How to make redundancies

Even though it is one of the least pleasant side effects of a downturn, sometimes businesses are forced to lay off staff in order to survive. If you're unfamiliar with the process, redundancy can be a legal minefield, so you need to make sure you stay on the right side of the law. This guide will provide you with an introduction to making redundancies during a downturn.

  • Selecting employees to make redundant
  • Conditions of redundancy
  • Redundancy programmes

Selecting employees to make redundant

One of the first ways of deciding on the pool of employees you will put forward for redundancy is to look at their skills - do you have too many people with a certain qualification? It's important to create a balanced workforce. Next, use appraisals to look at their performance - but remember, you will need to provide objective supporting evidence if you choose this method.

  • Create a pool of employees who could be candidates for redundancy
  • Look at skills to create a balanced workforce
  • Use appraisals to measure performance

Conditions of redundancy

According to the law, you can't just cut back on employees - they need to be given a valid reason as to why you are making cutback. This could be because their place of work closes, or because their position becomes nullified by, for example, technology.

  • Employees need to be given a valid reason for redundancy
  • You may choose to close their place of work
  • They position may no longer be viable

Redundancy payouts

In many cases, employees who have been made redundant have the right to receive a statutory redundancy payment (SRP). To receive an SRP, the worker must have been at the company for at least two years. The SRP is then calculated by looking at the employee's age, the amount of time they have worked for you, and their weekly pay. The maximum SRP is £9,900.

  • Some employees have a right to receive SRP
  • The worker must have been at the company for two years
  • Calculate the SRP by looking at the employee's age, weekly pay, and the amount of time they have worked for you

Smarta Business Builder

To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website BuilderBusiness PlansAccounting SoftwareLegal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.

We use cookies to create the most secure and effective website possible for our customers. Full details can be found here