The redundancy process – a guide for employers

As the Government’s Job Retention Scheme has now been extended to March 2021, Welsh businesses now have a slightly longer window to explore how their business fares after the latest nation-wide lockdown.

However, with the pandemic still ravaging the economy and a bleak Christmas forecast, it’s likely that at least some businesses will have to reduce their workforce.

While it may be possible to reduce staff levels by offering voluntary redundancies, it’s not always possible to reduce your staff enough through this.

It doesn’t make sense to purely let go of people on financial grounds – you could leave your business with a talent shortage that may be hard to fill.  Ensure your business is equipped to survive by thinking carefully about who will be left – and use an objective, documented process to ensure your redundancies are compliant with Employment Law Regulations.

Here at Hutchinson Thomas, we recommend the following steps:

Identify if and where cuts need to be made in the business

Invariably, where one part of a business is quiet, another will be busy.  If one part of the business is busy enough to hire, think about retraining and upskilling employees who would otherwise be candidates for redundancy.

However, if business is generally quiet, and there are clear grounds to reduce the workforce, for example if you have 3 sales staff but only sufficient sales to support one, then it’s easy to make the judgement call.

You will need to show this judgement is based on business reasons – but double check before deciding, remember to think how you will cover sickness absence, holiday and so on after people leave – overworking the remaining staff could create future mental health issues.

After this has been thoroughly explored and documented, you will have determined the roles which can be axed.

Determine the ‘Talent Pool’ for undertaking these roles

Draw up a list of all the people within the organisation who can work in these roles – this can include people who would not normally do that job, for example a secretary could cover work in a typing pool.  The redundancy pool should consider everyone capable of performing that role.

However, if a job post you plan to make redundant is unique or requires special skills from just one individual, then it is reasonable to only consider the employee fulfilling that role.  Again, document the process which brought you to this decision.

Define the criteria for redundancy

Choosing who to terminate is incredibly difficult, however best practice dictates that an employer should be able to show an objective process has been followed – and therefore you should focus on only those criteria which you can prove.  Think about factors like:

  • Transferable skills (e.g. some employees may be trained to perform more than one role, whereas others may only be able to do a single job and could not easily reskill)
  • Experience
  • Culture fit and team relationships
  • Performance in current role (ideally assessed using a 360-degree performance review)
  • Aptitude for the role

What factors you can’t consider

You cannot base a redundancy decision on any of the protected characteristics, e.g. disability, (including that of a dependent child or partner), pregnancy, maternity, mental health, gender, sexuality, religion and so on.   Be careful, too, with sickness absence. If absence is due to a disability, such as epilepsy, asthma or a long-term mental health condition, you could be guilty of disability discrimination.

Keep clear records

When making people redundant, it is important to keep accurate notes, documenting the redundancy selection process, how the settlement was reached and so on.  If the employee decides to bring action at a later date, access to a full audit trail will help you defend any claim.

Calculating Redundancy Pay

There are several free redundancy calculators online, but we advise you seek legal advice – a quick consultation to check settlements with your employment law solicitor is trivial compared to the costs of defending a claim.

If you are thinking about making redundancies in your firm, our Employment Law team are on hand to ensure that any redundancies you make are demonstrably fair and legal.

Here at Hutchinson Thomas, we can usually offer same day appointments for an initial 30-minute consultation. We can give advice either in person, by Skype/Facetime or by telephone.

If you wish to receive an immediate response to your enquiry, please telephone Simon Thomas on 01639 640164 or email at