Big companies based in the UK are shedding staff. Sainsbury’s announced it will cut 2,000 jobs. BAE Systems will do the same. Meanwhile, Vauxhall is losing 400.

When a larger organisation sharpens the axe ahead of making redundancies, it likely has the HR and legal resources to follow a fair and proper process, avoiding employment tribunals.

Smaller companies rarely have those resources. So making small-scale redundancies (under 20 staff) is fraught with the financial danger. If redundancy is affecting you (or you want to plan for the worst), here’s what you need to know.

Make sure it’s a redundancy situation

Redundancies happen in three main situations:

  • A whole business closes.
  • A specific location of work
  • The need to carry out work of a particular kind ends or reduces.

Redundancy is about the role, not the person, so identify the roles affected by the redundancy (whether it’s just one role or several performing the same work). Look at job descriptions, what staff actually do in their roles, the interchangeability of roles and geographical factors.

Before making any position redundant, you should always consider other ways to solve the problem such as freezing recruitment, cutting overtime or putting staff on lay off (unpaid leave until there’s work again).

Have meaningful consultations

For under 20 staff redundancies, there is no minimum or maximum consultation period. Instead, the consultation has to be meaningful.

You must go into consultations with no pre-determination about redundancy. Listen to proposals that affected staff or their representatives submit and give them proper consideration.

The consultation should:

  • Explain the need for the redundancies
  • Consider any alternatives to dismissal
  • Suggest alternative employment
  • Listen to proposals from affected employees
  • Agree on selection criteria (how you choose the roles to make redundant)
  • Ask for volunteers and outline any voluntary redundancy schemes

Usually, two to three meetings are enough, but the process can lengthen depending on the number of proposals or alternatives put forward to you.

Start the selection process

Apply the agreed selection criteria to the roles at risk via a scoring system.

Be as objective as possible; personal opinion should not influence you. Be wary of discrimination; for example, ‘first in, last out’ may be discriminatory on the grounds of age.

It’s best practice to have more than one person applying the selection criteria to ensure there’s no bias or unfair application.

Once you have the final scores, you will identify the lowest-scoring employees and should select them for redundancy as they are less beneficial for your business’s future.

Give notice of the redundancies

The employees you select for redundancy should get proper notice of their dismissal, whether contractual or statutory, to avoid them making a tribunal claim.

But even during this notice period, you must still offer affected staff suitable alternative roles should you find any.

Finally, staff with two years’ service at your business are entitled to a statutory redundancy payment up to a maximum of £14,670. You must also pay any contractual or enhanced redundancy pay.