Managing Redundancy in the UK: A Step-by-Step Guide for Employers

Redundancy is one of the most legally complex and emotionally difficult processes an employer can face. Get it wrong, and you risk unfair dismissal claims, protective awards, and significant reputational damage. This guide walks you through the process from start to finish.

When Is a Redundancy Genuine?

Redundancy occurs when an employer dismisses an employee because the business needs fewer employees to carry out work of a particular kind, or the business is closing down. It is not a tool for removing underperforming employees or resolving workplace conflicts — using redundancy as a disguise for performance-related dismissal is a common route to tribunal.

The Redundancy Process: Step by Step

1. Establish the Business Case

Document clearly why redundancies are necessary. This could be due to reduced demand, reorganisation, automation, or business closure. The reasoning must be genuine and supported by evidence.

2. Determine the Selection Pool

Identify which roles are at risk. The selection pool should be logical and defensible — typically employees carrying out similar work in the same location. Restricting the pool too narrowly, particularly to target a specific individual, is a common error that tribunals scrutinise.

3. Apply Fair Selection Criteria

Selection criteria must be objective, measurable, and non-discriminatory. Common criteria include:

• Skills, qualifications, and competencies
• Performance records and appraisal scores
• Attendance records (excluding disability or pregnancy-related absences)
• Disciplinary record
• Length of service (as one factor among several, not the sole criterion)

4. Consult Meaningfully

Individual consultation is required in all cases. This means genuine, two-way discussions — not simply informing employees of a decision already made. Employees should be given the opportunity to challenge their selection, propose alternatives, and suggest ways to avoid redundancy.

For 20 or more redundancies at a single establishment within 90 days, collective consultation obligations apply under Section 188 of TULRCA. This requires:

• Consultation with appropriate representatives (trade union or elected employee reps)
• Minimum 30-day consultation period (for 20-99 redundancies) or 45 days (for 100+)
• Notification to the Secretary of State via the HR1 form

5. Consider Suitable Alternative Employment

Before confirming any redundancy, you must consider whether suitable alternative roles exist within the organisation. Employees on maternity leave have priority for suitable alternative vacancies.

6. Issue Notice and Calculate Redundancy Pay

Employees with two or more years' continuous service are entitled to statutory redundancy pay, calculated based on age, length of service, and weekly pay (capped at a statutory maximum). Many employers also offer enhanced redundancy packages.

The Cost of Getting It Wrong

Failure to follow a fair process can result in unfair dismissal claims, where the basic award mirrors statutory redundancy pay but the compensatory award can reach over £100,000. Failure to collectively consult properly can result in a protective award of up to 90 days' pay per affected employee.

Our redundancy management service guides you through every step, ensuring legal compliance and minimising risk. Speak to our team before you begin.