As the economic crisis worsens and company after company goes to the wall, every manager is focusing on how to keep their business afloat. In many cases, this involves trimming overheads and making redundancies. This process is painful – no one likes letting staff go – but frequently necessary. As businesses become more cautious and focus on consolidation rather than expansion, there simply isn't room for surplus employees – the very survival of the business (and the jobs of everyone who works there) may be at stake.

In order to make successful redundancies (and avoid painful costs), you need to make sure that you are protected by your redundancy documents. The cost of an unlawful dismissal can be over £75,000, and your redundancy policy and procedure need to follow the letter of the law. Your company's redundancy documents need to:

Outline Your Policy

A clear redundancy policy is an essential document for any company, and should clearly state what the redundancy procedure is – the different stages of the process, selection criteria, right of appeal, the consultation process, the amount of redundancy pay that is offered, any support that is available during or after the procedure, and so on and so forth. A well written redundancy policy is the most important document to have when you need to let people go, both for employers (who need to know what process to follow) and employees (who need to know what to expect and what their rights are) – don't let your business be without one!

Support the Process

In addition to this redundancy policy, you should have documentation that supports the process the whole way through. This includes documents to outline the legally acceptable reasons for redundancy, notify employees of a redundancy decision, offer the right of appeal, provide the results of an appeal, and so on. It isn't enough to provide a sound redundancy policy – the rest of your documents have to follow the letter of the law as well, providing employees with clear information and the right to appeal.

Cover the Alternatives

Wherever possible, your redundancy procedure should allow for alternatives. Part time employment, a job share scheme, reduction of bonuses and salary and other such methods can help reduce costs without cutting staff. It may also be the case that while the company can no longer support a particular position, a member of staff can be offered a different position within the company. Your redundancy documents should clearly outline potential alternatives, if they are applicable, and the conditions under which they will be offered.

Managing redundancies is one of the least enjoyable parts of running a business, but a clear, legally supported redundancy policy and procedure will help to make things as painless as possible. Make sure you keep your documents up to date – every year brings numerous changes to UK employment law. Some of these are relatively minor, but others can be significant changes to policy and statutory redundancy pay. Staying on top of the latest developments may seem like hard work, but when it comes to making redundancies it doesn't pay to make mistakes.