Managing Redundancies: A Guide for Small Business Owners
Making redundancies is one of those decisions that stays with you as a business owner. It's often the conversation you dread most, the sleepless nights before difficult meetings, and the emotional weight of knowing you're affecting not just an employee, but their family and livelihood.
After handling hundreds of redundancy situations throughout my HR career—including 18 intensive months back in 2008 where I did little else. I've learned that whilst redundancies are never easy, conducting them properly makes an enormous difference for everyone involved.
If you're facing the possibility of redundancies in your growing business, here's how to approach them with both legal rigour and genuine sensitivity.
Start with Clear Business Justification
Before you do anything else, get absolutely clear on your business case. Not simply box-ticking—it's the foundation of the entire process.
Map out precisely why redundancies are necessary. Is your business genuinely closing? Are you shutting down a particular location? Has the requirement for certain work diminished or ceased entirely? These reasons must fit the legal definition of redundancy, which is more specific than many business owners realise.
Too often, I see business owners conflate redundancy with poor performance or capability issues. Confusing these concepts doesn't just complicate your process—it can expose you to significant legal risk and make an already difficult situation far worse for everyone.
Give Yourself Time to Plan Properly
Once you're certain redundancies are necessary, establish your timeline. When do you genuinely need to complete this process by? What are the practical and financial constraints?
Rushing redundancies because you're under pressure leads to mistakes—both legal and human ones. Give yourself breathing room to think through each stage carefully, consult the right people, and conduct the process with the dignity everyone deserves.
Working under panic conditions also takes a far greater emotional toll on you as the business owner. You need the mental space to lead this process thoughtfully.
Map Your Process with Precision
Your redundancy process needs careful planning across several dimensions:
Role selection: Which positions are genuinely at risk? If you have multiple people doing similar work, what's your fair and objective selection process? This is where many businesses stumble, so get it right from the start.
Communication strategy: How will you deliver the message to those affected? What will you say to team members who aren't at risk but will understandably be concerned? How will you communicate with the wider business to maintain trust and morale?
Think through each conversation before it happens. Consider the ripple effects throughout your organisation.
Ensure Legal Compliance Every Step
Employment law around redundancies exists to protect both employees and employers when these difficult situations arise. Make certain you're meeting all your legal obligations:
Following proper consultation processes
Providing appropriate notice periods
Calculating redundancy payments correctly
Offering suitable alternative employment where it exists
Meeting any collective consultation requirements if applicable
If you're uncertain about any aspect, take professional advice. The cost of getting redundancies wrong—financially, legally, and reputationally—far exceeds the investment in doing them properly.
The Human Side of Redundancies
Here's what I want you to remember: redundancies are hard for everyone. Full stop.
But when you conduct them properly—with clear communication, genuine sensitivity, and proper process—you can support your people through one of the most difficult experiences of their working lives. You can help them leave with dignity, with proper support, and with their self-worth intact.
And crucially, you protect yourself. Not just legally, but emotionally. Knowing you've handled a terrible situation as well as anyone possibly could provides some comfort during a difficult time.
Your remaining team will also be watching how you handle this. Conduct redundancies with integrity, and you build trust. Handle them poorly, and you damage your culture for years to come.
Support Is Available
If you're concerned about potential redundancies or think you may need to tackle them in the coming weeks or months, you don't have to navigate this alone.
At The People Consultancy, we specialise in helping growing businesses handle complex people challenges with both commercial pragmatism and genuine care. Our experience with hundreds of redundancy situations means we can guide you through every stage—from initial business case through to supporting your remaining team afterwards.
Get in touch for expert guidance that protects both your people and your business during this challenging time.
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Emily also shared this in a short (3min) video, on LinkedIn recently.
