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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.

Guide summary

Consult with employees before making anyone redundant. For 20 or more redundancies at one place within 90 days, you must consult with employee representatives for at least 30 days (45 days if 100+). You must also notify the government using an HR1 form or face a criminal offence and unlimited fine.

  • Consult individually with every employee you plan to make redundant
  • If 20+ redundancies in 90 days, consult representatives for 30 days minimum
  • If 100+ redundancies, consult representatives for 45 days minimum
  • Submit HR1 form to Redundancy Payments Service before consultation starts
  • Failing to submit HR1 is a criminal offence with unlimited fine
  • Use fair, objective selection criteria – avoid discrimination and LIFO without checking
  • Pay statutory redundancy: cap at £751/week, max £22,530 (20 years × 1.5 × £751)
  • Give employees time off to look for a new job if they have 2+ years' service
  • Keep records of all consultation steps and scoring decisions
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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:

CriterionMax Score
Skills and qualifications20
Performance (based on reviews)20
Attendance record15
Disciplinary record15
Length of service10

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

  1. Include right to appeal in redundancy notification letter
  2. Set clear deadline for submitting appeal (e.g., 5 working days)
  3. Appoint appeal manager not involved in original decision
  4. Hold appeal hearing within reasonable timeframe
  5. 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:

  1. Identify need for redundancies
  2. Define selection pool and criteria
  3. Notify and consult individual employees
  4. Apply selection criteria
  5. Consider alternatives to redundancy
  6. Make final decision
  7. Give notice and appeal rights

20+ redundancies:

  1. Submit HR1 form to government
  2. Begin collective consultation (30/45 days minimum)
  3. Also conduct individual consultations
  4. Complete consultation
  5. Make final decisions
  6. Issue notice and appeal rights