How to Write a Redundancy Letter

Employers have to act fairly and lawfully when making employees redundant. Communication with affected employees will be critical as you move through the redundancy process, to update employees, meet your legal obligations and avoid the risk of tribunal claims.

A redundancy letter is a formal document issued by an employer to inform an employee that their role is being made redundant. It serves as an essential part of the redundancy process, ensuring clear communication and compliance with UK employment law. The letter should outline the reasons for the redundancy, provide details of the consultation process, explain the selection criteria, and include information on redundancy pay and notice periods. Employers must also offer support, such as redeployment opportunities or access to career services, where appropriate.

For UK employers, drafting a redundancy letter requires careful consideration to ensure it is legally compliant and sensitive to the employee’s situation. A poorly drafted letter can lead to misunderstandings or claims of unfair dismissal. Employers must ensure the language used is clear, respectful, and free from ambiguity, providing all relevant information to the affected employee.

One of the key risks is failing to follow a fair process, which can result in legal challenges. Employers must also consider the impact on morale among remaining staff. Providing support and maintaining transparency throughout the redundancy process can help minimise negative effects and demonstrate a commitment to fair treatment. A well-crafted redundancy letter is a vital step in achieving these goals.

 

Role of the redundancy letter

 

Written notices will typically be needed to notify and inform employees at various stages of the redundancy process:

 

• A redundancy letter notifying an individual that their job is at risk of redundancy.
• A letter inviting the individual (or their representative) to take part in the redundancy consultation process.
• A letter informing the individual that they have been selected for redundancy and giving notice of their dismissal.

 

Where employees are notified verbally as part of the redundancy process, this should be followed up in writing as a documented record of the notification.

 

What should a final redundancy letter contain?

 

Each letter should be clear from the outset as to its purpose; if the objective is to inform them that their role is at risk of redundancy or if you are asking them to attend a consultation meeting.

Looking specifically at the final redundancy letter, the following should be included as a minimum.

 

Reasons for redundancy

 

If an employee alleges their redundancy is not genuine, that the correct process has not been followed or that the reasons for their redundancy are unfair, they may be able to bring a claim for unfair dismissal.

The redundancy letter should therefore be used to state why the employee’s role has become redundant and why they are being dismissed.

Typical fair reasons for redundancy include:

 

• Organisational changes such as workplace closure or relocation of the business.
• The work undertaken by the affected employees is no longer being required because there is no longer a business need or new technology or processes have been introduced.
• Reducing business costs.
• Transfer of the business to a new employer.

 

The letter should also provide the reason as to why the individual has been selected for dismissal. Again, the reasons must be fair and should relate to any objective selection criteria that were applied during the selection process, which could include:

 

• Disciplinary record
• Absence record
• Lateness record
• Performance
• Qualifications
• Skill level

 

 

Redundancy notice

 

The letter should then deal with the practicalities of the dismissal, including timescales for next steps, the final date of employment and details of any entitlements.

You will need to ensure you are giving the employee the relevant amount of notice of their redundancy. Minimum statutory redundancy notice periods apply, although some employment contracts may provide longer notice periods. Employers cannot give less that the legal minimum as prescribed by the statutory notice period.

The statutory notice period depends on how long the employee(s) has worked in your business. The following notice periods apply:

 

• If they have worked for less than one month, no statutory notice period needs to be given.
• For service between one month and up to two years, the statutory notice is one week.
• Between two to twelve years, the statutory notice is one week for each complete year they have worked
• Twelve years or longer, the notice period is twelve weeks.

 

The notice period starts from the day after you have informed the employee of the redundancy.

You should also advise as to how your business is going to treat accrued annual leave if it is not taken prior to their last date of employment.

Note also that employees have the same rights during coronavirus as they had before. This includes any action you take to end their contract of employment after a period of furlough.

 

Payment in lieu of notice (PILON)

 

When drafting the redundancy letter, you will need to state how much redundancy pay they can expect, and when they will receive it. Depending on the circumstances, this could include statutory redundancy pay or enhanced contractual redundancy pay.

If the employee’s contract allows, you may be able to make a payment to them in lieu of them working their notice. This means the employee would stop working for you as soon as they agree to the payment.

If the employee’s contract does not allow for payment in lieu of notice, then you can ask them if they would agree to it. You cannot force the employee to agree and if they do not want to do so, then they would be subject to statutory notice periods as stipulated above. If they do agree, you must give them their full pay and any other contractual benefits for their notice period.

An employee can make a claim for unfair dismissal to an employment tribunal for breach of contract if they are dismissed sooner than their notice period ends. If you are considering payment in lieu of notice, it may be wise to obtain legal advice.

 

Other details

 

You should also confirm that redundancy is a measure of last resort and full consideration and exploration has been given to avoid the redundancy. If possible, provide details of any alternative roles, or if none are available, this should be stated as evidence that you have given consideration to suitable alternative employment.

In addition to detailing the practicalities of the dismissal, you should also use the redundancy letter to inform the employee of their right to appeal the decision.

If using a downloadable template redundancy letter, ensure it is reviewed and amended to reflect the specific facts and details of the particular situation.

Finally, you may want to end the letter with a personal touch, thanking them for their service for example or telling them where to access support if they need it.

 

Redundancy letter template

 

The following is an example redundancy letter to illustrate the key points of information to include. Note that this template should be adapted to reflect the specific circumstances of the redundancy, ensuring it aligns with UK employment laws and the company’s policies. Employers should always consult legal professionals for advice where necessary.

 

[Your Company Name]
[Company Address]
[City, Postcode]
[Date]

[Employee’s Name]
[Employee’s Address]
[City, Postcode]

 

Subject: Notice of Redundancy

 

Dear [Employee’s Name],

Following our recent consultation meetings regarding potential redundancies within [department/team], I am writing to formally confirm that your role as [Job Title] has been identified as redundant. This decision has been reached after careful consideration and exploration of alternatives, as outlined during the consultation process.

 

Reason for Redundancy

The reason for this redundancy is [e.g., a downturn in business, a restructure to improve efficiency, or the closure of a specific department]. Unfortunately, this has led to the need to reduce roles within the organisation.

 

Selection Process

Your role was selected for redundancy based on [explain objective selection criteria, e.g., skills, performance, length of service], which we discussed during the consultation process.

 

Notice Period

Your employment will end on [Last Working Day], following your [notice period duration] notice period, which commences on [notice period start date]. During this period, you will [explain terms, e.g., continue working as normal, be placed on garden leave, or receive payment in lieu of notice].

 

Redundancy Pay

You are entitled to redundancy pay of £[amount], which includes:

 

• Statutory Redundancy Pay: £[amount].
• [Optional] Additional Payment: £[amount].
  This payment will be processed as part of your final salary payment on [date].

 

Support and Redeployment

We are committed to supporting you during this transition. We have explored redeployment opportunities, and [detail redeployment outcomes, e.g., no suitable roles were identified, or specific opportunities are available]. You are welcome to discuss further opportunities or access our outplacement support services, which include [e.g., CV writing, career counselling, job search assistance].

 

Appeal Process

If you wish to appeal this decision, please do so in writing within [timeframe, e.g., 5 working days] of receiving this letter. Appeals should be directed to [Manager/HR Contact Name and Email/Address].

 

Next Steps

You are welcome to contact [HR Contact Name and Details] with any questions regarding your redundancy package, final payments, or support services. We will arrange a meeting on [date] to discuss this letter and address any further concerns you may have.

 

We deeply regret the need for redundancy and thank you for your valued contributions to [Company Name]. Please do not hesitate to reach out for any additional support during this time.

Yours sincerely,

[Your Name]
[Job Title]
[Contact Information]

 

Pitfalls to Avoid When Writing a Redundancy Letter

 

Writing a redundancy letter is a sensitive and legally significant task. Employers must ensure the letter is clear, respectful, and compliant with UK employment law. Avoiding common pitfalls is essential to minimise the risk of misunderstandings, disputes, or legal claims. Below are key pitfalls to avoid:

 

Lack of Clarity in Communication

 

Failing to clearly outline the reason for redundancy can create confusion and leave employees feeling unfairly treated. The letter should provide a straightforward explanation of the business reasons for redundancy, such as financial difficulties, restructuring, or closure of a department.

 

Insufficient Information

 

A redundancy letter should include all relevant details, including:

 

• The redundancy reason.
• Notice period and end date of employment.
• Entitlements such as redundancy pay, outstanding holiday pay, or other compensations.
• Support available, such as redeployment opportunities or career counselling.

 

Omitting these details can lead to unnecessary questions or dissatisfaction.

 

Failing to Reflect Consultation Outcomes

 

If the employee has undergone a consultation process, the letter must accurately reflect the discussions and conclusions reached. Failing to acknowledge these can make the process appear unfair or dismissive.

 

Using Inappropriate or Insensitive Language

 

A redundancy letter should be professional and empathetic. Avoid overly formal or impersonal language that could come across as cold. Phrases that blame the employee or suggest redundancy is due to personal failings can lead to distress or even claims of unfair dismissal.

 

Ignoring Legal Obligations

 

Failing to adhere to legal requirements can result in legal claims. Common mistakes include:

 

• Not providing the correct notice period.
• Miscalculating redundancy pay or other entitlements.
• Failing to mention the employee’s right to appeal the decision.
• Not outlining statutory obligations, such as the offer of alternative employment or redeployment opportunities.

 

Ambiguity in the Selection Process

 

The letter must make it clear how the employee was selected for redundancy. A vague or unclear explanation of the selection criteria can lead to suspicions of unfair treatment and potential legal challenges.

 

Overlooking the Appeal Process

 

Failing to include details of how employees can appeal the decision can be seen as denying them their legal rights. The letter should provide a clear timeline and contact information for submitting an appeal.

 

Providing Inadequate Support Information

 

Employees should feel supported throughout the redundancy process. The letter should outline the support offered, such as:

 

• Redeployment opportunities within the organisation.
• Access to outplacement services or career counselling.
• Guidance on claiming redundancy pay or other entitlements.

 

 

Failing to Tailor the Letter

 

Using a generic template without customising it to the individual’s situation can appear impersonal and unprofessional. Tailoring the letter to reflect specific circumstances, such as the employee’s role and contributions, demonstrates care and respect.

 

Incorrect or Inconsistent Information

 

Providing incorrect dates, pay figures, or conflicting information can lead to confusion and distrust. Employers must double-check all details to ensure accuracy and consistency with verbal discussions during consultations.

 

Lack of Empathy

 

While redundancy is a business decision, it significantly impacts individuals. A letter that lacks empathy or fails to acknowledge the employee’s contributions can damage morale and reputation. Express gratitude for their service and recognise their efforts where appropriate.

 

Ignoring the Follow-Up Process

 

The redundancy letter is part of a broader process. Employers should ensure that employees have access to a follow-up meeting to discuss the content of the letter, ask questions, and receive further support.

 

Need assistance?

 

DavidsonMorris are experienced legal advisers to employers on all aspects of dismissals and restructuring.

Our employment law specialists work closely with our HR adviser colleagues, providing a holistic service to employers managing employee redundancies, advising on procedural matters and employee entitlements to reduce the risk of legal complaints. We also have specific expertise on the use of settlement agreements during the redundancy process. For help and advice with a specific issue, speak to our experts.

 

Redundancy letter FAQs

 

What is a redundancy letter?

A redundancy letter is a formal document provided to an employee to confirm their role is being made redundant. It explains the reasons for redundancy and outlines next steps.

 

When should a redundancy letter be issued?

A redundancy letter is typically issued after the consultation process has been completed and a decision has been made to proceed with redundancy.

 

What should a redundancy letter include?

It should include the reasons for redundancy, the selection criteria used, notice period details, redundancy pay entitlements, and information about available support or redeployment opportunities.

 

Do all redundancies require a formal letter?

Yes, issuing a formal letter is a key part of a fair redundancy process, ensuring clear communication and compliance with UK employment law.

 

Can employees challenge a redundancy decision?

Employees can appeal a redundancy if they believe the process was unfair or discriminatory. The letter should include information on how to lodge an appeal.

 

Is a consultation required before issuing a redundancy letter?

Yes, employers are legally required to consult with employees before confirming redundancies. Failure to do so can lead to claims of unfair dismissal.

 

How much notice must be given?

Notice periods depend on the employee’s length of service and the terms of their employment contract. The letter should clearly state the notice period.

 

What support can employers offer during redundancy?

Employers can provide career advice, access to training, or help with finding alternative roles within the organisation or externally.

 

How should employers handle redundancy letters sensitively?

Employers should use respectful and empathetic language, offer support, and communicate openly throughout the process to minimise distress for affected employees.

 

Can redundancy letters be sent via email?

While redundancy letters can be sent electronically, it is best practice to confirm the decision in a meeting and follow up with a physical or emailed copy of the letter.

 

Glossary

 

Term	Definition
Redundancy	The termination of employment due to an employer’s need to reduce the workforce or eliminate certain roles.
Redundancy Letter	A formal document issued to an employee to confirm their role is being made redundant, outlining reasons and next steps.
Consultation Process	Discussions between the employer and employee about the reasons for redundancy and potential alternatives before a decision is finalised.
Selection Criteria	The fair and objective standards used to determine which employees will be made redundant.
Notice Period	The amount of time an employee is given before their redundancy takes effect, as specified in their employment contract or statutory rules.
Statutory Redundancy Pay	The minimum redundancy payment required by law for employees with at least two years of continuous service.
Redeployment	Offering an affected employee an alternative role within the organisation as an alternative to redundancy.
Appeal Process	A formal procedure allowing employees to challenge their redundancy if they believe it was unfair or discriminatory.
Unfair Dismissal	The termination of employment in a manner that breaches legal or contractual obligations, including unfair redundancy processes.
Settlement Agreement	A legal agreement between an employer and employee, often used to outline redundancy terms and waive potential claims.
Outplacement Support	Assistance provided to redundant employees to help them transition to new employment, such as career counselling or training.
Statutory Notice Period	The legally required minimum notice period employers must give, based on the length of an employee’s service.
Mitigating Circumstances	Factors considered during redundancy that may affect how decisions are made, such as personal or health issues.
Voluntary Redundancy	When employees choose to leave the organisation in exchange for a redundancy package, reducing the need for compulsory redundancies.
At-Risk Notice	Notification to an employee that their role is at risk of redundancy, starting the consultation process.
Legal Compliance	Ensuring the redundancy process adheres to employment laws and regulations to avoid legal claims.
Protected Characteristics	Personal attributes protected under the Equality Act 2010, such as age, gender, race, and disability, ensuring redundancy decisions are non-discriminatory.
Employer Obligations	Legal responsibilities of the employer during redundancy, including consultation, notice, and redundancy pay.