"as they are all contract holders"
What do you mean by this? Does he have a permanent contract, a temporary contract? Who is his employer? - this company or is he employed through a third-party or is he regarded as self-employed?
Next thing, if he is an employee, has he been there more than 12 months continuously? More than 24 months continuously? I need to know this to establish if he could potentially make a claim for unfair dismissal, and indeed whether he is entitled to a redundancy payment at all. The letter seems to be a standard letter to all staff.
He can join a Union but that doesn't mean that the Union would be accepted for collective bargaining purposes - not before the company put this into action, anyway.