Getting redundancy wrong is one of the most expensive mistakes an employer can make. An unfair dismissal claim costs on average £10,000 to defend. This guide covers the correct process step by step.
Redundancy is a specific form of dismissal that occurs when an employer needs to reduce its workforce. The role itself must be genuinely redundant — not the person. Using redundancy to remove a difficult employee when the role is not genuinely redundant is unfair dismissal.
There are three situations that qualify as genuine redundancy: the business is closing entirely, a specific workplace is closing, or there is a reduced need for employees to carry out a particular kind of work.
Under the Employment Rights Act 2025, employees need two years of continuous service to qualify for statutory redundancy pay. The unfair dismissal qualifying period remains two years until January 2027, when it drops to six months.
January 2027 change: From January 2027, employees will only need six months of continuous service to bring an unfair dismissal claim. This means a much larger proportion of your workforce will be protected from day one of any redundancy process.
Document why the role is redundant. Write down the business reason — reduced demand, restructure, closure. This documentation is critical if the dismissal is later challenged.
Identify all employees doing similar work who could potentially fill the remaining roles. The pool must be fair and consistently applied. Cherry-picking who goes into the pool is a common mistake that leads to tribunal claims.
Use objective criteria — attendance record, skills, performance, qualifications. Avoid criteria that could discriminate — do not use age, length of service as a sole criterion (this can be age discrimination), or factors related to a protected characteristic.
Consult individually with each at-risk employee before any decision is made. There is no statutory minimum period for individual consultation (collective consultation applies at 20+ redundancies), but adequate time must be given. Hold at least two meetings — one to explain the situation and one to confirm the outcome.
Before confirming redundancy, you must genuinely consider whether there are any suitable alternative roles. Offering a role the employee would clearly refuse is not adequate consideration.
Issue a redundancy letter confirming: the reason, the notice period, the redundancy pay calculation, the right of appeal, and the last working day.
If you are making 20 or more redundancies at one establishment within 90 days, collective consultation rules apply. You must notify the Redundancy Payments Service (RPS) on Form HR1 before consultation begins.
Minimum consultation periods: 20-99 redundancies = 30 days. 100+ redundancies = 45 days. Failing to comply with collective consultation requirements means each affected employee can claim a Protective Award of up to 90 days' pay.
The maximum statutory redundancy payment is £19,290 (20 years × 1.5 × £643). Many employers enhance this contractually — check your employment contracts.
| Age | Per complete year of service |
|---|---|
| Under 22 | 0.5 week's pay |
| 22 to 40 | 1 week's pay |
| 41 and over | 1.5 weeks' pay |
Every employee being made redundant should be given the right to appeal the decision. Set a deadline of around 5 working days. Hold a separate appeal meeting chaired by someone not involved in the original decision. Ignoring the right of appeal is a procedural failure that strengthens any tribunal claim.
Selection matrix, at-risk letter, consultation meeting guide, redundancy confirmation letter, and appeal invitation — everything needed to run a compliant process. Word and PDF. Instant download.
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