Manage redundancies correctly

Collective consultation requirements

If you're proposing to make 20 or more employees redundant at one establishment within 90 days, you must collectively consult. This is a legal requirement - not optional.

The 90-day rolling period

The 90 days is a rolling period, not a fixed window. If you make 10 redundancies in month 1 and 15 in month 2 at the same establishment, you've triggered collective consultation for the second batch.

Who to consult:

• Trade union representatives (if recognised)
• Otherwise, elected employee representatives
• You must allow time for representatives to be elected

Consultation must be genuine and meaningful - not a box-ticking exercise after decisions are made.

HR1 notification

You must notify the Secretary of State (in practice, the Insolvency Service) using Form HR1 before any redundancies take effect:

• 20-99 redundancies: At least 30 days before first dismissal
• 100+ redundancies: At least 45 days before first dismissal

Failure to notify is a criminal offence with an unlimited fine. Send the form even if you're still consulting.

Fair selection criteria

Your selection criteria must be objective, measurable, and non-discriminatory. Using unlawful criteria makes dismissals automatically unfair - employees can claim regardless of length of service.

Building a fair selection process

Step 1: Define the pool

Include all employees doing similar work or with interchangeable roles. Don't artificially narrow the pool to target specific individuals.

Step 2: Choose objective criteria

Good criteria are based on documented evidence:

• Skills and qualifications (can be verified)
• Performance ratings from existing appraisals
• Disciplinary record (live warnings only)
• Attendance record (excluding protected absences)

Step 3: Apply criteria consistently

Use a scoring matrix. Have more than one manager score each employee. Document everything.

Step 4: Consider alternatives

Before confirming redundancy, consider suitable alternative employment. Offer a 4-week trial period in alternative roles.

Statutory redundancy pay (2026/27)

Employees with 2+ years' continuous service are entitled to statutory redundancy pay. You can pay more, but not less.

How to calculate redundancy pay

Use the GOV.UK redundancy pay calculator for accuracy. The formula is:

• Under 22: 0.5 week's pay per year of service
• Age 22-40: 1 week's pay per year of service
• Age 41+: 1.5 weeks' pay per year of service

The calculation uses age during each year of service, not just current age. Maximum 20 years counted.

Tax treatment: First £30,000 of redundancy pay is tax-free. No National Insurance is payable on statutory redundancy pay.

Penalties for getting it wrong

Failing to properly consult can result in protective awards at tribunal.

Other risks

• Unfair dismissal claims: Compensatory award up to £123,543 (2026/27 cap, removed from January 2027) plus basic award
• Discrimination claims: Unlimited compensation for discriminatory selection
• Criminal penalties: Unlimited fine for failing to notify (HR1)
• Reputational damage: Publicity from tribunal cases

Northern Ireland differences

Redundancy law in Northern Ireland is covered by separate legislation, though the principles are similar.

Key differences for NI employers

• Collective redundancy notification goes to Department for the Economy, not the Insolvency Service
• Different HR1 form and process
• Same statutory redundancy calculation formula and week's pay cap
• Employment tribunals operate under Industrial Tribunals (NI) rules

Redundancy process step by step