Know what redundancies will cost you.

The CIPD has calculated that it costs an average of £16,000 to make one employee redundant.  Consider alternatives to redundancy before you choose this route. Factor in the hidden costs of redundancy when you calculate redundancy payments.

Employees are entitled to statutory redundancy pay once they have completed two years' service. BERR (Department for Business, Enterprise and Regulatory Reform) have a very useful ready reckoner on their website www.berr.gov.uk which calculates redundancy pay entitlement.

Don't forget that employees are also entitled to statutory or contractual notice.

Offering enhanced redundancy pay has advantages for both businesses and employees but of course depends on whether your business can afford more than statutory redundancy pay.

Be aware that enhanced amounts can be discriminatory if based on age, unless you have logical reasons for allocation.

If you have previously paid generous redundancy payments but can no longer afford to do so you can revise your redundancy packages.