Redundancy is a difficult but sometimes necessary part of running a business. Whether due to restructuring, cost-cutting, or technological change, employers may find themselves needing to reduce staff. However, UK redundancy law is complex — and getting it wrong can lead to costly tribunal claims, reputational damage, and low staff morale.
This guide explains what employers in England and Wales must know about the legal framework around redundancy, and how to handle the process fairly and lawfully.
1. What Is Redundancy?
Under the Employment Rights Act 1996, redundancy arises in three main situations:
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Business closure (the company ceases to operate)
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Workplace closure (a particular site or office shuts down)
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Reduced need for employees to do specific work (due to automation, reorganisation, or reduced demand)
Redundancy is not about poor performance or misconduct — it’s a dismissal based on business need, not employee behaviour.
2. Establishing a Genuine Redundancy Situation
Before starting the process, ensure that redundancy is genuine and justified. You should be able to demonstrate:
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A real reduction in the work available
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The business rationale for the change
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That alternatives (like redeployment or reduced hours) have been considered
Failure to prove the redundancy was genuine can lead to an unfair dismissal claim.
3. Following a Fair Redundancy Process
A fair process is critical — even if the redundancy is legitimate. A fair process generally involves:
A. Early and Meaningful Consultation
You must consult with the affected employee(s) before a final decision is made. This includes:
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Explaining the reasons for potential redundancy
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Discussing alternatives (e.g. retraining, redeployment)
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Giving employees a chance to ask questions or propose alternatives
B. Selection Criteria
If only some staff in a department are being made redundant, you must apply objective, non-discriminatory selection criteria, such as:
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Skills and qualifications
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Attendance and disciplinary record
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Length of service (used cautiously)
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Performance
Avoid criteria that could be indirectly discriminatory (e.g. age, disability, part-time status).
C. Alternative Employment
You are legally required to look for suitable alternative roles within the business and offer them to affected employees where available.
4. Group Redundancies (Collective Consultation)
If you’re making 20 or more redundancies at one establishment within 90 days, additional rules apply:
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Collective consultation is mandatory
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You must notify the Redundancy Payments Service (RPS) at least:
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30 days in advance (20–99 redundancies)
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45 days in advance (100+ redundancies)
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Consult with employee representatives or a trade union
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Failure to follow this process can lead to a Protective Award of up to 90 days’ pay per affected employee
5. Notice and Redundancy Pay
A. Notice Period
Employees are entitled to their contractual or statutory notice period, whichever is longer. Statutory minimums are:
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1 week’s notice for 1–2 years’ service
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1 week per year (up to 12 weeks) for 2+ years
You may choose to give payment in lieu of notice if your contract allows.
B. Statutory Redundancy Pay
Employees with 2 or more years’ continuous service are entitled to statutory redundancy pay, based on:
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Age
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Length of service (capped at 20 years)
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Weekly pay (capped at £700 per week as of April 2025)
Calculation Example:
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1.5 weeks’ pay for each year aged 41 or older
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1 week’s pay for each year aged 22–40
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0.5 week’s pay for each year under 22
You can also offer enhanced redundancy pay as a contractual benefit or part of a settlement agreement.
6. Avoiding Tribunal Claims
Redundancy can give rise to claims such as:
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Unfair dismissal
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Discrimination (e.g. age, sex, disability)
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Failure to consult in collective redundancies
To reduce risk:
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Document every step of the process
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Apply criteria fairly and consistently
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Consider offering a settlement agreement where appropriate
7. Legal Support for Employers
Even well-intentioned employers can fall foul of complex redundancy laws. Seeking legal advice early helps ensure:
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Compliance with the law
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Clear documentation
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Reduced risk of tribunal claims
Need Advice on a Redundancy Process?
At [Your Law Firm Name], we work with employers across the UK to ensure redundancy decisions are handled legally, sensitively, and efficiently.
Our services include:
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Reviewing your redundancy strategy
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Drafting letters and scripts for consultations
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Preparing selection criteria and scoring matrices
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Advising on collective consultation and tribunal risks
📞 Call today: 01234 567890
📧 Email: info@firthstonevalelaw.com
💼 Confidential legal advice for employers and HR managers
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Employers should always consult a qualified solicitor before commencing any redundancy process.
