Redundancy policy

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What's a redundancy policy, and when do you need it?

You should have a redundancy policy in place for your employees. It only applies to your employees, not any other form of worker.

Before you make the decision to start a redundancy process in your business, it’s important to double check that you’ve considered all other options first. For example, layoffs and short-time working may be a better solution for temporary work shortages. However, if none of the alternative options would work for you, it is likely that you will wish to consider redundancy.

Redundancy is a very process-driven exercise and it’s important to ensure that you take the essential steps at the right time, with the right people and using the most appropriate communications and choice of wording.

If an employee hasn’t yet worked for you for at least 2 years, you don’t need to go through the full redundancy process. Instead, you can potentially follow a procedure for short-service dismissal. Take a look at our guide to dismissing staff to find out how to do so fairly.

If an employee has been working with you for at least 2 years, you’ve already ruled out other solutions, and you have valid reasons for making redundancies, then This template policy sets out the procedures that you will need to apply. You will be expected to follow these properly, to ensure that you do not find yourself facing well-grounded employee complaints.

If you’re making more than 20 employees redundant, you’ll also need to go through an additional process called collective consultation. This is where staff are given 1–2 weeks to elect representatives to consult on their behalf. If your staff have a trade union representative (take a look at our guide to trade unions for more information on this), you’ll need send to the trade union written information (in form HR1) about the situation, and be prepared to work with them before starting the collective consultation process.

Our experts recommend that you do not give this policy contractual status in any employment contract that you put in place, but that you do reference it in that contract, and that you make clear that the employee is expected to comply with the policy and that you have the right to update or revise it, in your discretion and when you want to.

This template includes all the statutory requirements, as well as any optional elements for you to consider.