This post is for: SME owners/directors facing change and considering redundancies. You’ll leave with a clear, fair step-by-step process (including consultation) and what to document. This post is NOT: a substitute for legal advice on a live redundancy programme.

This is about doing redundancy properly and in a supportive way – including consultation, selection, alternatives and documentation.

If you want something more specific

If you need difficult conversations, read: Difficult Conversations at Work: A UK Guide for Employers and Managers

If you’re tightening culture while changing, read: Culture Is Set in the Moments Leaders Don’t Address

Redundancy is one of the hardest decisions to make in a small business, because we get to know our people really well. In SMEs, everyone feels it when tough decisions are made - including the people who stay and have to make sense of what it says about the business and their future.

But “hard” doesn’t mean “impossible”. A clear process helps you treat the person affected with fairness, dignity and transparency. It also gives you an audit trail you can stand behind as a business, which reduces unnecessary risk later. And it reassures the rest of the team that changes are being handled properly, which protects trust at a time when people are watching closely.

One of the biggest risks we see in SME redundancies is moving too quickly because you want to “get it over with”. It’s understandable, but speed is rarely your friend here. The aim is a process you can explain step by step, so it feels fair to the person affected and credible to everyone else. When you do it with care and good records - rather than rushing - you avoid unnecessary risk and you make a difficult situation as straightforward as it can be.

What “good” looks like in practice

Even when you’re dealing with one role, a fair redundancy process is not a single meeting followed by a letter. People need time to absorb what they’re hearing, ask questions, raise alternatives and understand what happens next.

At a minimum, plan for an announcement that redundancies are being considered, followed by at least one private consultation meeting with each affected employee. In most real SME situations, you’ll usually need more than that - because meaningful consultation includes time to go away, think, come back with questions and hear your responses properly.

If you’re considering larger numbers - especially 20+ redundancies within 90 days - the legal steps and timelines change. Get advice early and do not try to “wing it”.

Why does redundancy take so long (and why the meetings)?

This is one of the most common questions we hear at the start of a redundancy process: "Why can’t we just make the decision and get it done?"

The honest answer is that consultation is there for a reason. There is always a possibility that employees will have ideas you haven’t considered - alternatives to redundancy, different ways to restructure work or practical suggestions about pooling, selection or redeployment that genuinely change the plan. If people don’t have a real opportunity to put those forward, the process can start to look like a done deal and that’s where risk increases and trust can be dented.

There’s a second, more human reason too: people need time. Redundancy decisions are never easy to take. Even very capable people often think of their best questions 24 - 48 hours later, once the initial shock has settled. The meetings create space for that.

Step 1: Make the announcement

Before you get into pools, criteria or outcome letters, you need a clear “we’re considering redundancies” announcement. This is where you explain what’s driving the change, which roles or teams may be affected, what the process will look like and when people will next hear from you.

In small businesses, leaders sometimes avoid this because they don’t want to worry people. The problem is that uncertainty fuels rumours and rumours are rarely positive for you or the business. A clear message early is usually the more supportive option, because people can stop guessing and start engaging with the process.

Follow up in writing so everyone has the same information to refer back to and you have a clean record of what was communicated. And those who are not formally part of the process need to know what’s happening too.

Step 2: Be clear on the reason (and make sure it’s about the role)

Redundancy is about the role, not the person. That sounds obvious, but it’s the point that causes the biggest problems when businesses are under pressure.

At this stage, you should be able to say plainly what’s changed. Perhaps the role is no longer needed. Perhaps there’s less work of that type. Perhaps you’re closing a site. Or perhaps you’re reorganising.

If the real issue is performance or conduct, don’t try to “solve” that through redundancy unless it genuinely fits a redundancy situation. A simple practical check is this: if you’d still want the role if the person changed, it’s probably not redundancy.

Write a short rationale now. It doesn't need to be long. It just needs to be clear enough that you can explain it calmly and consistently later.

Step 3: Decide who is at risk

Sometimes redundancy affects one specific role. Sometimes it affects a group of people doing similar work. The “pool” decision is one of the most common pressure points in redundancy conversations, because it’s where people ask, “Why me?” or “Why us?”

Your pool does not need to be complicated, but it does need to make sense. If you’re selecting from a pool, keep it grounded: who genuinely does similar work and why is it reasonable that they are considered together?

If you exclude someone from the pool, make sure you can explain why that exclusion is reasonable. The key here is that you have a record of your deliberations and the reasons you included or excluded certain roles.

Step 4: If selection is needed, keep it fair and objective

Where there’s a pool, you often need selection criteria. This is where you can inadvertently make things harder for yourself. Criteria become too vague (“attitude”, “commitment”) or too complex (so nobody applies them consistently).

Fair criteria are relevant to the role and as measurable as possible. If you include something that could become subjective - for example “flexibility” or “adaptability” - define what that means in practical terms. Otherwise, it becomes preference dressed up as process.

A simple way to keep this defensible is to use a basic scoring approach, such as 0–3, with a short description of what “0” and “3” look like for each criterion. If you can, use two scorers (even if one is the owner) and do a quick sense-check afterwards: if you swapped two names on the scoring sheet, would the scores still make sense? That small step often reduces inconsistency and avoids unnecessary friction during the consultation process.

Step 5: Consult early - and mean it

Consultation isn’t telling people a decision is already done. It’s engaging with them while there is still room to influence the plan, the pool, the criteria and the alternatives.

This is where many SMEs stumble because they’re trying to protect people from worry. In practice, clarity is kinder. It’s also where trust is built (or lost). A well-reasoned, honest explanation of what’s driving the change goes a long way.

To do this fairly, you need the announcement and at least one private consultation meeting with each affected employee. In most cases you’ll have more than one consultation meeting because you’ll need to go away and check answers, consider alternative suggestions or clarify how selection has been applied and then conclude the process.

Keep notes of what was discussed, what questions were asked, what you agreed to follow up on and what the next step is. You do not need chapter-and-verse notes - just enough that your memory is not tested later, if questioned.

Step 6: Hold individual consultation meetings genuinely

In a small business, the human side matters hugely. Keep meetings private, respectful and clear. Be direct without being harsh.

Don’t try to fill every silence. People need time to think. If you can’t answer something in the moment, it’s fine to say, “Let me check that and come back to you.” That is better than guessing and it gives confidence.

After each meeting, capture a short note of what was discussed, the key questions raised, what you said you would check and when the next meeting will take place.

Step 7: Consider alternatives properly

Redundancy should not be the first and only lever. Even when the final outcome is redundancy, a fair process shows that alternatives were genuinely considered. That might include redeployment into a suitable alternative role, reduced hours or job share, a recruitment or overtime freeze, re-skilling or (where contractually possible) short-time working.

If an option isn’t viable, record why - briefly and factually. If you do have alternatives, take care with wording because “suitable alternative employment” has a specific meaning; get advice if you’re unsure.

Step 8: Confirm outcomes in writing for everyone

If redundancy is confirmed, put it in writing clearly. That includes notice, redundancy pay (if applicable), holiday, any support you’re offering, the right of appeal and any suitable alternative role options if relevant.

Then plan what happens next for the wider team. This is the part that often gets missed, but it matters more than people think. Your team will be watching how you handle this. If they hear nothing, uncertainty fills the gap.

You do not need to overshare. You do need to be honest about why change is happening, what happens next and what support is in place. Even a short message will prevent a lot of anxiety and protect trust.

What to document

If you want a simple “document pack” for an SME process, keep it lean. You need a written rationale for the redundancy, your pool and selection reasoning (where relevant), the announcement communication, notes from consultation meetings, a brief record of alternatives considered and why they were or weren’t viable, outcome letters with an appeal route and a short plan for how you’ll communicate with the wider team.

That’s enough to protect fairness and clarity without drowning you in paperwork.

FAQ

How long does redundancy take?

It depends on scale and complexity. The key is meaningful consultation and a fair process and we usually suggest this will take a minimum of one week but often it is two weeks or more.

Can we make someone redundant during probation?

Possibly - but you still need a fair, reasoned approach and good documentation.

Can we offer a settlement agreement instead?

Sometimes, but get advice - it’s not a shortcut for a flawed process.

What should we tell the wider team?

Be honest without oversharing. Explain the reason for change, what happens next and what support is in place. Uncertainty is what fuels rumours and damages psychological safety.

When do collective redundancy rules apply?

If you’re considering 20+ redundancies within 90 days, get advice early.

Disclaimer

This is general guidance for UK employers. If you’re dealing with something live, the detail matters - get advice before taking action.