Managing redundancies: Best practices for HR leaders in 2025
Redundancies are becoming more common in the UK, unfortunately, following the Autumn budget announcement and upcoming legal changes, such as the Employment Rights Bill. HR teams must rethink their workforce strategies to ensure long-term resilience.
Compassionate and legally compliant redundancy processes should protect the organisation’s brand reputation, maintain workforce trust and minimise legal risks. However, HR leaders must also consider alternatives for long-term efficiency and cost savings for a sustainable future.
Here’s some considerations for how HR teams can navigate headcount reductions and cost saving strategies in 2025.
Delivering compassionate and compliant redundancy processes
High-profile cases in the media in early 2025 highlight the prevalence of redundancies. In fact, according to the UK Labour Market Statistics, there were 114,000 redundancies in October to December 2024 alone.
Given the high volume of redundancies and the expectation of more to come, understanding legal regulations, Employment Rights Bill amendments, compliance requirements, and best practices is not just a box-ticking exercise; it’s essential to ensure:
- Employees feel they have been treated fairly, with clear communication, and that their needs have been considered;
- Reduced risk of poorly managed consultation processes and legal challenges;
- Protection of the organisation’s reputation and workforce morale.
Missteps in the redundancy process can lead to instability, legal challenges, and affect future talent acquisition. A well-managed redundancy process requires HR to align redundancies with the business’s long-term goals while showing sensitivity to employees’ experiences.
How does redundancy relate to unfair dismissal?
Another legal risk to consider is unfair dismissal claims. Redundancy must be carried out in compliance with legal guidelines to avoid accusations of unfair dismissal.
Redundancy is one of the five fair reasons for dismissal, along with business closure, workplace shutdowns, or reducing specific types of work. A fair procedure is required, including consulting with affected employees, considering alternatives, and ensuring that the redundancy is genuine.
Decisions should be based on objective criteria, like performance and qualifications, to avoid discrimination. Before making decisions, consider alternatives, such as reallocating employees to vacant roles. Redundancy is not a means to address poor performance, as seen in companies like Meta recently. Statutory payments apply, and all employees are entitled to a fair process.
By applying best practices, HR leaders can minimise legal risks and ensure fairness, protecting the company’s reputation. This includes clear communication with employees, staying informed on laws, and consulting legal counsel when needed.
Collective redundancy consultation requirements
Employees are entitled to a fair process, which includes consultation. For proposed dismissals of 20 to 99 employees, a minimum 30-day consultation period is required; for 100 or more, it extends to 45 days. While there’s no set timeframe for fewer than 20 dismissals, meaningful consultations should not be rushed.
Organisations must follow ‘collective consultation’ rules if making 20 or more employees redundant in any 90-day period. Currently, this only applies if redundancies happen at a single workplace. However, the Employment Rights Bill amendments (effective in 2026) will extend this, setting a higher redundancy threshold when job losses occur across multiple locations.
Statutory redundancy pay stipulates half a week’s wage for each full year of employment up to age 22, one week’s full pay thereafter, and 1.5 times the weekly pay rate once workers pass 41. Weekly pay and length of service are capped, with the maximum statutory pay at £15,750.
When selecting employees for redundancy, ensure no discrimination based on characteristics protected by the Equality Act 2010, including age. Also consider that as of January 20th 2025, tribunals can impose a 25% increase in compensation penalties if organisations fail to comply with collective consultation obligations.
*The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 is the legislation introducing the change
Key business considerations when making redundancies
In today’s volatile business climate, marked by rising employment costs and financial pressures, short-term cost savings may seem like the best option. However, focusing solely on immediate cuts, such as redundancies, can undermine long-term resilience.
The loss of knowledge and specialised skills presents a significant risk to future success. Replacing this expertise is costly and time-consuming, leaving a potentially damaging skills gap that can hinder future growth and innovation.
Redundancies can also harm employee morale and damage the employer brand, which in turn affects future recruitment efforts. Employees remaining in the organisation after a round of redundancies may feel anxious, demotivated, or even experience “survivor guilt.” This can result in decreased productivity and higher attrition rates.
Long-term strategic alternatives to redundancy
Instead of relying on redundancies for short-term cost savings, a more sustainable approach is to invest in long-term strategies that drive sustainable cost savings and strengthen the organisation’s foundation. One key area to focus on is empowering managers and leveraging technology to transform the employee relations function.
By addressing employee relations issues proactively and enhancing workplace culture, companies create a more resilient and engaged workforce. This approach helps identify problems early, allowing for targeted interventions that improve business performance before issues escalate
Investing in the right technology and training can reshape how employee relations issues are managed, improving business outcomes. For example, AdviserPlus data shows that in 2024, 63% of ER cases were resolved by line managers without HR involvement when supported by the right technology. By equipping managers with the tools to manage people matters more effectively, organisations can reduce sickness absence, lower tribunal claims, and significantly enhance both employee and manager experiences.
Upskilling as a strategic priority
Forward-thinking organisations view upskilling as both a strategic priority and a smarter investment in their workforce. Instead of downsizing, redeployment builds a future-ready team that can adapt to evolving business needs.
Data analytics can help HR identify skills gaps in line managers to address performance concerns and identify root causes of issues impacting culture. This creates a more agile, adaptable workforce. Additionally, investing in training ensures employees are continuously developing, allowing the business to stay competitive in a rapidly changing market.
Providing training and coaching for the consultation managers can also make a difference. It ensures they can navigate challenging emotions, keep the conversation clear and respectful, and provide a more positive experience for employees, even in tough times of change.
HR redundancy best practices
If, however, redundancies are entirely unavoidable, then following best practices is essential. Ensuring compliance in collective redundancy processes is paramount, especially given the potential increased costs of mishandled consultations. However, it’s equally essential to address the human element.
A well-managed consultation can not only reduce non-compliance risks and provide a compassionate experience for those affected.
This can be significantly streamlined with dedicated consultation meeting tools and support, to ensure compliance and provide a people-first approach to impacted employees.
How consultation meeting tools simplify redundancy processes
Meeting Manager is designed to support HR teams and line managers during organisational changes, including redundancy processes. It offers:
- Simplified administration: Meeting Manager streamlines the process of scheduling meetings, reducing the administrative burden on HR.
- Built-in redundancy consultation scripts: Meeting Manager streamlines the consultation process, improving the experience for all involved with tailored consultation meeting scripts.
- Process tracking: Meeting Manager tracks each stage of the consultation process, offering visibility through management dashboards and accountability to ensure that all legal requirements are met and any issues are appropriately flagged to HR.
Need assistance?
Navigating large-scale redundancy consultation processes can be complex and emotionally taxing. Our team of HR experts is here to help you manage these challenges with compassion and compliance. Contact us today to learn how we can support your organisation.