What is the correct UK redundancy procedure?

What redundancy actually is

Redundancy is one of the five potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996. Section 139 defines three statutory situations:

1. The employer has ceased or intends to cease the business altogether
2. The employer has ceased or intends to cease the business at the workplace where the employee is employed
3. The requirement for employees to do work of a particular kind has diminished or is expected to diminish

Anything else dressed up as redundancy isn't. Replacing the role with a different person, restructuring without reducing headcount, or removing the post because of poor performance — none of these are redundancy. Different reasons require different processes.

Genuine vs sham redundancy

The most common fair-process failure is treating a non-redundancy situation as redundancy. The test is what's happening to the work, not what's happening to the person.

If you're letting one employee go and immediately recruiting a replacement to do the same role, that's not redundancy. If you're closing the marketing team and the work continues to be done by another team, that's not redundancy either — the work hasn't gone away. Tribunals look hard at whether the alleged need for fewer employees actually existed.

Individual consultation

For any redundancy — even just one — the employer must consult individually with the affected employee. The shape of the consultation:

1. Initial meeting — explain the redundancy situation, the proposed selection, and the timeline
2. Provide information — selection criteria, scoring, any pool of selection, alternative roles available
3. Time for the employee to respond — meaningful opportunity to raise points or propose alternatives
4. Further meetings as needed — to consider the employee's responses
5. Decision communicated in writing — including notice and any redundancy pay calculation
6. Right of appeal

A token consultation that's already arrived at a decision before the meeting starts is not consultation. Tribunals can identify pre-determined outcomes from the documentation.

Collective consultation

Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation rules under the Trade Union and Labour Relations (Consolidation) Act 1992 apply on top of individual consultation.

| Number of redundancies (in 90 days, one establishment) | Minimum consultation period before first dismissal | |--------------------------------------------------------|----------------------------------------------------| | 20–99 | 30 days | | 100+ | 45 days |

The collective consultation must be with appropriate representatives — recognised trade union, elected employee representatives, or (in their absence) the workforce directly. Topics to cover include the reasons, the numbers and categories proposed, the selection criteria, the timeline, redundancy pay calculations, and any mitigation steps.

The employer must also notify the Insolvency Service using Form HR1. Failure to do so can result in fines of up to £5,000 per affected employee and even unlimited fines for serious breaches.

The pool of selection

If only some employees in a category are being made redundant, the employer must define a pool of selection — the group of employees from which the redundancies will be selected. The pool definition must be rational and defensible.

Common approaches:

• All employees doing similar work at the affected workplace
• All employees in a specific department or team
• All employees performing a specific function regardless of location

A pool that's drawn too narrowly to capture only the people the employer wants to lose is a tribunal red flag. A pool that's drawn too broadly creates fairness issues for employees outside the actual affected work.

Selection criteria

Within the pool, employees must be selected against objective and consistent criteria. Common categories:

• Skills, qualifications, and experience relevant to the future business needs
• Performance (with documented appraisal evidence)
• Attendance (excluding disability- and pregnancy-related absences)
• Disciplinary record (excluding warnings that have lapsed)
• Length of service (use with caution — can disadvantage younger workers)

Each criterion is typically scored on a 1–5 or 1–10 scale, with weightings applied to produce a total score. The lowest scorers are selected for redundancy.

Criteria that are automatically unfair:

• Pregnancy or maternity leave
• Trade union activity
• Whistleblowing
• Health and safety duties
• Asserting statutory rights

Selection on these grounds, even indirectly, is automatic unfair dismissal with no qualifying-service requirement.

Suitable alternative employment

Before confirming any redundancy, the employer must consider suitable alternative employment within the business or any associated employer. Alternative roles should be:

• Comparable in pay and status
• Located reasonably for the employee
• Within the employee's reasonable ability to perform

If the employer has a suitable alternative and fails to offer it, the dismissal is unfair regardless of the rest of the process.

The employee has a four-week trial period to try the alternative role. If during the trial they decide the role isn't suitable, they retain their right to redundancy pay. If they unreasonably refuse a genuinely suitable alternative outright, they can lose entitlement to redundancy pay.

Statutory redundancy pay

Employees with two or more years' continuous service are entitled to statutory redundancy pay. The formula by age band:

• Under 22 at the time of service — 0.5 weeks' pay per year worked at that age
• 22 to 40 — 1 week's pay per year worked at that age
• 41 and over — 1.5 weeks' pay per year worked at that age

Maximum 20 years of service counted, with a weekly pay cap set annually (£700 for 2024–25, reviewed each April; verify on gov.uk).

Worked example

A 38-year-old with 7 years' continuous service, average weekly pay £900 (capped at £700):

• 7 years aged 22–40 = 7 × 1 week = 7 weeks
• Total: 7 × £700 = £4,900

Statutory redundancy pay is tax-free up to £30,000. Anything above that, plus enhanced contractual redundancy pay, is taxable through PAYE.

Notice and pay in lieu

Statutory minimum notice still applies on redundancy:

• Less than 2 years' service — 1 week (after 1 month's service)
• 2 to 12 years' service — 1 week per completed year
• 12+ years — capped at 12 weeks

Contractual notice (if longer) overrides the statutory minimum. The employer can pay in lieu of notice (PILON) if the contract permits, or require the employee to work the notice period.

Time off to look for work

Employees with two or more years' service who are under notice of redundancy have the statutory right to reasonable time off to look for work or arrange retraining. This is paid time off, capped at 40% of one week's pay regardless of how much time is taken.

The redundancy decision letter

The dismissal letter should set out:

• The redundancy situation
• The selection process and outcome
• Notice period and termination date
• Statutory redundancy pay calculation (years of service, age band breakdown, weekly pay used, total)
• Any contractual enhancements
• Any other final-pay items (accrued holiday, expenses, pension)
• The right of appeal and the deadline

A vague or incomplete letter weakens the employer's tribunal defence and creates HMRC and pension-administration friction.

Common mistakes

Pre-deciding the outcome

Going through the motions of consultation when the decision is already made — and the documents reveal it — is the most common reason redundancy dismissals are found unfair.

Drawing the pool to fit the result

Defining the selection pool deliberately to capture only the people you want to lose. A tribunal can re-draw the pool and find the dismissal unfair.

Forgetting collective rules

Twenty redundancies at one site triggers the 30-day clock. Some employers count by team or by department and miss the threshold. The test is one establishment, not one team.

Ignoring suitable alternatives

If a vacancy exists elsewhere in the business, you must offer it. Failing to consider alternatives is a frequent ground for tribunal claims.

Discounting protected absences

Selection criteria that include attendance must exclude disability- and pregnancy-related absences. Including them is indirect discrimination.

Putting it into practice

A robust redundancy process:

1. Establishes the genuine business case for redundancy in writing before the process starts
2. Defines the pool of selection on rational grounds
3. Sets objective scoring criteria with documented weightings
4. Triggers collective consultation if the 20-employee threshold is met
5. Conducts at least three individual consultation meetings before any decision
6. Considers and offers any suitable alternative roles
7. Issues a clear written decision with full pay calculation
8. Provides a right of appeal and follows up if exercised
9. Files Form HR1 if collective rules apply

Redundancy is one of the most procedurally exposed parts of UK employment law. Every step that's skipped or shortened is a future tribunal point. Build the timeline backwards from the intended dismissal date and don't compress the consultation phase.