Making someone redundant: A Guide for Small Businesses

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1 Making someone redundant: A Guide for Small Businesses

When it comes to employment in small businesses, there may come a time when it’s necessary to make someone redundant. This can be a difficult and sensitive process, but it’s important for employers to understand how to handle it legally and professionally.

One of the first steps is determining whether redundancy is the best option. This involves looking at the operational requirements of the business and considering any potential alternatives to redundancy. It’s crucial to weigh the pros and cons of each option, taking into account factors such as the cost of redundancy, the impact on the remaining employees, and the risk of a legal challenge.

If it’s determined that redundancy is the most suitable course of action, there are certain steps that need to be followed. Firstly, the employer must inform the employee of the decision in writing, providing all relevant information about the process, including the reason for the redundancy, the length of the consultation period, and any support that will be provided.

During the consultation period, the employer should allow the employee to provide any feedback or suggestions. It’s important to listen to their concerns and considerations, as this helps to ensure a fair and transparent decision-making process. The employer should also consider any alternatives to redundancy that the employee may propose.

Once the consultation period has ended, the employer must make a final decision and inform the employee in writing. This should include details of any redundancy package that will be offered, such as redundancy pay, notice period, and any other entitlements. It’s essential to keep a record of all communications and decisions made throughout the process, as this can be helpful in case of any legal disputes.

It’s worth noting that there are legal requirements around redundancy, such as the obligation to provide a minimum notice period and the right to a redundancy appeal. Employers should familiarize themselves with the relevant legislation and seek professional advice if needed to ensure they comply with these requirements.

Making someone redundant is a challenging task for any small business owner, but by following the correct procedures and treating employees with respect and fairness, it’s possible to mitigate the impact and maintain a positive working environment for those who remain.

🔔 Making Someone Redundant: A Guide for Small Businesses


Making someone redundant is a difficult process for any small business owner or manager. However, sometimes it becomes necessary due to various reasons such as financial constraints or changes in business requirements. In this guide, we will outline the steps involved in making someone redundant, ensuring the process is carried out fairly and legally.

Step 1: Understand Redundancy

Before proceeding with making someone redundant, it’s important to understand what redundancy means. Redundancy refers to the situation where an employee’s position is no longer needed due to the downsizing or closure of a business. It is not a reflection on the individual’s abilities or performance.

Step 2: Assess the Situation

Assess your business’s financial state and examine the reasons behind the redundancy. Is it due to a decline in sales, changes in market conditions, or other factors? This assessment will help you determine the best course of action moving forward.

Step 3: Consultation Process

Involve the employee in the decision-making process by having a consultation meeting with them. Explain the reasons for redundancy and provide them with relevant information about their rights, obligations, and any possible alternatives. This transparent approach will help them understand and accept the situation.

Step 4: Explore Alternatives

During the consultation process, explore alternative options with the employee. This could include offering them a different role within the company, adjusting their working hours, or providing training opportunities to improve their skills. Consider every possibility before finalizing the redundancy decision.

Step 5: Offer Support

Offer emotional support to the affected employee during the redundancy process. Losing a job can be distressing, and providing guidance or recommending local support services can make this difficult transition easier for them. It’s essential to show empathy and compassion while dealing with redundancies.

Step 6: Review Legal Obligations

Familiarize yourself with your legal obligations regarding redundancy, such as notice periods, redundancy pay, and consultation requirements. Non-compliance with these obligations can result in legal claims against your business. Seek professional advice if you’re unsure about any aspect of redundancy.

Step 7: Document the Process

Keep a record of all the steps taken during the redundancy process, including the consultation meetings, alternatives explored, and any agreements reached. This documentation will serve as evidence if any legal issues arise in the future.

Step 8: Communicate the Decision

Once all the above steps have been completed, communicate the final decision to the employee in a clear and concise manner. Provide them with written confirmation of their redundancy, including details about notice periods and redundancy pay.


Making someone redundant is a difficult and sensitive task for any small business owner. By following this guide and adhering to legal requirements, you can ensure that the redundancy process is carried out in a fair and professional manner. Remember to provide support to the affected individual and approach the situation with empathy and understanding.

🔔 Understanding Redundancy

When it comes to making someone redundant, there are certain steps and considerations that small businesses need to take. Understanding the process and the legal obligations is crucial to avoid potential issues and claims.

The Consultation Process

The first step in the redundancy process is to have consultations with the employees who may be affected. These consultations should be open and transparent, giving the employees an opportunity to ask questions and express their concerns.

During the consultation, it’s important to discuss the reasons for redundancy and any alternatives that may be considered. This can include offering alternative roles within the company or exploring other options instead of making someone redundant.

Selection Criteria

If there are multiple employees who could be made redundant, it’s essential to establish fair and objective selection criteria. These criteria should be based on business needs and take into account factors such as skills, experience, and performance.

Using a selection matrix can be helpful in objectively assessing individuals and determining the most suitable candidates for redundancy. This helps to minimize the risk of bias and ensures a fair process for all employees involved.

Legal Obligations

In some circumstances, there may be legal obligations that need to be followed when making someone redundant. For example, certain laws may require the employer to provide a minimum notice period, offer suitable alternative employment, or consult with employee representatives.

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It’s important to be aware of these legal requirements and ensure that they are followed accordingly. Failing to comply with these obligations can lead to potential legal claims and additional complications.

Record Keeping

Throughout the redundancy process, it’s essential to keep detailed records of all the steps taken, consultations held, and decisions made. This includes documenting any alternative job offers, selection criteria, and any other relevant information.

These records can be crucial in providing evidence of a fair process and can help protect the business in case of any disputes or claims in the future.

Voluntary Redundancy

In some cases, businesses may offer voluntary redundancy to employees. This can be a way to achieve the desired reduction in staff without resorting to compulsory redundancies.

However, it’s important to be cautious when implementing voluntary redundancy programs and ensure that they are fair and transparent. There should be clear criteria for eligibility and a fair process for selecting who gets accepted for voluntary redundancy.

Seek Professional Advice

If you’re unsure about the redundancy process or have concerns about potential legal implications, it’s always recommended to seek professional advice. Employment law specialists can provide the necessary guidance and ensure that you’re taking the right steps to meet all your obligations.

Consider Individual Circumstances

While redundancy is about the needs of the business, it’s also important to consider the individual circumstances of the employees involved. This includes their personal circumstances, such as family responsibilities, health issues, or other factors that may impact their ability to find new employment.

Taking these factors into account and providing support or assistance as needed can help to ensure a more humane and considerate approach to redundancy.

🔔 Assessing the Need for Redundancy

Before making someone redundant, it is important for small businesses to carefully assess whether redundancy is necessary. This involves evaluating the current situation, considering various factors, and making well-informed decisions.

Evaluating the Current Situation

Assessing the need for redundancy begins with an evaluation of the current state of the business. Look at factors such as the company’s financial stability, operational efficiency, and future prospects. Determine if there is a genuine need to downsize the workforce due to economic challenges, market changes, or other legitimate reasons.

Considering Various Factors

When considering redundancy, there may be multiple factors at play. Some common factors that may contribute to the need for redundancies include:

  1. Heavy reliance on manual labor that can be replaced by automation or technology.
  2. Changes in the market or industry that require a shift in business strategy.
  3. Operational inefficiencies that can be addressed through restructuring.
  4. Long-term absences or consistently poor performance.
  5. Instances of theft, violence, or other misconduct in the workplace.
  6. Moving certain business activities to another location or outsourcing them.

Weighing the Options

Once the need for redundancy is identified, it is important to consider all possible options before making a final decision. This may include finding alternative roles for affected employees within the company, offering voluntary redundancy, or providing retraining opportunities to enable employees to acquire new skills.

Consultations and Union Involvement

When making redundancies, it is crucial to engage in consultations with affected employees and, if applicable, involve relevant unions. This ensures that employees are given the opportunity to express their concerns, ask questions, and provide input. Consultations should be conducted in a fair and transparent manner, and any decisions made should take into account the feedback received.

Providing Adequate Notice and Support

Employees who are at risk of redundancy should be given sufficient notice in writing, explaining the reasons for the redundancy and the process that will be followed. Small businesses should also provide support to employees during this difficult time, such as access to counseling services or assistance in finding new employment opportunities. It is important to demonstrate empathy and understanding throughout the entire redundancy process.

Seeking Legal Advice

Redundancy laws and regulations can vary depending on the jurisdiction, so it is essential for small businesses to seek legal advice to ensure compliance with relevant laws. Legal professionals can provide guidance on the correct processes and procedures, reducing the risk of potential legal issues.

In conclusion, when assessing the need for redundancy, small businesses must carefully consider the current situation, evaluate various factors, engage in consultations, provide support to employees, and seek legal advice if necessary. By making well-informed decisions and handling redundancies in a fair and transparent manner, businesses can navigate these challenging situations with integrity and compassion.


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🔔 Legal Obligations and Consultation

When making someone redundant, there are legal obligations that small businesses must complete to ensure the process is carried out correctly. These obligations are meant to protect the rights and interests of the employees involved in the redundancy process.


One of the key obligations is to consult with the affected employee(s) about the redundancy. This means having a discussion with them, explaining the reasons behind the redundancy, and giving them an opportunity to provide their input or suggest alternatives. It is important to involve the affected employee(s) in the decision-making process and listen to their concerns.

Consultation should be meaningful and not just a formality. It should take place as early as possible, giving the employee(s) enough time to understand the situation and explore potential alternative options. The duration of the consultation period may vary depending on the circumstances, but it is generally recommended to allow at least two weeks for consultation.

Legal obligations

In addition to consultation, there are other legal obligations that must be fulfilled when making someone redundant. These include:

  • Serving the appropriate notice period: The notice period for redundancy is usually based on the length of service of each employee, up to a maximum of 12 weeks. Small businesses should be aware of the notice requirements and provide the necessary notice to the affected employee(s).
  • Keeping records: Small businesses should keep a record of the redundancy process, including the reasons for redundancy, consultation meetings, and any actions taken. These records may be needed in case of disputes or legal proceedings.
  • Providing support: Small businesses should offer support to the affected employee(s) during and after the redundancy process. This could include providing information about available resources, offering career guidance, or helping them find new job opportunities.
  • Avoiding unfair dismissals: Small businesses must ensure that the redundancy process is carried out in a fair and non-discriminatory manner. They should follow fair selection criteria, consider alternatives to redundancy, and provide proper redundancy payments.
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Consultation examples

Here are a few examples of what consultation in the redundancy process might look like:

  1. The employer informs the affected employee(s) about the decision to make redundancies and explains the reasons behind it. They listen to the employee’s concerns and suggest alternative options, such as reduced working hours or different roles within the company.
  2. The employer holds regular consultation meetings with the employee(s) to provide updates on the redundancy process and to gather feedback. The employee(s) have the opportunity to ask questions, discuss their concerns, and suggest improvements to the process.
  3. The employer considers the employee’s input and takes it into account when making the final decision on redundancy. They provide clear and transparent reasons for their decision and offer support to the employee(s) throughout the transition period.

It is important to note that while consultation is a legal requirement in some situations, it is not always compulsory. For example, if a small business is making fewer than 20 employees redundant within a 90-day period, consultation may not be required. However, it is still advisable to consult with employees to maintain a good relationship and avoid any potential legal issues.

By following the legal obligations and engaging in meaningful consultation, small businesses can handle the redundancy process in a fair and responsible manner.

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🔔 Planning the Redundancy Process

When considering making someone redundant, it is essential for the employer to plan the entire redundancy process carefully. This ensures that the process is fair, conducted in a transparent manner, and complies with legal requirements.


One of the crucial steps in planning a redundancy process is consultation with the affected employees. It is essential to involve them in the decision-making process and provide them with suitable opportunities for input. Consultation helps in understanding their concerns and also provides an opportunity for the employer to explain the reasons for redundancy and any measures to mitigate its impact.

During the consultation process, the employer should ensure that all employees are treated fairly and that no discrimination takes place. This means considering input from all employees, regardless of their position or length of service. It is important to create a record of the consultations, including the discussions and decisions made.

Notify and Provide Information

After the consultation process, the employer should notify the affected employees about the redundancy decisions. This includes providing them with information about their redundancy pay, any notice periods, and any support or assistance that will be provided during the redundancy process. It is important to provide this information in a clear and understandable manner.

Operational Considerations

During the redundancy process, the employer should consider the operational implications of the redundancies. This includes assessing which roles and positions are no longer required and identifying suitable alternatives for the affected employees. The employer should also consider the long-term impact of the redundancies on the remaining employees and the overall business.

Legal Requirements

It is essential to ensure that the redundancy process complies with all legal requirements. This includes consulting with employee representatives (if applicable), following any collective consultation requirements, and adhering to relevant employment laws and regulations. Failure to meet these legal requirements can result in legal action being taken against the employer.

Seek Professional Advice

For small businesses, navigating the redundancy process can be challenging. Seeking professional advice from an employment law specialist or HR consultant can help ensure that the process is conducted optimally and consistently. They can provide guidance, assist in drafting necessary documentation, and help resolve any issues that may arise during the redundancy process.

Remember, each redundancy case is unique, and the specific circumstances may require additional steps or considerations. It is important to be thorough and proactive in planning and implementing the redundancy process to minimize the impact on both the affected employees and the business as a whole.

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🔔 Selection Criteria and Fairness

When making someone redundant, it is important for employers to follow a fair and transparent process. This ensures that all employees are treated equally and that the selection criteria for redundancy is objective and unbiased. It also helps to minimize legal issues and potential disputes.

Selection Process

The selection process should be based on clear and justifiable criteria. These criteria should be related to the requirements of the role and should not discriminate against any particular group of employees. For example, it may be appropriate to consider factors such as:

  • Skills and qualifications
  • Experience
  • Performance
  • Attendance and punctuality
  • Flexibility and adaptability
  • Teamwork and collaboration

Employers should ensure that they have documented evidence to support their decisions based on these criteria. It is also important to involve relevant stakeholders, such as line managers or HR professionals, in the selection process to ensure a fair and consistent approach.

Notice and Consultation

Employers should provide employees with appropriate notice and consult with them throughout the redundancy process. This means giving employees sufficient time to prepare for redundancy and discussing the reasons behind the decision. Employers should also consider any alternatives to redundancy, such as redeployment or retraining opportunities.

During the consultation process, employers should be open and honest about the reasons for redundancy and the selection criteria used. They should also encourage employees to ask questions and provide feedback. This helps to ensure that employees understand the process and feel that their concerns are being heard and considered.

Information and Support

Employers should provide employees with all the information they need to understand the redundancy process and their rights. This may include information on entitlements, such as redundancy pay and notice periods, as well as available support services, such as career counseling or financial advice.

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Employers should also consider providing additional support to employees who are being made redundant. This may include offering training opportunities, job search assistance, or access to a redundancy support network. By doing so, employers can help employees transition to new employment more effectively and minimize the impact of redundancy.

Steps to Improve Fairness

  1. Clearly define the selection criteria and ensure they are based on legitimate business needs.
  2. Document all steps taken in the redundancy process.
  3. Train managers and supervisors on the redundancy process and their responsibilities.
  4. Consider conducting an external review of the redundancy process to ensure fairness and compliance with relevant laws.
  5. Seek legal advice if unsure about any aspect of the redundancy process.

By following these steps and ensuring fairness throughout the redundancy process, employers can minimize the risk of legal issues and disputes. It also helps to maintain good relationships with employees and protects the reputation of the business.

Author: Small Business Network Australia (Suggested citation: Small Business Network Australia, “Selection Criteria and Fairness”, [Online]. Available:

🔔 The Redundancy Meeting and Notice Period

Once you have determined that redundancy is the best option for your business, the next step is to inform the employee and go through the redundancy process. The redundancy meeting and notice period are crucial parts of this process.

The Redundancy Meeting

The redundancy meeting is an essential step in ensuring that the employee understands the reasons behind their redundancy and the process that will be followed. Here are some key points to keep in mind during the meeting:

  • Provide a clear explanation of why the redundancy is necessary and avoid using legal jargon that the employee may not understand.
  • Reiterate that the employee’s redundancy is not a reflection of their performance or skills, but rather a business decision.
  • Explain the selection process that was used to determine who would be made redundant, such as a skills matrix or a fair and reasonable selection criteria.
  • Ensure that the employee has an opportunity to ask questions and raise any concerns they may have.

Notice Period

After the redundancy meeting, the employee will enter into their notice period. The length of the notice period is usually based on the employee’s length of service. In Australia, for example, the notice period is:

  • 4 weeks if the employee has been employed for less than 1 year
  • 3 months if the employee has been employed for 1 year or more

During the notice period, the employee should be provided with any necessary information to help them during their transition out of the company. This may include a formal redundancy letter, information about their entitlements, and support in finding new employment.

It’s important for employers to remember their legal obligations during the redundancy process. This includes providing the employee with any outstanding entitlements, such as accrued annual leave or redundancy pay, and ensuring that the process is conducted in a fair and reasonable manner.

While the redundancy process can be difficult for both the employer and the employee, it’s important to approach it with empathy and understanding. Providing support and guidance through the process can help to alleviate some of the stress and uncertainty that comes with being made redundant.

🔔 Supporting Employees through Redundancy

When determining whether an employee is at risk of redundancy, it is important to support them throughout the process. Redundancies can be a difficult and stressful time for employees, so providing guidance and assistance can make a big difference.

Step-by-Step Guide

Here are 4 steps that employers can take to support employees through the redundancy process:

  1. Maintain open communication: Keep employees informed about the decision-making process and the reasons behind it. Transparency is key to building trust and ensuring that employees feel valued and involved.
  2. Offer support services: Provide information and resources to help employees navigate through the redundancy process. This can include counseling services, career coaching, and job search assistance.
  3. Encourage employee consultations: Give employees the opportunity to ask questions and express concerns during the redundancy consultation process. Actively listen and provide honest and clear answers to alleviate any uncertainties they may have.
  4. Provide legal information: Make sure employees are aware of their rights and obligations during the redundancy process. This can include information about redundancy pay, entitlements, and other legal requirements.

The Importance of Support

Supporting employees through redundancy is important for several reasons:

  • It shows empathy and compassion towards employees who may be facing a difficult time in their lives.
  • It helps maintain the morale and motivation of remaining team members who may be concerned about their own positions.
  • It demonstrates the employer’s commitment to acting in a fair and responsible manner.
  • It can help protect the employer from potential legal actions by ensuring that proper procedures are followed and obligations are met.

Providing support during redundancy may save businesses time and money in the long run by minimizing the need for legal intervention or by helping employees transition into new roles more smoothly.

Examples of support services that businesses can offer include:

  • Assistance with updating resumes and applying for new positions.
  • Training opportunities to enhance employees’ skills and increase their chances of finding new employment.
  • Help with networking and connecting employees with potential job opportunities.
  • Access to relevant information and resources, such as job search websites and industry-specific forums.

Remember, supporting employees through redundancy is not only the right thing to do, but it can also benefit the business in the long term.

About BforB

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