With the Government’s new Employment Rights Bill progressing through Parliament, set to introduce wider protections for workers and potential changes to redundancy rights, and the increase in employers’ National Insurance contributions from April 2025, many SMEs are re-evaluating their staffing levels. It is always wise to seek employment law advice before considering redundancies within your firm.
At Scott Bailey LLP, we are seeing more and more businesses exploring cost-saving redundancies, while employees are coming to us for advice on employment settlement agreements. Alongside new legislation, we are also seeing a shift in team structures across multiple sectors as AI and automation become more embedded in day-to-day operations.
When redundancies are handled correctly, businesses can avoid expensive Employment Tribunal claims and maintain staff trust. When handled poorly, the process can damage morale and reputation, and ultimately cost more than the intended savings.
Ultimately, spending a relatively modest amount of time and cost on preparing for a redundancy process can save many times the amount should you rush into things and Employment Tribunal claims arise.
Here are some top tips for SME employers considering redundancies in 2025.
1. Plan (and take advice!)
As soon as employees are told they are “at risk”, questions will follow. To set expectations, keep consistency with your managers, and reduce stress for everyone – try and set out a clear plan. Staff who feel informated about what’s going to happen next are less likely to challenge the process later.
2. Build a strong business case
Redundancy must be based on a genuine business need. This is especially important for employees with two years’ service or more, though this qualifying period may be reduced under the Employment Rights Bill. A well-documented business case shows that decisions are based on commercial realities, not personal preference.
3. Check for discrimination risks
Employees with protected characteristics (such as age, disability or maternity) may need adjustments in how selection criteria are applied. For example, discounting disability-related absences avoids the risk of unfair disadvantage. Reviewing your workforce early helps protect against discrimination claims.
4. Know when collective consultation applies
If you are considering 20 or more redundancies within a 90-day period at one site, collective consultation rules kick in. These require formal processes, including notification to the Government via an HR1 form. Missing this step is a criminal offence, and directors have been prosecuted in the past for failing to comply.
5. Make the consultation genuine
Consulting with staff at risk of redundancy isn’t just about going through the motions, it’s about listening and engaging. If your employees put forward realistic alternatives, or suggest fairer selection criteria, these should be considered. Tribunals will look closely at each case to determine whether the consultation was meaningful or just rubber-stamped.
6. Be open and keep records
Being transparent ultimately reduces risk. Share your proposed timelines, the selection process, and the reasons why you’re considering redundancy. Keep a written record of all meetings and communications. If a claim arises later, good paperwork is your best defence.
7. Allow enough time
While there is no set consultation period (unless collective consultation applies), the process must be long enough to be fair. Rushing increases the risk of claims, but dragging the process out damages morale and productivity. Strike a balance that fits your business circumstances.
8. Consider voluntary redundancy and settlement agreements
Voluntary redundancy can help reduce compulsory redundancies, though care must be taken not to lose key staff or inadvertently discriminate.
Many employers and employees choose to finalise exits using a settlement agreement. This contract provides both parties with certainty and requires the employee to obtain independent legal advice before signing. Settlement agreements are often the quickest way to close matters on clear, agreed terms.
Fixed-Cost Employment Law Advice
Uncertainty over legal fees is a common worry. At Scott Bailey LLP, our employment solicitors usually work on a fixed-fee basis for redundancy and settlement agreement advice. This gives you certainty from the outset so that you can plan with confidence. Whether you are an SME director managing a restructure or an employee who has been handed a settlement agreement, our transparent pricing means no surprises.
Why this matters in 2025
With Tribunal fees no longer payable by claimants, and with the job market still uncertain, employees are more inclined to challenge redundancy decisions. Combined with new rights under the Employment Rights Bill, the risks for employers are greater than ever – even if the Employment Tribunal process is taking longer than ever.
How Scott Bailey LLP can help
Our experienced employment law team supports both employers and employees in matters related to redundancy and settlement agreements.
For employers, we provide:
- Fixed-fee redundancy support for SMEs
- Drafting and negotiating settlement agreements
- Insurance-backed options to cap legal costs and risks
For employees, we offer:
- Same-day advice on settlement agreements when time is important
- Negotiation of improved packages, including compensation and references
- Clear guidance on redundancy rights and next steps
Contact our employment solicitors in Hampshire today for confidential, commercially focused advice. Call 01590 676933 or get in touch via our contact page.
