When costs rise or work changes, a small employer may need to remove roles. The commercial decision can be genuine and the dismissal can still be unfair if the process is predetermined, the wrong employees are placed at risk or consultation begins after the decision has effectively been made. A sound redundancy process starts with the business requirement, keeps the outcome open and gives affected employees a genuine opportunity to influence what happens.
1. Confirm that the situation is genuinely redundancy
Redundancy commonly arises where the business closes, a workplace closes or moves, or the employer needs fewer employees to perform work of a particular kind. Start by writing down what is changing: the work, structure, location, funding or required number of roles. Support it with reliable information such as forecasts, lost contracts, duplicated responsibilities or a proposed operating model.
Do not use redundancy to avoid dealing with one employee's conduct, capability or attendance. If the role is still needed but the concern is the person performing it, the appropriate route may be performance, capability or disciplinary management instead.
Related guide: workplace investigations before disciplinary action →
2. Look for ways to avoid or reduce dismissals
Before placing employees at risk, consider recruitment freezes, reduced overtime, voluntary redundancy, redeployment, revised hours, job sharing and ending genuinely temporary arrangements. Some options require employee agreement and should not be imposed simply because redundancy is being considered.
Record each realistic option, its likely saving and why it is accepted or rejected. Consultation can produce alternatives the employer has not identified. Voluntary redundancy should be offered and selected fairly; volunteering does not guarantee acceptance where losing a particular employee would damage the future operation.
3. Plan the process before announcing an outcome
Decide which roles are potentially affected, who will lead consultation, what information employees need, how suggestions will be considered and the proposed timetable. Include employees who are absent, working remotely or on family-related leave. Managers should understand the proposal without presenting it as final.
For fewer than 20 proposed redundancies, legislation does not set a fixed individual-consultation timetable. Consultation must still be genuine and meaningful if the employer is to demonstrate a fair process. Where 20 or more redundancies are proposed within 90 days at one establishment, collective consultation and government notification rules currently apply.
From 6 April 2026, the maximum protective award for failing to comply with collective consultation duties is 180 days' pay for each affected employee. A future organisation-wide threshold is planned under the Employment Rights Act 2025, but it is not the current trigger. The government has indicated further collective-redundancy changes are expected in 2027.
4. Identify a fair selection pool
If a unique role disappears and there is only one employee doing it, a selection pool may be straightforward. Where several employees perform the same or interchangeable work and fewer roles will remain, consider which roles belong in the pool. Look beyond job titles to actual duties and transferable skills.
Do not draw the pool around a preferred outcome. Record why employees were included or excluded and consult on the proposed approach before final selection. Existing policies, collective agreements and previous practice may also affect what is reasonable.
Check the business case, pool and timetable before announcing redundancies.
HR + SAFETY can review the proposed restructure, identify the correct consultation route and prepare a defensible plan before positions become fixed.
Discuss a proposed redundancy process5. Use evidence-based selection criteria
Criteria should be relevant to the future roles, measurable and applied consistently. Skills, qualifications, documented performance, disciplinary record and carefully handled attendance data may be relevant. Avoid vague tests such as attitude, flexibility or management preference unless they can be defined and supported objectively.
Check every criterion for direct and indirect discrimination. Disability-related, pregnancy and maternity absence must not be counted as ordinary attendance. Part-time or fixed-term status, family leave, whistleblowing, trade-union activity and raising statutory or health and safety rights can create additional protections. Use more than one trained scorer where practicable and retain the evidence behind each score.
6. Consult while the proposal can still change
Tell employees they are at risk, explain the business reason, proposed pool, criteria, timetable and possible outcomes, and provide the information needed to respond. Meet each affected employee privately and listen to alternatives, challenges to the pool and criteria, and factual corrections to scoring.
Consultation does not require agreement, but it does require an open mind. Record suggestions and the employer's reasoned response. If a point changes the proposal, pool, score or available alternatives, update the process and give affected employees a fair opportunity to comment before deciding.
7. Search properly for suitable alternative employment
Identify vacancies across the organisation and discuss whether they are suitable. Consider duties, status, pay, hours, location, skills and the employee's circumstances. A suitable role should be offered in writing before the existing contract ends and normally start within four weeks of it ending.
Employees accepting alternative work normally have a statutory four-week trial period. Where training is needed, a longer trial can be agreed in writing. Pregnant employees and certain new parents have priority for suitable alternative vacancies during their protected period; they do not merely compete for those vacancies on equal terms.
8. Make, explain and allow challenge to the final decision
Only after consultation should the employer decide whether redundancies remain necessary and who is selected. Confirm the decision, termination date, notice, redundancy payment, outstanding holiday, other contractual sums and support available. Explain the calculation and offer an appeal so errors or unfairness can be reviewed by somebody not previously responsible where practicable.
Employees with at least two years' continuous service will normally qualify for statutory redundancy pay. For dismissals on or after 6 April 2026, the weekly pay used in the statutory calculation is capped at £751 and the maximum statutory payment is £22,530. Contractual schemes may provide more. Notice pay, holiday pay and redundancy pay are separate calculations.
Small-business redundancy checklist
If the name of the employee appeared in the plan before the role, pool and evidence were considered, stop. That is a warning that the process may have started with the answer rather than the business problem.
- Write a genuine business case based on roles and work requirements.
- Consider and record practical alternatives to compulsory redundancy.
- Check the policy, contracts and whether collective consultation applies.
- Identify and explain the proposed selection pool.
- Use objective criteria supported by reliable evidence.
- Check for discrimination and special statutory protections.
- Consult before the decision is final and answer suggestions properly.
- Search across the organisation for suitable alternative vacancies.
- Confirm notice, payments, holiday and the right of appeal in writing.
Redundancy HR support across the North East
HR + SAFETY supports SMEs across Teesside, Stockton-on-Tees, Middlesbrough, Darlington, County Durham, Sunderland, Newcastle and the wider North East with redundancy planning and consultation.
We can review the business case, map the pool, develop fair criteria, prepare letters and consultation questions, check suitable alternative employment and support the final decision and appeal. The aim is a process managers can explain, employees can meaningfully engage with and the business can evidence afterwards.
Start with the reduced requirement for roles, not the employee you expect to leave. Keep consultation meaningful, build a fair pool and evidence-based selection process, search for alternatives and issue notice only after the proposal has been properly tested.
This guide provides general information for UK employers. It is not legal advice and should not replace advice based on the facts of a specific matter.