Redundancy is often viewed as a business decision. A reduction in work, a restructure, a need to reduce costs. Simple enough?
The reality is that most redundancy challenges don’t arise because there wasn’t a genuine business reason for reducing headcount. They arise because of issues in the process.
A rushed consultation. A poorly chosen selection pool. A failure to properly consider alternative roles. A decision that was effectively made before consultation even began. And the Employment Rights Act (ERA) is only increasing the cost of getting redundancy wrong.
To kick off our latest blog series, here are 10 of the biggest redundancy mistakes we see employers make, and what HR teams and business leaders should be doing to avoid them.
1. Using redundancy to solve the wrong problem
Redundancy should be about the role, not the person doing it. One of the most common mistakes employers make is using a redundancy process to address concerns that are really about performance, conduct, attendance or another employee issue.
If the work still exists and the real concern is the individual carrying it out, redundancy is unlikely to be the right route.
What to do – Make sure your business case focuses on the reduction or change in work, not concerns about a particular employee.
2. Deciding the outcome before consultation starts
Employees should be placed “at risk” of redundancy. They should not be told, either directly or indirectly, that redundancy is inevitable. Tribunals will be quick to criticise employers who appear to have made their minds up before consultation begins.
Consultation is supposed to be a genuine opportunity for employees to influence the outcome.
What to do – Keep an open mind throughout the process and be prepared to properly consider feedback, alternatives and challenges.
3. Choosing the wrong selection pool
Before deciding who may be redundant, employers need to identify who should be included in the selection exercise. A selection pool that appears engineered to target a particular employee can quickly undermine an otherwise reasonable process.
Employers should consider who performs similar work, whose duties overlap and whether a wider pool may be appropriate.
What to do – Document your reasoning and be prepared to back up why the chosen pool is fair.
4. Using selection criteria that won’t stand up to scrutiny
Selection criteria are often at the heart of redundancy issues. Criteria such as skills, qualifications, experience and performance can be perfectly legitimate. Criteria such as “attitude”, “fit”, “potential” or “commitment” are often much harder to justify.
Even where the criteria themselves are reasonable, employers still need to be able to explain how scores were reached.
What to do – Use objective, evidence-based criteria wherever possible and ensure managers can support scores with records, data or specific examples.
5. Not spotting discrimination risks
A redundancy process can be fair in principle but discriminatory in practice. Attendance criteria may disadvantage disabled employees. Flexibility requirements may affect employees with caring responsibilities. Performance measures may need adjusting where employees have been absent due to pregnancy, maternity leave or disability-related sickness.
These issues are often overlooked until it is too late.
What to do – Review your criteria for potential discrimination risks before scoring begins and again once provisional scores are available.
6. Treating consultation as a tick-box exercise
Consultation is often where redundancy processes succeed or fail. Many employers focus on explaining what is happening rather than consulting on whether it should happen and how it should be implemented.
Meaningful consultation should cover the business rationale, selection pool, criteria, provisional scores, alternatives to redundancy and any other relevant concerns raised by employees.
What to do – Give employees enough information to understand the proposal and a genuine opportunity to respond before decisions are made.
7. Getting collective obligations wrong
Collective consultation remains one of the most significant redundancy risks for employers. The obligations can arise where 20 or more redundancies are proposed within a 90-day period and involve specific consultation requirements and notification obligations. The ERA also proposes to adjust the trigger for collective consultation so that it’s assessed across the organisation, not only ‘at one site’.
Employers should also remember that collective consultation does not replace individual consultation.
From January 2025, the maximum compensation award for failure to collectively consult doubled from 90 to 180 days’ pay per affected employee, along with a further 25% uplift applicable for failing to comply with the statutory Code of Practice. This is a total potential exposure of up to 225 days’ pay per affected employee for getting this wrong. Significant.
What to do – Assess redundancy numbers early, keep them under review and seek advice if there is any doubt about collective consultation obligations.
8. Failing to properly explore alternative employment
Many employers identify a redundancy situation and immediately focus on dismissal. That can be a mistake.
Redeployment, retraining, relocation, reduced hours and other alternatives should all be considered before a final decision is made. Simply directing employees to an internal vacancies page is unlikely to be enough.
What to do – Take an active role in identifying suitable vacancies and discussing realistic alternatives throughout consultation and notice.
9. Forgetting employees with enhanced redundancy protection
Employees connected with pregnancy, maternity leave, adoption leave and shared parental leave may benefit from enhanced protection in a redundancy situation. Where a suitable alternative vacancy exists, they may have priority over other employees.
This is an area where employers can easily find themselves exposed to claims if they fail to identify protected employees early enough.
What to do – Review family leave protections at the start of the process and assess alternative vacancies carefully before dismissal decisions are made.
10. Assuming a redundancy process is low risk
Some employers still view redundancy as a relatively low-risk form of dismissal. That assumption is becoming increasingly precarious. Issues such as TUPE, collective consultation, discrimination risks, family leave protections, redundancy payments and upcoming Employment Rights Act reforms mean redundancy exercises are becoming more heavily scrutinised than ever.
A process that appears straightforward at first glance can quickly become complicated.
What to do – Plan early, document decision-making carefully and seek advice before small issues develop into expensive disputes.
How can we help?
Whether you’re managing an individual redundancy process or a larger collective exercise, we can help you reduce risk and navigate the process with confidence. We can support with:
- Individual redundancies – access to documentation, templates and unlimited employment law advice through our Intelligent Employment service.
- Collective redundancies – end-to-end legal support, including access to our Collective Consultation Toolkit and expert guidance throughout the process.
- Outplacement – through Working Transitions, part of the Empowering People Group, helping employees navigate redundancy and career transitions through one-to-one coaching, group coaching and virtual workshops.
Whether you need practical documentation, legal advice or support for affected employees, Halborns and the wider Empowering People Group are here to help.
The first in our latest redundancy series
Redundancy is one of the most challenging processes employers and HR teams have to manage, and many of the risks only become apparent once the process is underway.
Over the coming weeks, we’ll be taking a closer look at some of the biggest danger areas for employers, including consultation, selection pools and scoring, suitable alternative employment, and the impact of recent ERA changes on redundancy exercises.
If you’d like to discuss a current redundancy situation in the meantime, get in touch.
This update is accurate on the date it was published but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.
