Redundancy Reforms: Why Employers Need to Plan Before They Restructure
Redundancy is never just a business decision. It affects people, teams, morale and trust. It is also one of the highest-risk areas of employment law if the process is rushed or poorly documented.
For SMEs across Yorkshire, particularly in engineering, manufacturing and operational environments, redundancies often follow real commercial pressure: reduced orders, rising costs, contract changes, automation or the need to reshape skills for the future.
But even where the business reason is clear, employers still need to follow a fair and compliant process.
What is changing?
The Employment Rights Act 2025 will bring greater scrutiny to redundancy and dismissal processes.
One key change relates to collective consultation. Employers will need to look at proposed redundancies across the whole organisation, rather than only at one workplace. This means businesses with multiple sites, departments or teams must take a wider view before starting any restructure.
A proposal that looks small in one area could trigger wider consultation obligations when added to other planned changes across the business.
The cost of getting this wrong is also increasing. From 6 April 2026, the maximum protective award for failing to collectively consult doubled from 90 days’ pay to 180 days’ pay for each affected employee.
For SMEs, that could be a serious financial and reputational risk.
Consultation must come before decisions are made
A fair redundancy process should not begin with a decision already made.
Consultation should give employees a genuine opportunity to understand the proposal, ask questions, challenge the rationale and suggest alternatives. This might include reduced overtime, redeployment, retraining, voluntary redundancy, changes to working patterns or other ways to avoid or reduce redundancies.
For engineering and manufacturing employers, this is particularly important. Skilled people can be hard to replace, and short-term cost pressures should be balanced against the skills the business will still need in the future.
Do not treat each change in isolation
Many businesses make changes in stages: one team here, one department there, a management restructure later.
Under the reforms, employers will need to be careful. Separate changes may still need to be considered together if they are happening within the same period across the same organisation.
Before starting a process, ask:
How many roles could be affected across the whole business?
Are other restructures being planned?
Have we allowed enough time for consultation?
Are managers following one consistent process?
Do we have HR oversight from the start?
This joined-up view is essential.
Selection, documentation and fairness still matter
Even where collective consultation does not apply, employers still need a fair individual process.
That means having a clear business case, a fair selection pool, objective criteria, meaningful consultation, consideration of suitable alternative roles and accurate records.
Employers should also take extra care where employees have additional protections, including those who are pregnant or taking certain family-related leave. In some cases, they may have priority for suitable alternative vacancies.
Good documentation is key. If a decision is challenged later, employers need to show why redundancy was necessary, how decisions were made and how employees were consulted.
Redundancy reform is a prompt to review your process now
Redundancy situations often arise quickly. A contract is lost, orders reduce, costs increase or the business needs to restructure.
That is why employers should not wait until they are under pressure before reviewing their process.
Now is the time to check:
Your redundancy policy
Your consultation process
Manager understanding
Template letters and meeting notes
How you track proposed redundancies across the business
How protected employees are identified
How alternative roles are considered
Redundancy will always be difficult, but it should never be rushed, informal or inconsistent.
For Yorkshire SMEs, the reforms are a reminder to plan properly, consult early and keep clear records. A fair process protects your business, supports your people and reduces the risk of costly mistakes.
At Castle HR & Training Solutions, we support businesses with practical redundancy and restructure advice, including planning, documentation, consultation support and manager guidance.
If your business is considering restructuring, reviewing headcount or making contractual changes, take advice before decisions are made.
