For many social sector employers, managing a redundancy process is one of the most challenging parts of people management. Often, redundancies arise due to funding changes, the end of grants, or the completion of projects. Even when unavoidable, it’s vital that every step is handled fairly, legally, and sensitively.
At Roots HR, we understand the unique pressures faced by charities, social enterprises, and not-for-profit organisations. We support social sector employers to manage redundancies with confidence, care, and compliance – helping them navigate difficult decisions while protecting their people and values.
Our team provides practical, jargon-free HR guidance designed specifically for the social sector, where compassion and fairness matter just as much as compliance.
We’re often asked the same key questions by small employers navigating this complex process. This blog brings together the answers, helping guide you to meet your obligations, support your people, and protect your organisation.
What Is a Genuine Redundancy?
A genuine redundancy occurs when an employer no longer needs employees to carry out work of a particular kind, or when the business is closing, relocating, or reducing headcount. It is about the role, not the person.
In the social sector, redundancies most commonly arise when external funding or contracts come to an end, projects conclude, or organisational priorities shift due to changes in service delivery or community needs. However, even when the cause is outside of your control, a fair process is still required.
It’s not enough to simply state that funding has stopped. Employers must be able to show that the need for work has genuinely reduced or ceased and that the redundancy process has been carried out fairly and transparently. This includes consulting with affected employees, exploring alternatives to redundancy, and considering options such as redeployment or reduced hours where possible.
Taking the time to demonstrate fairness and compassion helps protect both your organisation’s reputation and the trust of your employees during what is often a difficult and emotional time.
How Should We Consult with Staff?
Consultation is at the heart of a fair redundancy procedure. It ensures that employees are treated with respect, given a voice in the process, and fully understand the reasons behind potential changes. A genuine consultation should be meaningful, not just a formality – it’s about listening, considering feedback, and exploring ways to avoid or reduce redundancies wherever possible.
For small employers, this usually means individual consultation with each employee at risk. This is your opportunity to discuss the reasons for the proposed redundancy, answer questions, consider alternative solutions such as redeployment or reduced hours, and provide emotional as well as practical support. These conversations can be difficult but approaching them with openness and empathy helps preserve trust.
If you are proposing 20 or more redundancies within a 90-day period, collective consultation rules apply. This means you must consult with employee representatives or trade unions within set timeframes before any dismissals take effect.
Failing to consult correctly can make a redundancy dismissal unfair and expose your organisation to legal and reputational risk. In the social sector, where values of fairness and compassion are central, taking the time to do this well demonstrates integrity and care for your people at a time of uncertainty.
How Should We Set Selection Pools and Criteria?
When more than one person performs a similar role, employers must identify fair and reasonable selection pools and apply objective selection criteria to determine who is at risk of redundancy. This step is crucial to ensure that decisions are transparent, evidence-based, and free from bias.
Start by defining the pool carefully. Group employees who carry out the same or similar work, even if their job titles differ slightly. The aim is to ensure that the process feels fair to everyone involved and that no one is unfairly excluded from consideration.
Examples of fair and measurable selection criteria include skills, qualifications, performance, disciplinary record, and attendance (where absence is not linked to disability, pregnancy, or other protected reasons). Avoid subjective or potentially discriminatory factors such as personality, flexibility, or “team fit”, as these can easily be challenged and undermine trust.
For social sector employers, this process is particularly important where teams are small, and individual roles are often closely aligned with organisational values. Applying clear, documented, and consistent criteria ensures both legal compliance and fairness, helping to demonstrate that your redundancy process has been handled with integrity.
What Extra Protection Applies to Pregnant Employees and New Parents?
Employees who are pregnant or returning from maternity, adoption, shared parental, or neonatal care leave have priority for suitable alternative employment for up to 18 months after the birth or placement of their child.
This means that if a suitable vacancy exists during a redundancy process, it must be offered to them before it is offered to any other employee. This legal protection recognises the unique challenges faced by new and expectant parents and is designed to reduce the risk of discrimination and job insecurity.
For social sector employers who pride themselves on compassion and fairness, ensuring this protection is upheld not only meets your legal obligations but also reflects your organisation’s values. It reinforces trust, supports equality, and demonstrates that you truly care about the wellbeing of your people.
What Is Suitable Alternative Employment and How Do Trial Periods Work?
If you can offer a potentially suitable alternative role to an employee at risk, it should be as close as possible to their existing role in terms of duties, pay, hours, and location. Offering redeployment is one of the most effective ways to avoid redundancy while retaining valuable skills within your organisation.
Employees are entitled to a statutory four-week trial period in the new role to assess suitability. This can be extended by mutual agreement if there are reasonable grounds, such as the need for training.
If, during the trial, the role proves unsuitable for either party, the redundancy dismissal and payment still apply. However, if an employer fails to offer a suitable vacancy that exists, the dismissal could be deemed automatically unfair.
Documenting discussions, being transparent, and showing genuine effort to retain staff wherever possible demonstrates both fairness and care, particularly in values-driven environments like the social sector.
How Do We Calculate Statutory Redundancy Pay (SRP)?
Employees with at least two years of continuous service are entitled to statutory redundancy pay, calculated based on their age, length of service, and weekly pay (subject to a statutory cap). You can use the government’s online statutory redundancy pay calculator to calculate SRP.
Some social sector organisations offer enhanced redundancy pay through their internal policies or contracts. Always check your contracts, policies or handbook to confirm entitlements, as some may include additional provisions.
What Notice Must We Give and Can We Use PILON?
Employees are entitled to statutory or contractual notice, whichever is greater. Notice can be worked in full, or employers can choose to offer garden leave or payment in lieu of notice (PILON), provided the contract allows for this.
The most appropriate option will depend on your operational needs and the culture you wish to maintain through the redundancy process. For example, allowing an employee to work their notice can give them closure and time to transition, whereas a PILON arrangement may offer a more private and dignified exit.
Clear communication about notice periods and pay is key. It ensures employees understand their rights and helps your organisation uphold its reputation for fairness and transparency.
Can Staff Take Time Off to Look for Work During Notice?
Yes. Employees with at least two years of continuous service are entitled to reasonable paid time off to look for new employment or arrange training during their notice period. This right is capped at 40% of one week’s pay.
Encouraging staff to use this entitlement supports them to move forward positively and demonstrates your organisation’s commitment to treating employees with dignity and respect, even during difficult transitions. For social sector employers, this simple act of support aligns closely with sector values of empathy and fairness.
How Do Redundancies Work Around a TUPE Transfer?
When redundancies occur around a TUPE transfer, special rules apply. If dismissals take place before the transfer, they are likely to be automatically unfair if the reason is related to the transfer itself.
After the transfer, redundancies may be considered fair if they are for a genuine redundancy reason and an economic, technical, or organisational (ETO) reason that involves workforce changes.
Because TUPE can be complex, employers should seek specialist advice to ensure compliance and fair treatment of affected staff. For social sector organisations, where contracts and funding streams often change hands, handling TUPE and redundancy lawfully and sensitively helps preserve your organisation’s integrity and reputation.
Taking the Next Step
Even when managed with care, redundancy is never easy. For social sector employers, combining fairness, compassion, and compliance is key to maintaining trust and safeguarding organisational values.
We recommend that every social sector employer seeks professional advice in advance of any restructure or redundancies.
At Roots HR, we specialise in supporting charities, social enterprises, and not-for-profit organisations through every stage of the redundancy process. We understand that funding changes, project closures, or contract ends can create uncertainty – which is why we focus on helping you manage these transitions lawfully, ethically, and with sensitivity.
We can help you:
- Provide advice on redundancy consultation and fair selection
- Review your redundancy policy and documentation
- Support redeployment and suitable alternative employment discussions
- Train managers to handle redundancy conversations with confidence and empathy
Contact us to discuss your support needs now.
You can also:
At Roots HR, we’re proud to support the social sector to manage redundancy fairly and compassionately, protecting both people and purpose. Let’s ensure every redundancy is handled with fairness, empathy, and integrity – values at the heart of the work you do every day.
