Redundancies are an unpleasant experience for everyone involved. However, they're often a necessary part of building and running a successful business.

Whether it’s an economic slump, the loss of a major client or a change in operational direction, redundancies can come suddenly.

Spencer Fearn had been running learning provider LifeSkills for eight years when he realised it needed to change direction.

“The business was turning into something I wasn’t comfortable with. I’d be dealing with major corporations, and could see how enormous and completely disorganised they were. I just thought: I don’t want that for LifeSkills,” he said.

The alternative – focusing on the quality of provision, not the quantity – meant making half of the company’s 150 staff redundant. It was a difficult process for everyone involved, but ultimately the decision has paid off.

Ofsted has commended LifeSkills for its “outstanding” care and support, and the company has become a fixture on The Times’ list of best small companies to work for.

We look at some of the reasons you might need to make a member of staff redundant and the steps you can take to make the process as smooth as possible.

Redundancies are hard because they often feel personal. The most important thing to remember is that you make positions redundant, not people.

Here are some of the most common reasons for redundancy:

• Your business is pivoting and focusing on a different area
• Your business is undergoing a restructure and changing how it works
• The amount of work required in a role has decreased (perhaps as a result of improved efficiency or automation)
• Your business is changing location or closing down a branch

It’s vital to have a clear reason for making a member of staff redundant. If you haven’t properly thought it through or you’re rushing the process, you risk an employment tribunal.

Some selection criteria for redundancies is deemed automatically unfair. Make sure the employee hasn’t been selected for redundancy for any of these reasons:

• Pregnancy or reasons related to maternity leave
• Family, including parental or adoption leave
• Acting as an employee or trade union representative
• Age, race, disability, religion or sexual orientation
• Pay and working hours

If you’re worried about breaking the bad news to your employee, having a redundancy plan in place allows you to approach the process professionally.

Consultancy meetings can be emotionally fraught – clearly outlining essential information and your next steps will help to keep you on track.

Step one: Inform your employee

The first step is to let your employee know what’s going on in a private meeting. Tell them why the position is being made redundant and what steps they can expect next.

Be compassionate

If you don’t break the redundancy news in a compassionate way, you’ll make the conversation harder and your work environment even more tense.

Keep your language focused on the role, rather than the person. For example, explain that “the role has been made redundant” rather than “you have been made redundant”. This can lessen the feeling of personal rejection for staff.

Reinforce that it’s a business decision

Be open and honest about why the redundancy is happening. It can be hard to talk about challenges you’re experiencing as a leader, but being specific will reinforce that it’s a decision you have to make for the business.

The worst thing you can do? Leave an employee feeling confused about why they were made redundant.

Make your employee feel valued

One of the most difficult aspects of being made redundant is the feeling that your hard work has gone to waste. Staff want to feel valued and like they make a difference at a company.

Acknowledge your employee’s achievements and thank them for their contribution. By reminding them of everything they’ve accomplished, you’ll demonstrate that they’ve been an integral part of your company and that they have the talent to excel elsewhere.

Step two: Offer a suitable alternative job

If you have a position opening up that’s similar to your employee’s current role, it’s important to offer the job to them during the redundancy process.

For example, if they worked as a writer and there’s an editorial job opening up in a different department, you should let them know. The redundancy can count as unfair dismissal if you have suitable alternative employment and you don’t offer it to your employee.

Whether a job is suitable depends on how similar the work is to the employee’s current job. Think about:

• The skills and abilities required
• The working conditions, hours and location
• The pay and benefits

Your employee can still turn the job down if there’s an aspect of it that’s substantially different to their existing job. For example, if your main office is based in Sheffield and the new job would require a commute to Manchester.

Step three: Give notice and agree on a leaving date

If there isn’t a suitable alternative job for your employee, you’ll need to tell them what to expect next. Clearly explain their notice period and redundancy pay and agree on a leaving date.

Issuing a notice period

The statutory minimum notice period is dependent on how long your employee has been with the company.

• Between one month and two years: at least one week’s notice
• Between two years and 12: one week’s notice for each year they were employed
• For 12 years or more: 12 weeks’ notice

You can give more than the statutory minimum but you can’t give less.

Redundancy pay

If your employee has worked for you for more than two years, they will normally be entitled to statutory redundancy pay too. That means:

• Half a week’s pay for each full year they were under the age of 22
• One week’s pay for each full year they were aged 22-40
• One and a half week’s pay for each full year they were 41 or older

The length of service is capped at 20 years.

Step four: Provide extra support

To ease your employee’s transition from the company, offer additional support to end the relationship on a more positive note. For example:

• Give your employee time off to attend interviews
• Talk to your contacts to find out if they have any vacancies
• Offer to write references for your employee

These little steps will impact how your business is perceived externally too. When your employee talks about their redundancy to future employers and colleagues, there’s a world of difference between these two attitudes:

1. “I was made redundant. The whole process was badly managed, so I wouldn’t recommend working there.”
2. “I was made redundant. It was difficult at the time but they were really helpful about it.”

Step five: Talk to the rest of the business

A redundancy doesn’t just affect the employee who’s leaving. It can create a tense, uncertain atmosphere across the rest of the business. If you aren’t quick to quash doubts, many of your staff members will start looking for other jobs.

Be open about what’s happened and where the business is going next. Communicate with staff more regularly than you normally would – if there’s an information vacuum, rumours will start to surface.

After redundancies, your employees want to be reassured that their jobs are safe and given reasons to stay with your business. Celebrate progress and look for small ways to reward your employees’ hard work – surprise them with cake one morning or let people leave early on a Friday.

Encourage managers to schedule in one-to-ones too, giving employees a chance to talk through any concerns they have.

This is particularly important for teams who worked closely with your exiting employee. It’s common for people to feel guilty that they were ‘chosen’ to stay over someone else.

Making a member of staff redundant is always tough. However, with a proper redundancy plan and thoughtful communication, you help to give your employee the best possible transition to their next role.