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.
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
- Skill level
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.
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.
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 the minimum notice for redundancy?
You must give the employee their contractual notice as stipulated within their contract of employment or the statutory redundancy notice, which is at least one week’s notice if employed between 1 month and 2 years, one week’s notice for each year employed between 2 and 12 years, and 12 weeks’ notice if employed for 12 years or longer.
How do I write a redundancy letter?
Include an overview of the situation in general together with an outline of the process that has been followed and confirm if you have identified any areas suitable for redeployment. Other details include notice periods and redundancy pay. If using a template letter, remember you should tailor it to your business requirements.
Last updated: 19 April 2021