How to do redundancy consultations that treat your employees with fairness and empathy
While we always picture our businesses thriving, it’s difficult to consider that the reality may not be as positive. If a business is struggling, it’s unfortunate that redundancies may be required.
As a small business you want to do everything you can to avoid letting good employees go, but sometimes you can’t avoid it. If redundancies must happen, a carefully orchestrated redundancy consultation process gives you a chance to demonstrate empathy and ethical leadership.
If you're a HR professional or a small business owner, this guide will tell you everything you need to know about redundancy consultations. We’ll explore what a redundancy consultation is, what your legal obligations are, and how you can approach the process in a supportive way.
What is a redundancy consultation?
A redundancy consultation is a legally mandated process in which businesses engage with employees to discuss potential layoffs and explore solutions.
It's a transparent dialogue designed to treat everyone with dignity throughout the restructuring and redundancy situation. The redundancy process protects both employers and employees, by creating an environment for fair discussion and exploring potential alternatives.
Redundancy consultations aren’t just a legal requirement, but a framework that allows you to demonstrate that you’re a responsible and ethical employer. Approached in the right way, redundancy consultations:
- ensure all parties are heard
- show a commitment to ethical practices and team welfare
- give your employees the respect and support they deserve
Having to consider saying goodbye to employees is never easy, but with the right redundancy process and support you can help make a hard situation feel more comfortable.
Comparing individual vs. collective consultations
Within UK law, there’s a difference between individual and collective redundancy. Knowing which applies in your scenario allows you to take the correct approach and stay compliant.
Let’s explore the differences between the two types of redundancy consultation.
Individual redundancy consultations
Individual consultations are required when a business is letting go of fewer than 20 employees. These one-on-one meetings are tailored to discuss the redundancy decision, explore alternatives, address concerns, and offer support.
Collective redundancy consultations
Collective consultations are a necessity for businesses considering 20 or more redundancies within a 90-day period. This process involves discussions with a recognised trade union representative or elected employee representatives, rather than individual conversations. The main goal is to prevent potential redundancies and find other ways to make cutbacks without reducing your headcount.
Your redundancy legal obligations as a UK small business
UK employment law sets out several consultation requirements for all businesses, including small businesses. Here’s what you need to know as you approach the redundancy consultation process.
Notification of redundancies
As an employer in the UK, you have a legal obligation to notify the Redundancy Payments Service (RPS) when making redundancies.
The timing of this notice period is critical and varies based on the scale of redundancies:
- For companies with 20 to 99 employees, the notification must be given at least 30 days before any dismissals take effect
- In cases with 100 or more employees, the notification period is extended to 45 days.
These timeframes ensure that the relevant authorities are informed and that the right process is followed depending on the number of redundancies involved.
Minimum consultation period
UK law mandates specific minimum consultation periods before confirming any redundancies.
These are the timeframes you need to be aware of:
- When considering 20 to 99 redundancies, the consultation period should be a minimum of 30 days
- For companies dealing with 100 or more redundancies, this consultation period is extended to 45 days.
The time limits within the legislation guarantee that all parties involved have sufficient time to engage in meaningful consultation and explore alternative solutions to redundancy, like a redeployment to suitable alternative employment.
Information sharing
Throughout the collective redundancy consultation process, employers are required by law to provide comprehensive information to the employee representatives, such as a trade union representative.
This information includes:
- The rationale behind the proposed redundancies
- The number of employees affected
- The redundancy selection criteria used
- The methodology for calculating redundancy pay.
This information is not only a requirement to share, but doing so shows that you are a fair and ethical employer. Being transparent throughout the consultation process allows your employees to feel more confident throughout.
Best practices for conducting redundancy consultations
It’s not often that you have to go through the redundancy consultation process. If this is your first time, or you simply want advice from those who have been there before, here’s the best practice we recommend following:
- Preparation: Before redundancy consultation meetings, gather all necessary information. Understand your legal requirements and have a clear plan of the steps you need to take.
- Active listening and empathy: Show genuine concern by engaging in active listening. Allow employees to voice feedback and concerns. Acknowledge the emotional impact and show empathy to create a supportive environment.
- Transparent and clear communication: Communicate business reasons clearly in plain language, and avoid using jargon or complicated terms. Discuss potential opportunities for affected employees transparently. Don't forget to send redundancy letters.
- Document the process: Record the steps you take at every step of the journey. Include attendees, discussions, and decisions. Detailed records are essential for legal compliance and in the unfortunate event that you’re challenged on a decision you make.
Redundancy is a tough situation for employees to go through, so anything you can do to make them feel more at ease is appreciated. Use these best practice tips together to approach the consultation process in a fair, supportive, and structured way.
Common mistakes in redundancy consultations and how to avoid them
Redundancy consultations are high-stakes situations, and there's a lot that can go wrong if you don’t know what to do.
Here are some of the most common pitfalls that can happen in these meetings and how you can avoid them.
- Insufficient planning: One fundamental mistake is entering the consultation process without sufficient planning. To avoid this, don’t rush the process. Put together a clear plan with timelines that meet the legal requirements, and notes on how you’ll approach the process.
- Failure to communicate effectively: Ineffective communication can lead to confusion and anxiety. To sidestep this obstacle, stick to clear and open communication. Give your employees and their representatives the information they need and plenty of time to ask questions, give feedback, and make decisions.
- Neglecting employee feedback: Overlooking employee feedback is a critical mistake that’s easy to encounter in the redundancy process. Look for ways you can promote feedback — whether that's through an anonymous suggestion box or a Slack channel where people can leave questions to be answered. Follow up on feedback, and explain your reasons behind decisions you make.
- Non-compliance with legal requirements: Neglecting legal aspects of redundancy consultations can result in penalties and harm your company's reputation. To avoid this, familiarise yourself with your legal obligations. Follow timelines closely and communicate key information as required.
- Lack of knowledge: You’re probably not an expert on redundancies, and neither are your managers. Look for appropriate training and make sure that everyone involved feels comfortable and confident in their role within the process.
If you’re not confident in approaching the redundancy consultation process alone, seek expert HR or legal advice. Our Charlie Advice service can connect you with an experienced HR advisor for support and guidance through these difficult and stressful times.
How to maintain morale in your small business during redundancy consultation
In 2023, the number of people reporting redundancy in the UK increased from 1.4 to 4 per 1,000 employees. That 3% difference has people on edge about their jobs and livelihoods. If you have to go down the redundancy route, it’s essential that you look for ways to proactively maintain employee morale.
Keeping morale positive after making redundancies can seem impossible, but there are steps you can take to lift spirits and reassure your remaining team members, including:
- Promote transparent communication: Share the progress and outcomes of the consultation clearly and transparently. Update employees on your plans for the future, including any steps you’re planning on taking to avoid future redundancies.
- Build support systems: Create support systems for employees affected by redundancy. This can include counselling, career coaching, and support to find alternative employment.
- Encourage team communication: Introduce open forums and channels where employees can gather to ask and answer questions, express concerns, and support each other.
- Highlight good news: Alongside transparency around your redundancy consultation, don’t be afraid to promote good news too. Celebrate team members’ achievements, life updates, and project wins as normal.
The redundancy process won’t last forever, and these actions can help you rebuild morale during and after the journey. Being proactive about how you communicate and enable support now can affect the impact this has on your employees in the long term.
Approach your redundancy consultations with confidence
Redundancy can feel like a big deal, and it is. But it shouldn’t feel scary or fill you with anxiety. Use this guide to help you figure out the legal obligations on your small business and gather ideas on how you can approach it in a mindful, supportive, and compliant way.
For more support on the subject, explore our collection of redundancy guides. We have advice and tips on everything from selection criteria to how to send a compliant redundancy letter.
Redundancy consultations FAQ
Have a question about redundancy consultations? Here are the top frequently asked questions and our best answers to help you navigate the process.
When is a redundancy consultation required?
You must hold a redundancy consultation if you plan to make 20 or more employees redundant within a 90-day period. For situations with 20 or fewer redundancies, there’s no set requirement — but it’s still wise to follow best practice and consult with employees. If you don’t, you could find yourself subject to an employment tribunal and a potential unfair dismissal claim.
What are the 5 stages of redundancy?
You might find some experts refer to the 5 stages of redundancy, which refers to the following: preparation, the selection process, consultation, notice of redundancy and how to appeal, and the termination process.
What is voluntary redundancy?
Unlike compulsory redundancy, a voluntary redundancy is where an employee chooses to end their employment during the redundancy process in return for financial compensation. It allows employers to reduce their headcount sufficiently to meet needs without having to complete the compulsory redundancy process.
What are the primary legal requirements for redundancy consultations?
The legal requirements for redundancy consultations include timely notification to the Redundancy Payments Service (RPS), observing the statutory minimums for length (30-45 days), and informing employees about reasons, numbers, and provisions for redundancy pay.
What are the consequences of a poorly managed redundancy consultation?
If you don’t follow the correct legal process or infringe on employment rights, there could be negative consequences for your small businesses. An employee may be awarded an unfair dismissal claim at an employment tribunal, or they could be awarded a protective award that includes up to 90 days’ pay. For these reasons, it’s good practice to be aware of your legal obligations and follow the process as directed.
Where can I find more support about redundancy consultations?
For more advice on the redundancy process for employers, we recommend visiting the Gov.uk and Acas websites.
