REDUNDANCIES: MAKING CUTS IN A SMALL BUSINESS

5 key takeaways when it comes to managing redundancies in a small business.

There are no special rules for small companies

Don’t think that because you are a small business you have special dispensation from the consultation requirements around redundancy.  You must follow the correct process, otherwise you leave yourself open to claims of unfair dismissal and discrimination.

Consultation

Consultation is key – it has to be meaningful, and employees have to be given the opportunity to put forward alternatives to redundancy, and given details of vacancies within the business.

Pools

Don’t cherry pick the ‘people’ to be made redundant.  You need to assess which areas of the business and roles are to be affected and if more than one person does the same or similar role, there needs to be a pool to select from.

Selection

Selection needs to be fair and criteria transparent – it should also be discussed as part of consultation.

Budget for redundancy pay

You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for 2 years or more.

You’ll get:

  • half a week’s pay for each full year you were under 22
  • one week’s pay for each full year you were 22 or older, but under 41
  • one and half week’s pay for each full year you were 41 or older

Length of service is capped at 20 years.

If you were made redundant on or after 6 April 2018, your weekly pay is capped at £508 and the maximum statutory redundancy pay you can get is £15,240. If you were made redundant before 6 April 2018, these amounts will be lower.

Don’t forget to add in the correct notice pay, and holiday accrued but not taken.

REDUNDANCIES: MAKING CUTS IN A SMALL BUSINESS