news to the employee
When communicating the news of redundancy to an employee, it’s important to be sensitive and compassionate.
This is a difficult time for them, and they will need your support.
Try to avoid using jargon or technical language, and make sure you explain the situation clearly.
Redundancy pay entitlement
Employees who are made redundant are entitled to receive a redundancy payment, which is calculated based on their length of service and weekly wage.
The minimum amount they are entitled to is two weeks’ pay, but this can be higher depending on their circumstances.
How to calculate statutory redundancy pay
Employees are entitled to a week of pay for each year they have worked for the company, up to a maximum of 20 weeks.
For example, an employee who has worked for the company for four years would be entitled to four weeks’ pay.
The weekly wage is capped at £571, so employees who earn more than this will only receive £571 per week. The maximum amount of statutory redundancy pay is £17,130.
Weekly pay is calculated as the average they earned per week over the 12 weeks before the day they got their redundancy notice.
How to take a redundant employee off your payroll
Once you have made an employee redundant, you will need to take them off your payroll.
This can be done by sending a P45 form to their address.
FAQ for how to make someone redundant
Yes, employees who are made redundant are entitled to receive a redundancy payment, which is calculated based on their length of service and weekly wage.
Once you have made an employee redundant, you will need to take them off your payroll. This can be done by sending a P45 form to their address.
No, you cannot make someone redundant if they are on maternity leave. If you need to discontinue their role, you will need to explore other alternatives, such as changing their role or offering them voluntary redundancy.
Yes, if there is a trade union recognized by your company, you will need to consult with them before making any decisions about redundancies.
You must give the employee a minimum of two weeks’ notice if they are being made redundant.
The minimum amount an employee is entitled to is two weeks’ pay, but this can be higher depending on their length of service and weekly wage.
Yes, you can make someone redundant if they are on sick leave. However, you will need to follow the correct procedure, which includes giving them a minimum of two weeks’ notice and consulting with any trade unions or elected representatives.
If you don’t pay redundancy pay, the employee can take you to an employment tribunal. They may also be entitled to receive interest on the amount owed.
You can contact Acas for advice on whether or not your employees qualify for legal redundancy.
Yes, you can make someone redundant if they are on probation. However, you will need to follow the correct procedure.
The process for making an employee redundant includes giving them a minimum of two weeks’ notice, consulting with any trade unions or elected representatives, and explaining the situation clearly.
You can contact Acas for advice on whether or not your employees qualify for redundancy pay.
It is important to communicate the news to the employee in a clear and concise manner. You should explain the situation clearly and give them a minimum of two weeks’ notice.
Some alternatives to redundancy include changing the employee’s role or offering them voluntary redundancy.