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Help for small firms

Handling small-scale redundancies - A step-by-step guide

Handling redundancies

Be prepared: What is redundancy?

Redundancy is generally where an employer needs to reduce their workforce - for example, if the business is closing or certain work is no longer required.

As the owner or manager of a business, you may be worried about a downturn in trade.

  • Is there enough work to keep staff busy?
  • Is there sufficient income to pay wages and keep the company afloat?

Your thoughts may turn to making redundancies to reduce the number of staff you employ to cut costs. This can be a daunting prospect which will affect you and all of your employees.

If you have to make redundancies they should normally be for the following reasons.

  • You have ceased (or intend to cease) carrying on the business for the purposes of which you employ someone.
  • You have ceased (or intend to cease) to carry on the business in the location you employ someone.
  • You don't require your employees to carry out work of a particular kind any more.
  • You don't require your employees to carry out work of a particular kind in a specific location any more.

Redundancy can occur either where the amount of work disappears completely, or where the amount of work reduces. Redundancy can be voluntary or compulsory.

This might seem a little legalistic, but ensuring you meet legal requirements is essential if your business is changing or closing.

This guide is aimed at small firms, and larger organisations proposing to make fewer than 20 employees redundant.

For advice on proposing 20 or more redundancies, see the Acas pdf  Advisory booklet - Handling large-scale (collective) redundancies [508kb].

If your situation, or the cost of making redundancies, will put your business at risk of closure or administration, you may wish to contact the Redundancy Payments Service Helpline (now managed by Acas) on 0845 145 0004.

Unhappy with employee performance or conduct?

This is not a reason for redundancy. To find out how to handle this, see Discipline and grievances at work: The Acas guide.

Selling or transferring your business?

Making redundancies that are connected to the sale or transfer of your business need particularly careful handling and consideration. See the FAQs section for more information.