Guide
Redundancy consultation process
How to conduct redundancy consultations properly. Covers collective consultation requirements, selection criteria, statutory redundancy pay, HR1 notification, and employee rights including time off for job hunting.
If you're considering making employees redundant, you must follow a fair consultation process. Failure to consult properly can result in unfair dismissal claims, protective awards, and criminal penalties.
This guide covers the legal requirements for both individual and collective redundancy consultations.
Employee redundancy rights
Before starting the redundancy process, understand what employees are entitled to.
Consultation requirements overview
Individual vs collective consultation
- Individual consultation: Required for ALL redundancies, regardless of number
- Collective consultation: ADDITIONAL requirement when 20+ redundancies planned at one establishment within 90 days
Important: Even if collective consultation applies, you still need to consult individually with each affected employee.
Collective consultation (20+ redundancies)
What collective consultation involves
You must consult with employee representatives (trade union reps or elected representatives) about:
- Ways to avoid the redundancies
- Ways to reduce the number of dismissals
- Ways to mitigate the consequences of dismissals
Meaningful consultation: This isn't a box-ticking exercise. You must genuinely consider alternatives and respond to proposals. Starting with a fixed plan and going through the motions isn't proper consultation.
HR1 notification
You must notify the government before collective redundancies.
Getting HR1 right
- Timing: Submit before consultation begins, not after
- Criminal offence: Failure to notify is a criminal offence with unlimited fine
- Copy to reps: Must provide copy to employee representatives on same day
- Updates: Notify if numbers change significantly
Selection criteria and pools
Fair selection is crucial to avoiding unfair dismissal claims.
Creating fair selection criteria
Good criteria are:
- Objective and measurable
- Supported by evidence (attendance records, performance reviews)
- Consistently applied across the pool
- Free from discrimination
Example criteria matrix:
| Criterion | Max Score |
|---|---|
| Skills and qualifications | 20 |
| Performance (based on reviews) | 20 |
| Attendance record | 15 |
| Disciplinary record | 15 |
| Length of service | 10 |
Document everything: Keep detailed records of how you scored each employee and why.
Statutory redundancy pay
Enhanced redundancy pay
You can offer more than the statutory minimum. Common enhancements:
- Multiplier on statutory formula (e.g., 2x or 3x)
- Higher weekly pay cap than statutory limit
- Additional ex gratia payment
- Extended notice period
Consistency: If you enhance for some employees, be consistent to avoid discrimination claims.
Notice periods
Notice options
- Work notice: Employee works through notice period
- Garden leave: Employee stays employed but doesn't work
- PILON: Pay in lieu of notice - employment ends immediately
PILON note: Payment in lieu is always taxable, even if included in a settlement agreement. It's separate from the £30,000 tax-free allowance for redundancy payments.
Alternative employment offers
Before dismissing for redundancy, consider whether you can offer the employee suitable alternative employment.
Time off for job hunting
Practical approach: While the statutory entitlement is limited, being reasonable about time off for interviews:
- Helps maintain goodwill during difficult period
- Reduces risk of constructive dismissal claims
- Shows you're acting fairly (relevant if claim arises)
Appeals
Setting up an appeals process
- Include right to appeal in redundancy notification letter
- Set clear deadline for submitting appeal (e.g., 5 working days)
- Appoint appeal manager not involved in original decision
- Hold appeal hearing within reasonable timeframe
- Confirm outcome in writing
What employees can appeal:
- Selection for redundancy
- Application of selection criteria
- Failure to consider alternatives
- Adequacy of consultation
Redundancy process timeline
Fewer than 20 redundancies:
- Identify need for redundancies
- Define selection pool and criteria
- Notify and consult individual employees
- Apply selection criteria
- Consider alternatives to redundancy
- Make final decision
- Give notice and appeal rights
20+ redundancies:
- Submit HR1 form to government
- Begin collective consultation (30/45 days minimum)
- Also conduct individual consultations
- Complete consultation
- Make final decisions
- Issue notice and appeal rights