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- Making someone redundant means their role no longer exists in the company.
- Reasons to make a role redundant include a change in the business that means the position is no longer needed (e.g. new tech), specific tasks are taken on by other team members, part or all of the business stops operating, or the business relocates.
- Meetings about redundancy need to be handled with care and compassion — think about where and when to meet, get your facts straight, avoid small talk, and be as direct as possible.
- Offering mental health support can be a powerful way to help redundant and remaining employees navigate the process, as well as the managers who have to break the news.
- Common mistakes that small businesses make when it comes to redundancy include making redunancies instead of firing someone, making redundancies instead of trying to avoid them (it should always be a last resort), and hiring new employees straight away.
Making someone redundant is arguably one of the hardest things you’ll ever have to do. And, it's vital that you manage it well — for the sake of those leaving and those staying behind.
While there’s no way to make redundancy a joyful occasion, there are things you can do to provide the support your team members deserve. Here at Spill, we have our own experience of redundancies and with it, some lessons we’d like to share. But first, let’s look at what redundancy means…
What is redundancy?
Redundancy happens when there’s no longer a business need for a particular role. Unlike firing someone, which means that their behaviour or performance has led them to be dismissed, making someone redundant simply means their role no longer exists in the company.
Making someone redundant means their role no longer exists in the company.
It’s important that the decision to let someone go is purely business-related. Any feelings about performance, company loyalty or character should be kept separate from the process.
Examples of redundancy in a small business
It can be hard to imagine at what point redundancies are necessary, especially in a small business where every employee is deeply invested in the company’s success. Here a few example reasons why you can make someone redundant in a small company:
A change in the business means the position is no longer needed. For example, new technology like an automated chat bot may have considerably reduced the number of queries coming in and as a result, you’re reducing the size of your customer service team. Note that you can’t make someone redundant if new technology simply means that the same job will be done differently.
Specific tasks of the role are taken on by other team members. Combining, for example, marketing activities might mean you no longer need a dedicated social media manager.
Part (or all) of the business has stopped operating. If your business has gone insolvent, when redundancies are made and employees get their redundancy payments through the sale of assets.
The business is relocating. Say you shift focus and decide to target sales in Edinburgh rather than Cardiff. You Cardiff-based sales team is no longer needed, so their roles are made redundant. The existing team can either choose to relocate or you will have to hire new staff for the Edinburgh-based sales team.
These are just a handful of examples: there are many layers of complexity when it comes to making redundancies, which is why it's important to get legal advice and follow the guidance closely. Citizens Advice offers a useful resource about unfair reasons for being made redundant.
Managing staff redundancies
There’s already plenty of advice available to help you make redundancies responsibly, so we won’t go into too much detail here. But legally, the process will involve:
- sharing your plans to make redundancies with all staff (including anyone on holiday or sick or parental leave)
- writing to anyone whose role is at risk
- holding a meaningful consultation with those people before you even make a decision about which jobs are being let go
Keep in mind that you only need an official redundancy process if the people you’re letting go have been with you for at least two years. If someone you’re making redundant has been at the company for less than two years, you don’t technically have to have a process or offer an individual meeting. But, you should still check that any redundancies you make are fair.
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What to say when making someone redundant
If you’ve followed the legal process for making staff redundancies, the news that your employee is losing their job shouldn’t come completely out of the blue. But that doesn’t make the big conversation any easier. We’ve written some tips to help you handle these meetings with care and compassion – which is as much about clarity as it is empathy.
Before your meeting
Be thoughtful about where and when to meet
Unless you work remotely, a face-to-face meeting is more respectful than a phone call. Make sure to choose a setting that offers enough privacy from the rest of the workspace, ideally on ‘neutral’ ground. It might be best to have this meeting late in the day or just before lunch, when an employee can leave your workplace discreetly if they’re not feeling sociable afterwards.
Think about roles in the room
One exercise to help you feel more prepared is to jot down what each person needs to get out of this meeting. Your objectives might be to communicate clearly on behalf of the business, and answer any questions your employee has. Your colleague’s objectives might be to understand how they will be affected by this redundancy and – probably – to feel genuinely listened to. If an HR or union representative is present, think about what they’re bringing to the table, from note-taking to legal advice (and don’t forget to introduce them at the top of the meeting).
Get your facts straight
Make sure you’re clear on the timings and logistics of the redundancy before you break the news. Anticipating your employee’s questions ahead of time can help you to communicate more calmly. As well as knowing the facts about someone’s notice period, benefits and remaining holiday allowance inside out, you should be prepared for more emotional questions, too. Things like “Why me?” or “Who made this decision?” can be disconcerting, but usually have an objective answer you can think about ahead of time.
During your meeting
Avoid small talk
It’s tempting to add a bit of chit-chat to the start of an uncomfortable meeting, but that’s usually more for your own benefit than your employee’s. Get straight to the point, if you can.
Keep your language direct
Hearing hard news can be a shock, so using short sentences and avoiding jargon will make your message easier to absorb. Try to be direct and keep things objective – “Your role has been made redundant” is more sensitive than “You’ve been made redundant,” for example. Using past tense can help to confirm in your employee’s mind that the decision has already been made.
Leave space for emotions
If you’re stressed about delivering bad news, it’s natural to try and fill any awkward silences. But listening to your employee is vital. Give them time to react or express their feelings, and acknowledge them out loud. Rather than offering platitudes like “I know how you feel,” you could try “I realise this has come as a shock.” If they’re silent, you may need to repeat or clarify any key points to make sure your message has been understood. If they’re angry or upset, it’s important not to defend or debate the company’s position. Stay calm, let them talk and reassure them that the decision wasn’t taken lightly.
After your meeting
Make sure that next steps are clear to your employee. Now’s a good time to remind them about any resources like mental health support or careers advice that may be available in your business. Get a follow-up meeting in the diary if you can help them personally, either through written references, support with job applications or introductions to professional contacts in your network. Take the opportunity to thank them for their work and show that you believe in their success, even if it’s not at your current company.
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Support for after redundancy
Offering support after redundancy comes in two parts: for the person or people you’ve let go and for your remaining team.
For those being made redundant, the next few weeks and months are likely going to be tumultuous. Even if they seem okay on the surface, the impacts of redundancy can manifest under the surface and cause difficult emotions. Supporting your employee through this emotional side of redundancy should be considered your duty of care. Here are a few things you can do to support your employee’s wellbeing and help them find new employment:
- Offer counselling to help your employee navigate the ups and downs of redundancy in a safe space.
- Be clear about their employment benefits and pay, including information on their pension, notice period and any other benefits that will stop as a result of the redundancy.
- Highlight services for financial and job seekers advice and make sure they know it’s okay to pursue these options: Citizens Advice is a great place to find clear information and the Job Centre Plus Rapid Response Service helps people who have been made redundant find new work and financial support, and even help with retraining.
- Depending on the redundancy agreement, your employee may have to work their notice period — if this is the case, give them time off to look for new jobs or get training without any requirement to make the time up.
- If invited, help your employee with their job search. This could mean offering advice on their CV and transferable skills, or connecting them with people in your network who could offer them advice about open roles.
For the managers who had to break the news and your remaining employees, redundancies can trigger a wave of negative emotions that can severely impact team morale and motivation. The stress of the redundancy process can take its toll and survivor’s guilt, when remaining employees feel guilty that they’ve kept their jobs while others haven’t, can lead to disengagement, an unwillingness to learn new skills, low productivity, increased absences and even quitting. Despite keeping their jobs, your remaining workforce has undergone a huge change and may feel uncertain about the future of their role and the company.
It’s easy to overlook the impact of redundancy on those left behind, but without careful management, things can spiral. There’s a number of things you can do to protect your company culture in the wake of redundancies but the number one thing is to keep the communication going. Give remaining employees the chance to explore their emotions with counselling, offer individual meetings to chat through any concerns and keep your remaining team in the know about any further development or future plans.
Easy redundancy mistakes to make as a small business
Redundancy is such a complex process that mistakes are easy to make. Here are four common mistakes companies, especially small businesses, tend to make when it comes to the topic of redundancy.
- Making redundancies instead of firing someone: remember, to make someone redundant you have to prove their role is no longer needed in the company. Making someone redundant for a disciplinary reason can lead to serious legal issues, so make sure you only make people redundant in the right circumstances.
- Making redundancies instead of trying to avoid them: redundancies should be a last resort and before initiating the process, you should explore other money-saving measures first. These can include finding a cheaper office space and withdrawing certain perks, but also reducing the use of freelancers, stopping recruitment, limiting overtime, moving employees at risk of redundancy to other parts of the business, and offering reduced hours or even early retirement.
- Hiring new employees straight away: rehiring after making redundancies is a slightly grey area — there are no fixed rules per se but you should think carefully before recruitment restarts. Small businesses and startups have ever-changing needs and while there’s no specific law that stops you from rehiring, you could get into trouble for using the redundancy process to get rid of someone just to hire someone new into the same (or very similar) role.
What we’ve learned from making redundancies at Spill
When market conditions changed and Spill made a team redundant in June of last year, CEO Calvin openly shared our financial runway with the wider team to show why difficult decisions needed to be made quickly.
“Telling people that they were being made redundant within a week of the company making that decision meant that we weren’t being inauthentic with anyone in the team, or getting managers to set arbitrary targets for people they knew would be leaving. We were incredibly honest with people. Nobody was left with any question marks.” – Calvin
Rather than asking people to work their notice period, Spill let leavers spend that time digesting the news and applying for jobs, instead. Although this helped our remaining team to adjust quickly to the new normal, it also made it harder to say thanks and goodbye (something we later realised might be more important for the morale of the team staying than for anyone leaving).
Another learning for our team was the importance of thoughtful manager handovers. Giving people enough time to prepare and deliver these before they leave the business is vital for supporting more junior team members and stopping them from feeling disoriented. The need for stable leadership is naturally more important when things feel wobbly.
“When morale is low after making redundancies, it’s easy to make promises in the moment that you can’t follow through on. We kept a promise to backfill any roles in our downsized team, and as time went on it reassured everybody that their position was safe. It proved that these were the people and the roles that we were relying on to move our business forward.” – Calvin
Redundancies aren’t easy, but you can do it nicely
Making people that you care about redundant is never going to be easy, but by following a fair process and supporting their wellbeing you can handle it with the respect everyone deserves. And remember, your managers and remaining team will need just as much support, too.
Get it right and you’ll have a trusting team that understands and supports the company, no matter what happens next.
Download our exit interview questionnaire template
Tips on how to host a useful exit interview, and a template questionnaire sheet covering key topics from onboarding, in-role experience, company culture and the future of the company
Make your company culture psychologically safe by regularly surveying your team and giving support to those in need.
