This is the conversation you've been dreading. Maybe you've been rehearsing it in the shower, testing different versions, looking for the words that make it less terrible. I'll save you the trouble: there are no words that make it less terrible. There's only honest, humane, and practical — and that's what we'll aim for.
Your team deserves the truth, delivered with compassion, along with clear information about what happens next. They're losing their jobs, possibly their income, and definitely their professional stability. The least you owe them is a straight answer.
Here's how to do it.
When to tell them
The short answer: as soon as you know. Not when everything is finalised. Not when you have all the answers. As soon as you have reasonable certainty that the business is closing or entering insolvency.
People always know something is wrong before you tell them. They've noticed the closed-door meetings, the cancelled projects, the senior hires that didn't happen, the forced optimism in your all-hands updates. By the time you make the announcement, most of your team will have suspected it. Some will have started job-hunting already.
Delaying the announcement to "protect" them doesn't protect them. It denies them time to prepare, to update their CVs, to start conversations with their networks, to make financial arrangements. Every day you delay is a day they could have been planning their next move.
The exception: if you're in active negotiations — a sale, a rescue deal, a restructuring that could preserve jobs — you may need to keep things confidential for a limited period. But "limited" means days, not weeks. And if the negotiations fail, tell people immediately.
How to tell them
Group first, individuals second
Start with an all-hands meeting. Everyone hears the same information at the same time. This prevents the rumour mill from distorting the message and ensures nobody finds out through the grapevine.
Keep it short — fifteen to twenty minutes. You'll be emotional, and they'll be in shock. Neither of you will absorb much beyond that.
What to say in the meeting
Start with the headline. Don't bury it. "I need to tell you that the company is closing / going into administration / making significant redundancies." Get the news out immediately. Everything before the headline is just anxiety-building preamble.
Explain briefly what happened. Not a thirty-minute post-mortem, but enough context that people understand why. "We weren't able to reach profitability before our cash ran out" or "We lost our major customer and couldn't replace the revenue in time" or "The market changed in a way we couldn't adapt to fast enough." Be honest. They'll know if you're spinning.
Take responsibility. This is your company. Even if external factors were the primary cause, you're the person who made the decisions. "I take responsibility for the decisions that led here" goes a long way. Don't blame the market, the investors, or the team. Even if blame is shared, this isn't the moment for it.
Tell them what you know about what happens next. This is the most important part. Your team, the moment they hear the news, will be thinking about one thing: what happens to me? Address it directly.
If you know the timeline: "The company will cease trading on [date]" or "We're entering administration this week."
If you know about redundancy: "Formal redundancy consultations will begin [when]" or "The administrator will handle the redundancy process."
What they're entitled to: statutory redundancy pay (based on age and length of service), notice pay, outstanding holiday pay, any unpaid wages.
The Redundancy Payments Service: if the company can't afford to pay what it owes employees, the government's Redundancy Payments Service (part of the Insolvency Service) can pay certain amounts from the National Insurance Fund. This includes up to eight weeks of unpaid wages (capped at £643 per week as of 2024), up to six weeks of holiday pay, statutory notice pay, and statutory redundancy pay. Make sure your team knows this safety net exists.
Be honest about what you don't know. "I don't have all the answers yet" is infinitely better than making things up. If you don't know the exact redundancy timeline, say so. If you're not sure whether the administrator will keep some staff on, say so. False certainty is worse than honest uncertainty.
Tell them you're available. "I'll be here to answer questions, help with references, and support you however I can." And mean it.
After the meeting
Make yourself available for individual conversations. Some people will want to talk immediately. Others will need a day to process. Some will be angry. Some will cry. Some will be strangely calm. All of these reactions are normal.
Provide written information. Follow up the meeting with an email containing: a summary of what was communicated, practical next steps, links to government resources (GOV.UK redundancy page, Redundancy Payments Service), and your contact details.
Help with references. One of the most useful things you can do for departing staff is provide a strong reference immediately, while the details of their contribution are fresh. Offer to write references proactively — don't wait to be asked.
Help with introductions. If you know companies that are hiring, make introductions. Your network is a resource you can share, and doing so is one of the most tangible ways you can help.
What NOT to do
Don't announce by email. This is a face-to-face conversation (or video if the team is remote). Email is for follow-up, not for breaking the news. Finding out you've lost your job through a corporate email is dehumanising.
Don't be defensive. Some team members will be angry. They might say things that are unfair. They might blame you personally. Resist the urge to argue or justify. Their anger is valid — they're losing their livelihoods. Let them express it. You can process your own feelings later.
Don't make promises you can't keep. "I'll make sure everyone gets paid" is a dangerous promise if the company doesn't have the money. "I'll do everything I can to ensure you get what you're entitled to" is honest and doesn't create liabilities.
Don't disappear. Some founders deliver the news and then vanish — unable to face the emotional fallout. This is understandable but terrible for the team. They need you available, at least for a few weeks, to answer questions, sign documents, and provide human connection during a frightening time.
Don't make it about you. This is not the moment for your emotional processing. "This is the hardest thing I've ever done" might be true, but right now the focus should be on the people in front of you, not on your feelings about delivering the message. Save your processing for later, with a friend or therapist.
The emotional reality
Let's be honest: this conversation will be awful. You'll feel sick before it, shaky during it, and empty after it. You might cry. You might not be able to get the words out cleanly. That's okay. Your team doesn't need you to be polished. They need you to be honest and human.
Some team members will take it well — surprisingly well, even. Some will have been expecting it and feel relieved that the uncertainty is over. Others will be devastated. The ones who've been with you longest, who believed in the mission most, who turned down other opportunities to stay — they'll take it hardest.
You can't control their reactions. You can only control how you deliver the message: with honesty, with compassion, with practical information, and with genuine care for the people who trusted you enough to join your company.
Your legal obligations
Redundancy has specific legal requirements in the UK. If you're making 20 or more employees redundant within a 90-day period, you're legally required to collectively consult with employee representatives (this process must begin at least 30 days before the first dismissal for 20-99 redundancies, or 45 days for 100+).
If the company is entering administration, the administrator will typically handle the formal redundancy process. But understanding the basics helps you communicate accurately with your team.
Key points: redundancy must be based on the role becoming redundant, not on the individual; selection criteria should be objective and documented; employees with two or more years of service are entitled to statutory redundancy pay; all employees are entitled to their notice period (or pay in lieu).
For a detailed guide on what employees are entitled to, read: What happens to your staff when your company goes insolvent.
After the dust settles
In the weeks after the announcement, check in on your team. Not because you're obligated to — your legal relationship may have ended — but because these are people you spent months or years working alongside. A text. A coffee. A LinkedIn recommendation. These small gestures matter more than you realise, both to them and to your own ability to process what's happened.
Many founders carry guilt about their team for years after a business fails. If that's you, know this: the fact that you feel guilty is evidence that you cared. The fact that the business failed despite your efforts is evidence that you tried. Those two things can coexist. You can feel terrible about what happened to your team and still know that you did your best with the information and resources you had.
For more on the emotional aftermath, read: Why losing your business feels like losing yourself.
Practical support you can provide
Beyond the announcement itself, there are concrete things you can do to help your team through the transition:
Write personalised references immediately. Don't wait for them to ask. Write a strong, specific reference for each person while their contributions are fresh in your mind. Include concrete achievements, not just generic praise. "Led the migration to our new platform, delivering three weeks ahead of schedule" is worth infinitely more than "was a valued team member."
Make your network available. You know people. Your team needs jobs. Connect them. Send introductory emails. Share job listings. Post about your team's availability (with their permission). This is one of the most tangible, useful things you can do, and it costs you nothing but time and some emotional energy.
Help them understand the redundancy process. Many people have never been made redundant and don't understand their rights. Point them to the GOV.UK redundancy guidance. Explain the Redundancy Payments Service. If the company can afford it, consider whether you can offer any additional support — outplacement services, extended health insurance, or a small ex-gratia payment.
Create a shared document. A simple document containing: key dates, contact details for the administrator (if relevant), links to government resources, guidance on claiming benefits, and information about their rights. Having everything in one place reduces the cognitive burden during a stressful time.
Be a human, not just an employer. Check in individually with people who are struggling. Be honest about your own feelings without making it about you. Acknowledge specific contributions. Thank people personally for what they gave to the company. These conversations are emotionally draining but they matter — both to your team and to your own ability to process the loss.
The special cases
Long-serving employees who've been with you from near the beginning deserve a separate, private conversation before or immediately after the group announcement. Their relationship with you and the company is different, and they should hear it from you personally.
Employees with vulnerabilities — people on parental leave, those with health conditions, those on visas tied to employment — need additional consideration. Their situations may be more complex, and you may have additional legal obligations. Ensure they get specific, accurate information about their rights and options.
Team members who are also friends will be processing a dual loss — their job and their proximity to you. These relationships often survive business failure, but they change. Be prepared for some distance as people process their own feelings about what happened.