The Economic Pressures facing all Businesses from April … is redundancy on the cards?

In April 2025 businesses face significant new financial pressures with the increase in Employers National Insurance and the increase in the National Minimum Wage.

There are already stories appearing in the press about some employers not recruiting, or not replacing employees who leave, and even contemplating redundancies as a way of saving money. If you have decided that redundancies may be needed as part of your business strategy, here are some key points to remember.

The starting point with redundancies

• Employees with less than two years’ service do not have rights to claim a statutory redundancy payment or claim unfair dismissal. However, remember that any employees selected for redundancy may seek to argue that they are being discriminated against, and Discrimination Rights apply from day one of employment.
• If 20 or more employees are made redundant then this triggers group consultation rights and there are expensive penalties for employers if they do not follow the group consultation process.
• There needs to be a good financial reason for undertaking redundancies, and redundancies should not be used as an excuse for removing a poor performing employee.
• Unless an employer is closing their place of work, or completely reorganising their business, then they will need to decide which group of employees are affected and then go through a selection process in respect of that pool of employees.
• It is important to ensure that all employees affected are within that pool.

Fair selection criteria

• Selection criteria can include marking the skills of an employee. Length of service is not a deciding criterion but could be used as tie-break if some employees scores are identical.
• Employers should be careful not to adopt selection criteria that could be seen as discriminatory. For example, if sickness absence is considered, or absence in general, then if that catches an employee with a disability or a female employee on maternity leave then discrimination issues will arise.
• Once an employer has decided on how many employees within the relevant pool are being made redundant, then individual consultations with each employee should start. At each consultation meeting the employee should be given the right to have as a witness a fellow employee or a trade union representative, if that employee is a Trade Union member.

What happens during the redundancy consultation?

• The first consultation will be informing an employee that they have been provisionally selected for redundancy and the financial reason why redundancies are taking place.
• An invitation then follows to a further consultation meeting where the employee has the right to make representations. Those representations do not have to be agreed with by the employer, but they should be listened to.
• It is likely that at a third consultation meeting, a redundancy would be confirmed, and the employee should be given the right to appeal. At that meeting, the employee should also be given the opportunity to apply for any alternative jobs within the employer’s business.

Concluding the redundancy process

• If an employer is paying notice monies and statutory redundancy, then that should all be confirmed in the letter of dismissal.
• If the employer is paying more than statutory redundancy, then they may wish to consider whether the employee is requested to sign a Settlement Agreement to ensure that there is no later claim against the business.

Contact us if you are considering making redundancies

It is vital that any employer who is looking at making employees with two years or more service redundant follows a fair process and consults fully with their employees.  If they do so, any dismissal is likely to be a fair dismissal.

If you are considering making redundancies in your business, please contact us for individual advice.  It is better, and generally more cost effective, to take advice first rather than have to seek advice after the event when claims are being pursued.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.