MAKE YOUR FREE Redundancy Policy
What we'll cover
What is a Redundancy Policy?
When should I use a Redundancy Policy?
Use this Redundancy Policy template to:
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help those within your organisation responsible for making redundancies (eg managers) to communicate clearly with employees affected by proposed redundancies
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ensure that employees are treated fairly, reasonably, and without discrimination throughout the process
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help your organisation consider how to avoid compulsory redundancies
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remind managers of their consultation obligations
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communicate to employees their rights and the fair processes you’ll follow if redundancies are being considered
Sample Redundancy Policy
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REDUNDANCY POLICY
Purpose and Scope of This Policy
- (the Employer) is committed to retaining its staff where possible and will always try to avoid compulsory redundancies, but sometimes they may be necessary, for example when the pattern, volume or methods of working change meaning requirements for employees may reduce.
- The purpose of this Policy is to ensure that, whenever reduction in employee numbers may become necessary:
- the Employer keeps all affected employees clearly informed and ensures that they are treated fairly, reasonably and without discrimination throughout the redundancy process;
- the Employer tries to find ways of avoiding compulsory redundancies;
- the Employer consults with employees; and
- any selection for compulsory redundancy is undertaken fairly, reasonably and without discrimination.
- This Policy will be reviewed from time to time so that it reflects the Employer's legal obligations and its business needs.
- This Policy applies to all employees but does not form part of any employee's contract of employment and may be changed by the Employer at any time. This Policy does not apply to agency workers, consultants or self-employed contractors.
Avoiding Compulsory Redundancies
- Where there is a possibility that redundancies will be made, the Employer will consult with all affected employees individually. Firstly, the Employer will look at steps that may be taken to avoid compulsory redundancies, such as:
- whether agency staff, self-employed contractors and consultants can be used less;
- restricting recruitment in areas where affected employees might be redeployed;
- reducing overtime in affected areas, to levels needed to meet contractual commitments or critical business demands;
- freezing salaries until redundancies and restriction on recruitment are no longer issues;
- possible short-time working, job-sharing or other flexible working arrangements;
- searching for suitable alternative work that might be offered to potentially redundant employees; and/or
- asking for applications to retire early or volunteer for redundancy. In all cases, the acceptance of a volunteer for redundancy will be a matter of the Employer's discretion and it reserves the right not to offer voluntary redundancy terms or to refuse an application.
- Any measures adopted must not negatively affect the Employer's business and its ability to serve its customers.
Making Compulsory Redundancies
- When it is not possible to avoid making compulsory redundancies, the Employer will meet with all affected employees to advise of the reasons for this and the number of jobs at risk of redundancy.
- The Employer will consult, advise of the measures being looked at to avoid or reduce the number of redundancies and may ask employees for suggestions.
- The Employer will consult on the procedure that will be followed and the pools for redundancy (if relevant) and selection criteria that will be applied and will confirm this to the affected employees in writing.
Compulsory Redundancy Procedure
- The Employer will not discriminate directly or indirectly on grounds of gender, sexual orientation, marital or civil partner status, gender reassignment, race, colour, nationality, ethnic or national origin, religion or belief, disability or age. Part-time employees and those working under fixed-term contracts will not be treated differently to permanent employees in the same role.
- Where selection of employees for redundancy is necessary, the criteria used to select those employees who will potentially be made redundant will be objective, transparent and fair and based on the skills required to meet the Employer's existing and anticipated business needs.
- Where there is more than one employee in the selection pool, each potentially redundant employee will be scored against the criteria and those provisionally selected based on their score will be informed in writing of this.
- Each potentially redundant employee will be invited to a meeting to discuss their provisional selection for redundancy, where they will be individually consulted. No final decisions about redundancies or the exact employees to be made redundant will be made at this stage.
- Employees are allowed to attend individual redundancy consultation meetings with a trade union representative or colleague and will have a reasonable time to prepare before the meeting. At the meeting each employee will individually discuss their scores (if any), the proposal to select them for redundancy and the terms of the redundancy and employees will have the chance to make comments about their scores (if any) for the Employer to consider. If there are other relevant available roles, these may also be discussed at the meeting.
- Where selection for redundancy is confirmed by the decision maker, employees selected for redundancy will be invited to a further meeting and can attend with a trade union representative or a colleague. At this meeting, it will be confirmed that the employee has been selected for redundancy and after this meeting the employee will be given notice of termination of employment in line with their contract and written confirmation of the payments that they will receive. Employees will be given the opportunity to appeal against this decision and will be advised of how to do so, when their redundancy is confirmed in writing.
- If an employee chooses to appeal, they will be invited to an appeal hearing, usually held by someone senior to the person who held the previous meeting(s). If only one person is handling the redundancy process, that person will be as impartial as possible during the appeal meeting. The employee will again have the right to be accompanied by a trade union representative or work colleague and following the meeting the result will be confirmed to the employee in writing and that will be the final decision on the matter.
- The Employer will continue to look for alternative employment for redundant employees until their termination dates. Alternative employment may be offered for a trial period, at the Employer's discretion.
- Where the Employer is unable to offer alternative employment, employees under notice of redundancy may be entitled to take a reasonable amount of paid time off work to look for alternative employment or to arrange training for future employment.
Data Protection
- The Employer processes personal data collected when managing redundancy in accordance with its Data Protection Policy.
- In particular, data collected as part of the redundancy procedure is held securely and accessed by, and disclosed to, individuals only for the purposes of managing redundancy, conducting redundancy consultations and selecting employees for redundancy.
- Inappropriate access or disclosure of employee data constitutes a data breach and should be reported in accordance with the Employer's Data Protection Policy immediately. It may also constitute a disciplinary offence, which will be dealt with under the Employer's Disciplinary Procedure.
About Redundancy Policies
Learn more about making your Redundancy Policy
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How to make a Redundancy Policy
Making your Redundancy Policy online is a quick and easy process. Just answer our questions and Rocket Lawyer will build your document for you.
To make your Redundancy Policy, all you will need is your organisation’s (ie the employer’s) name.
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Common terms in a Redundancy Policy
Redundancy Policies are an important way of communicating employees’ and employers’ rights related to redundancy. They also demonstrate that there’s a clear and fair procedure you’ll follow if you need to make any redundancies. To achieve this, this template includes sections covering:
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purpose and scope of the policy - this section explains why the Redundancy Policy is important and overviews the employer’s commitment to treating employees fairly and to following appropriate processes should redundancies need to be made. It also explains that, as an employment policy only, this document doesn’t form part of employees’ employment contracts and the employer may amend it as required
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avoiding compulsory redundancies - this section sets out the employer’s commitment to avoiding redundancies wherever possible and explains measures that may be taken to do this (eg stopping use of agency staff or promoting flexible or short-time working). This section also includes the employer’s commitment to having consultations with staff when redundancies are being considered
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making compulsory redundancies - this section elaborates on the employer’s commitment to consult with staff about redundancies. It explains the measures that may be taken to reduce redundancies, the selection criteria to be used to pool and select employees for redundancy, and how the employer will communicate with staff about the redundancies
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compulsory redundancy procedure - this section covers the employer’s commitments that will help them to make any redundancies by following a fair procedure. It covers how the employer will avoid discrimination in the redundancy process (eg against part-time workers or based on any of the Equality Act 2010 protected characteristics). It also explains:
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that employees will usually be invited to at least 2 consultations (ie meetings)
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that employees have the opportunity to be accompanied to their meetings by a trade union representative or a colleague
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the employee’s right to time off to look for alternative work
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the employee’s right to appeal a redundancy
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data protection - this section sets out the employer’s commitment to complying with data protection laws when undertaking any redundancy processes. For more information, read Data protection
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Legal tips for employers
Make sure you follow the law on redundancy
This Redundancy Policy sets out how an employer should act when considering and carrying out redundancies in order to comply with employment law. To comply, you must make sure you and others responsible for making redundancies within your organisation actually follow these procedures and uphold the rights described in the FAQs above. Remember that you can make use of our Redundancy advice service if you need any help.
Make sure you follow the statutory consultation obligations if necessary
In certain circumstances, employers are legally required to follow a more defined process when making redundancies, primarily by carrying out a ‘collective redundancy consultation’. This is necessary when an employer intends to make 20 or more employees redundant within any 90-day period. It may also be required as part of the fair procedure if a collective agreement with a recognised trade union or a works council agreement is in place. The statutory consultation obligations include requirements that, in addition to upholding regular redundancy rights, employers:
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consult with appropriate representatives (eg trade union representatives)
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provide certain information to appropriate representatives, and
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notify the Department for Business, Energy and Industrial Strategy (BEIS) of the redundancies
For more information, read the Government’s guidance. However, following the collective consultation rules can be difficult. You can use our Redundancy advice service to help you through the process.
Understand when to seek advice from a lawyer
If you’re unsure about how to understand and follow your Redundancy Policy, it’s a good idea to Ask a lawyer for assistance. Also consider asking for advice if:
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you’re considering redundancies for employees based outside of England, Wales, and Scotland
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you’re considering making 20 or more employees redundant within a 90-day period (ie if the collective consultation rules may apply)
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you’re unsure whether somebody who works for you has legal employee status
You can also use our Redundancy advice service if you’d like guidance and support through the redundancy process.
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Redundancy Policy FAQs
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What's included in a Redundancy Policy?
This Redundancy Policy template covers:
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the purpose of the Redundancy Policy
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consultation obligations and how the employer will meet them
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the selection criteria and processes that should be used when considering redundancies
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alternative options to redundancy and how attempts will be made to avoid making redundancies
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how dismissals by reason of redundancy will ultimately be made and employees’ right to appeal
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data protection considerations during a redundancy process
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Do I need a Redundancy Policy?
There is no general legal requirement for employers to have a Redundancy Policy in place. However, it’s good practice for employers to adopt Redundancy Policies to help them deal fairly with any redundancy processes that they go through. This is essential for demonstrating respect for staff and for helping the employer to avoid any claims for unfair dismissal following poorly managed redundancies.
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What is redundancy?
Redundancy is a type of dismissal by which an employee is dismissed because they’re no longer needed. This may be because, for example:
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their role has become obsolete
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fewer people are now needed to perform their role
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the organisation they work for or part of their organisation is closing or moving locations
Redundancy can either be compulsory or voluntary.
What is compulsory redundancy?
Compulsory redundancy occurs when an employer makes a final decision on who is being made redundant. Compulsory redundancies do, however, require the employer to interact with the employee before making the final decision.
What is voluntary redundancy?
Voluntary redundancy is when an employer asks if any of their employees would like to offer to be made redundant. Employees may take any offers into account when making redundancy decisions. However, they must still consider the whole pool of candidates for redundancy fairly and make the final decision themselves (eg based on business needs and employees’ skills rather than only who volunteered).
For more information, read Redundancy.
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Who should a Redundancy Policy apply to?
A Redundancy Policy should only apply to employees who have employee status (ie they’re employed under an Employment contract). This Policy does not apply to contractors or workers (ie people who work for you without employee status). For more information, read Consultants, workers and employees.
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What process should I follow to make someone redundant?
Employers must follow a fair procedure when making someone redundant, else any redundancies they make will very likely be found to constitute unfair dismissal if challenged (for which the employer may have to pay compensation).
What constitutes fair procedure depends on whether you have to follow the ‘collective consultation’ rules or not. The collective consultation rules usually only apply when you’re making 20 or more people redundant within 90 days. If the rules apply, a more comprehensive process must be followed. In this situation, you can Ask a lawyer for assistance or use our Redundancy advice service.
If you don’t have to follow the collective consultation rules, there’s more flexibility regarding the process you should follow. What’s considered fair will depend on your circumstances (eg how many employees you have and the reason why redundancies are being made).
This Redundancy Policy sets out a general approach to the key steps that should be followed during an average redundancy process. When considering staff for redundancy, an example of a fair process to follow is:
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consider alternative employment solutions - managers should always consider alternative options to reduce or prevent redundancies (eg by encouraging moves to part-time or flexible working, discouraging overtime, or offering staff alternative roles in the business)
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initial consultation - employees must be consulted during the redundancy process, although to what extent depends on context. It’s good practice to hold a meeting about potential redundancies early on. Employees should be encouraged to ask questions during this meeting and afterwards (ie during an ongoing period of consultation)
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staff information - all potentially affected staff must be informed that they are at risk of redundancy. It's good practice to communicate this with information about alternative options and with information about individual consultations. You can use an At risk of redundancy letter to communicate this
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employee consultation - each employee who is at risk of redundancy should be invited to an individual consultation meeting where potential redundancy, your redundancy selection process, the employee’s scores against the selection criteria, and any alternative employment options will be discussed. You can use a Redundancy consultation letter to invite employees to a consultation
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staff selection - a key part of following a fair process is carefully and fairly selecting which staff are at risk of redundancy (ie pooling) and which will be made redundant (ie selection). You must take care not to discriminate during this process. For more information, read Redundancy pooling and selection
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redundancy notice - you should inform selected employees in writing that they will be made redundant. You must ensure employees are aware of their right to appeal your decision. You can use a Dismissal for redundancy letter for this purpose
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appeal - make sure you run the appeal process fairly if an employee appeals their redundancy. You can make an Invitation to a redundancy appeal meeting letter to begin the process. For more information, read Appealing decisions made by employers
For more information, read How to make someone redundant in a small business.
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What redundancy rights do employees have?
Employees being made redundant are usually entitled to certain rights. These include rights to:
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receive a statutory redundancy payment (SRP)
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have been made redundant following a fair process (including fair pooling, consultation, and selection). For more information, read the FAQ ‘What process should I follow when making someone redundant?’
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take paid time off work to look for other employment or to make arrangements for work-related training
The rights to a statutory redundancy payment and to take time off work to look for alternative employment are usually available to employees who have worked for their employer for a continuous 2-year period.
What is a redundancy payment?
A statutory redundancy payment is a payment made by an employer to an employee they’re making redundant. It’s intended as compensation for the employee losing their job. Employees who are made redundant may be entitled to a statutory redundancy payment if they’re made redundant after having been employed by the employer continuously for 2 years.
The amount an employee may receive is calculated with reference to their age, length of service with the employer, and pay. For more information, read Redundancy.
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Is this Redundancy Policy template appropriate for small and large businesses?
This Redundancy Policy is adapted to both small and large businesses, as long as you’re not likely to make 20 or more employees redundant within any 90-day period.
However, redundancy pooling and selection may not be relevant in small and micro businesses as employees often perform their roles individually, so there is no requirement to select between employees performing similar roles.
For more information on small-scale redundancies, read How to make someone redundant in a small business.
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