​​Making redundancies is never a pleasant experience, but it’s sometimes unavoidable and employers need to ensure they navigate the process with sensitivity and professionalism, and adhere to the law, or they may face employment tribunals and unfair dismissal claims.

A redundancy letter is a written communication from an employer to an employee that informs them of their job loss due to a reduction in the workforce. To help employers manage this process and ensure they provide employees with clear and concise information, we have compiled a selection of adaptable redundancy letter templates for the various stages of the redundancy procedure.

When would you need to write a redundancy letter?

Employers may have to write redundancy letters in the following circumstances: 

Economic downturns

During a time of economic decline or recession, businesses may experience a reduction in revenue, leading to reduced demand for their products or services. In such circumstances, businesses may look to reduce their workforce to cut costs. 

Restructuring

Companies may need to restructure their operations, departments, or teams due to changes in the market, mergers and acquisitions, or changes in leadership, which could lead to redundancies. 

Technological advancements

With advancements in technology, businesses may require less manual labour, leading to a reduction in the workforce. Employers may have to make employees redundant where their jobs have been automated or outsourced. 

What is the difference between voluntary and compulsory redundancy?

Voluntary redundancy is when an employer offers an employee the option to leave their job in exchange for a financial package, which could include a lump sum payment, extended notice period, and other benefits. Employees who accept voluntary redundancy do so voluntarily, and their decision is not influenced by their employer.

In contrast, compulsory redundancy is when an employer selects an employee to leave their job due to a reduction in the workforce, restructuring, or other reasons. Employees who are made redundant involuntarily do not have a choice in the matter and may be entitled to statutory redundancy pay and other benefits.

What are the stages of a redundancy process? 

The redundancy process can be broken down into stages and logical steps that employers can follow. The stages are: preparation, selection, individual consultations, notice of redundancy, appeals (if applicable), and termination.

Stage one: Preparation

During the preparation stage, you will assess whether redundancy is the only option and is completely necessary before beginning the process. If you are concerned with your employee’s performance or behaviour, then you should go down the disciplinary route instead.

Redundancy is a type of dismissal where the employee’s job is no longer required. Ensure that you have covered all alternative options and if you have concluded that redundancy is essential, establish a time frame and prepare the relevant documentation.

Stage two: Selection

At this stage, you will be selecting the people who are under consideration for redundancy. You’ll need to determine the criteria for selecting those employees which should be objective and fair across the workforce.

Additionally, now is the time to inform employees of the upcoming redundancies. This should also include those who are not under consideration. You should explain that there is the risk of redundancy, the reason why it’s necessary, roughly how many redundancies you're considering, and what will happen next.

Stage three: Individual consultations

The consultations stage is a hugely important part of the redundancy process, and it’s essential that employers look at this as an open discussion with the employee, rather than using this time to just inform them of their potential redundancy.

You should explain why they have been selected and discuss alternative employment in the company. Employees will have the chance to make suggestions as to how the business can retain them and these suggestions should be considered fairly, or the employer may face unfair dismissal claims.

Note: there are legal time frames regarding consultations, so make sure you adhere to these.

Stage four: Notice of redundancy

Once you have finished consulting with everyone and made your decision, you should meet with each at-risk employee to discuss the outcome. Ideally, do this face to face, but if this is not possible, organise a phone call.

Those who have been selected for redundancy should also receive confirmation in writing, by letter or email. We have included a redundancy notice letter template for your ease.

Stage five: Appeals

If an employee feels they have been unfairly chosen for redundancy or if they think there were discriminatory issues in the process, it is essential to offer them the opportunity to appeal within a reasonable time frame after they have received their redundancy notice. This could be, for instance, five days. The employee should submit their reasons for appeal in writing. Once you receive an appeal, you should arrange a meeting with the employee as soon as possible.

If it becomes clear that the employee was selected unfairly but you still need to make the role redundant, you must manage the situation with great care. This could mean ending the employment of another employee who was informed their job was secure. It is important to communicate clearly and openly with your staff, rectify any issues with the process, and ensure a fair selection procedure is carried out. If serious problems are identified, you may need to repeat the entire redundancy process.

If you decide to reject the appeal, the employee's redundancy dismissal, notice, and pay will continue as before.

Stage six: Termination

This is the final stage of the redundancy process where the employment contract is terminated. During this stage, you should be supportive and give your employee reasonable time to find another job while they work their notice period.

All employees who have been with the company for more than two years qualify for a statutory redundancy payment. Provide the employees with a written record of how the statutory redundancy payment has been calculated and what they will receive.

What should be included in a redundancy letter?

The redundancy letter to the employee should clearly state the reasons for the employment termination and the terms of their departure. Here are some key pieces of information that should be included in a redundancy letter:

• Reason for redundancy: The letter should clearly state the reasons for the redundancy, such as economic downturn, restructuring, or technological advancements.

• Selection criteria: Employers should explain the selection criteria used to determine which employees are being made redundant. This could include factors such as length of service, skills and qualifications, and job performance.

• Notice period: Employers should provide details of the employee's notice period, including the start and end dates, as well as any entitlements to pay in lieu of notice.

• Redundancy pay: The letter should provide information on the employee's entitlement to statutory redundancy pay, as well as any additional redundancy pay provided by the employer.

• Benefits: Employers should explain what happens to the employee's benefits, such as healthcare, pension, and life insurance, after they leave.

• Support: Employers should offer support to the employee during this difficult time, including assistance with finding new employment opportunities and access to training programmes.

To help you navigate this challenging process, we have put together a selection of redundancy letter templates that can be used at various stages throughout the process. These include:

• Redundancy consultation letter

• Redundancy consultation outcome letter

• Invitation to redundancy outcome meeting letter

• Notice of redundancy letter
  

​Due to the current economic climate, businesses may be presented with some difficult decisions to make regarding their workforce, including redundancy.

Employers may have to write redundancy letters during economic downturns - when the business is experiencing a reduction in revenue, when restructuring operations or departments due to changes in the market, or when technological advancements mean jobs have become automated or outsourced.

Managing and making staff redundancies across a business is often an unpleasant but necessary task that many employers may have to consider when reducing their headcount. When faced with the prospect of making redundancies, it’s important for employers to manage the process effectively and efficiently to minimise the impact on both the affected employees and the entire business.

Here are some steps employers can take to manage staff redundancies:

Create a redundancy plan

Having a redundancy plan in place will help employers effectively manage every stage of the process, from consultation and planning to notification and evaluation. It’s important to make sure the initial plan includes checks to see if there is a genuine redundancy situation, what the timescales are, and how consultation will take place.

For each stage of the plan, a record needs to be kept, ensuring the entire process is accountable to be delivered efficiently and legally. Redundancy plans should include: 

• An explanation as to why redundancies are being made 

• A timetable outlining next steps

• The meeting process for all affected employees

• The meeting process for all unaffected employees

• An outline of the redundancy criteria and selection process

• How the announcements will be made

If redundancies are in fact unavoidable, the latter stages of the plan should also include selection, notices and payments.

Be lawful, fair and transparent

Redundancy can be seen as a fair reason for dismissal, but should only be used in certain circumstances where the employee’s role no longer exists and/or is no longer required within the business.

As such, when considering employees for redundancy, employers should use a selection criteria that is fair and objective, which might include an employee’s:

• Skills

• Experience

• Performance

• Length of service

Employers must comply with employment laws and regulations when managing redundancies. According to the Equality Act 2010, it’s unlawful to make someone redundant by reason of a protected characteristic. These include age, sex, sexual orientation, marital status, disability, race or religion.

Following the correct legal procedure is imperative, as failure to do so can lead to wrongful dismissal claims. Employers should consult with employees and/or their representatives when making decisions that affect their jobs.

Offer clear communication

As with most situations that concern employees, communication is key when it comes to managing redundancies. Be open and honest with employees about the situation – it always helps to explain the reasons for the redundancy and provide as much information as possible about the process.

This information can be hard to hear, so employers are encouraged to act sensitively to the emotions of those affected and provide support where necessary. For that reason, the process needs to be transparent, and employees should know what to expect throughout.

Alongside the employee, it’s important to remember that redundancies can impact the business in more ways than one – and stakeholders with an interest in the organisation should also receive clear communication. Anyone from customers to suppliers and investors have the right to be informed about any changes, but the focus should be on reassuring them about the future of the business.

Remember, communication is there to help to manage any negative impact on the organisation’s reputation or relationships.

Provide employee support and guidance

Redundancy can be a traumatic experience for any employee. Therefore, providing the necessary support and guidance to help affected workers cope with the news can go a long way, not only in terms of maintaining best practice but for business reputation.

Employers can help employees through:

• Finding new employment

• Accessing training and reskilling opportunities

• CV support and career coaching

• Job search advice and recommendations

As redundancy is a last option, it’s worth considering whether there are any suitable alternative roles within the business that impacted employees could be offered.

Anyone who has worked for their employer for at least two years at the time their job ends should be offered an alternative role if one is available, or at least be made aware of any opportunities across the business. This may involve individuals undertaking training or upskilling to take on different roles – but if the offer isn’t taken up, the employee will be deemed as dismissed through redundancy and be entitled to receive statutory redundancy pay.

This payment is there to help employees during the transition period as they look for new employment, and should be calculated correctly and paid in a timely manner.

Consider remaining employees

Redundancies can have a significant impact on remaining employees, who may feel demotivated, stressed, or uncertain about their own job security. As much as the focus may be on creating a supportive environment for those leaving the company, be mindful to keep your existing workforce updated and supported throughout the stressful period.

While those workers may not have faced dismissal, they may have been affected by witnessing the experience of their colleagues, which can negatively impact their morale. This can be harmful to the working environment, business operations and to employee performance.

Continue to learn and adapt

Managing redundancies can be a difficult process, but it can also provide an opportunity for an organisation to learn from the experience and improve upon its practices. Employers should conduct a post-redundancy review to evaluate the situation and identify any areas for improvement so, if it does need to happen again, the business is better prepared.

During the redundancy talks, it may be worth taking any feedback on board from the affected employees. This can be used to make changes to any practice and policy currently in place, and, most importantly, improve the support and guidance provided. Proactive measures can help build resilience and better prepare managers for any future challenges.

Employers should also look at their redundancy process as a whole, making sure line managers are able to confidently deal with these types of situation. According to research by employment law support firm WorkNest, 74% of employers aren’t providing any training to their line managers on how to handle redundancies – indicating the scale of potential emotional damage that could be routinely occurring though no fault of their own.

Staff redundancies can be a challenge, but it’s imperative that the process runs as smoothly as possible. By taking the time to plan, execute and evaluate the task, employers can minimise the impact that redundancies can have on all involved.

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