Employers often have to make tough decisions. Making redundancies is one of the most difficult decisions. When making redundancies, you need to keep several things in mind. In order to avoid unfair dismissal claims and employment tribunals, you must understand the law and follow the redundancy process properly. A redundancy process carries significant risk for both unfair dismissal and discrimination claims, if the procedure is not carried out correctly.
Consistency and fairness are key in the organisation’s approach.
The organisation must:
- Have a rationale for redundancy; and
- Follow a fair procedure
1. Identify a potential redundancy situation
A redundancy situation exists where:
- The organisation closes of part of the organisation is closed;
- A specific location (even if the organisation is moving to a new location) is closed; or
- The organisation’s requirement for employees to do work of a particular kind has reduced or come to an end.
If the organisation has identified that it needs to reduce job roles, it will need to have a justifiable rationale (as noted above), and follow a fair procedure.
2. Identify affected employees
The organisation should then identify the affected employees who are ‘at risk of redundancy’.
The organisation will also need to identify the number of job roles to be made redundant, so it can be ascertained whether individual or collective consultation would be appropriate.
In this guide, the employment law specialists from HR Team explain how to write a clear ‘Notice of Redundancy’ letter.
What is a redundancy letter?
Generally, a redundancy letter serves as an official notification that redundancy proceedings are in progress. At each stage of the redundancy process, employees must be properly informed by letter. Open and honest communication with employees will make the process more amicable and smoother. Communication does not have to be limited to letters.
Redundancy letters should explain why an employee’s role is ending. In order to end a position, there has to be a valid reason, such as organisational changes or funding cuts.
Redundancy letter types
At each stage of the redundancy process, you must issue:
- At risk of redundancy letter – A warning of potential redundancies is sent to the affected employee/employees in this first official letter.
- Redundancy consultation letter – As part of the consultation process, this letter invites the affected employees to attend a meeting to discuss options.
- Notice of redundancy letter – In this letter, employees who have been selected for redundancy are notified of their dismissal and associated details such as redundancy date, payment, etc.
There may be slight differences in your process, but you must complete these steps. Additional letters, such as a second consultation letter, may be needed. The notification of redundancy letter also varies depending on whether it’s compulsory or voluntary redundancy.
What to include in a notification of redundancy letter
The letters will differ depending on the stage of the process, but some essential points must be included in compliance with the law and HR policy. It will be easier to avoid disagreements, and miscommunications if the letters are clear and explain the situation. The following items should be included in the notification of redundancy letter:
The purpose of the letter
The notification of redundancy letter should begin by providing a clear summary of the process and the rational for redundancy. To avoid any doubt, this should be clearly written.
The reason for redundancy
There must be a justifiable reason for redundancy, and this is a legal requirement. Otherwise, your employees can file an unfair dismissal claim and you could end up facing a costly tribunal.
Address other options
Demonstrate to the employee what you have done to avoid a redundancy. Redeploying them or moving them into other roles should be done if possible. In the letter of notification of redundancy, it should be stated that these things have been discussed and considered and the reasons why they were not feasible.
Provide feedback on any other questions, concerns, or suggestions to avoid a redundancy situation that were put forward at the consultation process.
Details on any redundancy payment that the employee is entitled to.
Details on time off to look for alternative work or take part in training.
State the redundancy notice period
You must give written notice of redundancy and confirm the end date of your employees’ employment. Details on the notice period and whether or not the organisation requires the employee to work their notice period or alternatively pay them in lieu of notice;
Additionally, you should state how any remaining annual leave and bonuses will be handled.
Address employee rights
Throughout the process, employees should be kept informed and their rights, including their right to appeal. These should be explained to, and understood by, the employee.
Get the help you need with HR Docs
There is nothing easy about making redundancies.
It is important to follow the rules when making redundancies. A situation that is already challenging can become even more stressful if you don’t do this to the letter of the law.
With HR Docs online library of HR template documents from employment law experts, you can access redundancy letter templates to free up time and make sure you don’t forget any vital information.