New Zealand Law
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The first stage would be to have a meeting with the employees to discuss the problem. You need to be open with them and explain that because you are scaling down the operation, you cannot afford to keep both employees. During this discussion you should ask them for suggestions, and tell them that you will consider any proposals. After you have had the meeting and listen to the proposals, you can then make a decision about which employee you wish to make redundant, and then have a second meeting in which you advise the employee who is to be made redundant, that you have reached this decision. The employee would get the standard notice depending on the pay period, usually two weeks, plus any outstanding holiday pay.