First published on Wednesday, July 14, 2021
Last updated on Friday, June 7, 2024
As an employer, you’ll have to make tough decisions from time to time. One of the hardest of those decisions is making redundancies.
There’s a lot to keep in mind when making redundancies. It’s vital that you understand the law and follow a proper redundancy process — or you risk facing unfair dismissal claims and employment tribunals.
Part of that process means issuing redundancy letters to your staff.
In this guide, we’ll explain the different letters you need to provide for compulsory and voluntary redundancies and how to write a clear notice of redundancy letter.
The UK employment law says you must keep employees informed using redundancy letters.
You must do this at each stage of the redundancy process, issuing a:
Your process may differ slightly, but you must complete these stages. You may need to issue additional letters, such as a second consultation letter.
Your confirmation of redundancy letter can also differ depending on if it’s a compulsory or voluntary redundancy.
There’s a lot to consider when writing a notice of redundancy letter. Your letter should:
Ensure you have all the details about the next stage before you send a letter to an employee. For example, know how long your consultation process will take before inviting staff for meetings.
Your final redundancy letter should:
We’ve gone into more detail on each of these steps below.
The introduction to your redundancy letter should provide a clear summary of the outcome. In this case, letting the employee know that they have been chosen for redundancy. This should be clearly written to avoid any doubt.
For compulsory redundancies, you must have a fair reason for making an employee redundant.
You should have already confirmed the criteria you’re using for selection in the consultation letter.
You’re not required to include the reasons in your final redundancy letter. But including this provides evidence that you had a fair reason for your decision and can prevent unfair dismissal claims.
Your letter should confirm what happens now that employees have been selected for redundancy.
This means confirming the final date of employment following the notice period or details of pay in lieu of notice (PILON).
You should also cover statutory redundancy pay, and any other details regarding pay or benefits here, such as how unused annual leave will be handled.
Redundancy should be a last resort. You’re required to consider whether there are any alternative roles an employee could do before you make someone redundant.
You should list possible suitable alternative employment in your redundancy letter, or state that you have reviewed alternatives and there aren’t any that would be suitable.
Your redundancy process must include looking for other suitable work. Providing evidence you have done this in your letter to employees will help to prevent unfair dismissal claims.
Before you sign off, you should include details of the employee’s right to appeal.
There’s no specific statutory right to appeal a redundancy. However, employees have a statutory right to appeal against all disciplinary and grievance decisions that they consider wrong or unfair.
You should inform employees of their rights and the time period for taking action — usually up to five working days from the decision.
The letter format above is for compulsory redundancy only. A letter for voluntary redundancy is very different.
Voluntary redundancy is where you inform staff that redundancies are required and offer an enhanced redundancy package for anyone that agrees to accept.
This allows you to cut costs, make sure staff leave on good terms and reduce the risk of discrimination claims.
When offering voluntary redundancy, you should provide a letter to staff informing them of the situation.
This letter should outline:
Even though your employees are volunteering, you need to make sure that you follow a fair dismissal process.
You should provide a second letter to confirm the details to any individual that accepts your offer.
Making redundancies is hard. It can strain your relationship with good employees, and even have a negative impact on those that aren’t leaving.
There are lots of rules you need to follow when making redundancies. And getting them wrong can make an already difficult situation much more stressful.
Use BrightHR’s redundancy navigator tool to lead you through each step of the redundancy process. And access redundancy letter templates to free up time and make sure you don’t forget any vital information.
Book in a free demo today to see just how easy it is to manage HR with our app. Give us a call on 0800 783 2806.
