Manage redundancies correctly

Making employees redundant is one of the most difficult tasks for any employer. Get it wrong, and you face unfair dismissal claims, protective awards, and reputational damage. Get it right, and you treat people fairly while protecting your business.

The legal requirements for redundancy in the UK cover:

• Collective consultation (20+ redundancies)
• Fair selection criteria
• Statutory redundancy pay calculations
• Northern Ireland differences

Follow ACAS guidance throughout the process. Even individual redundancies require a fair procedure.

Consult the people affected

Consult every employee you plan to make redundant, whatever the numbers. There are no set rules for fewer than 20 redundancies, but if you do not consult, a tribunal will almost certainly find the dismissals unfair. Meet each person, explain why their role is at risk and how they were selected, discuss alternatives, and consider what they say before you decide. Consultation does not have to end in agreement, but it must be carried out with a view to reaching it.

When collective consultation applies, you still meet each affected employee individually as well.

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.

What you must give representatives in writing:

• the reasons for the proposals
• the numbers and descriptions of employees you propose to dismiss, and the total number of employees of each description at the establishment
• how you propose to select people
• how and over what period you propose to carry out the dismissals
• how you propose to calculate any redundancy payments beyond the statutory minimum

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

Give a copy of the form to each of the representatives you are consulting. Failing to notify is a criminal offence. 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, weighted by what matters most to the business, and apply it in the same way to everyone in the pool. Have more than one manager score each employee, keep written evidence for every score, and record why each person scored as they did. A simple matrix might score:

• work performance out of 15
• skills and competence out of 15
• attendance out of 5, leaving out absences for disability, pregnancy or maternity
• disciplinary record out of 5, counting only live warnings

Step 4: Consider alternatives

Before confirming redundancy, consider suitable alternative employment, within your business or an associated company.

Suitable alternative employment

A redundancy can be an unfair dismissal if you had a suitable alternative job and did not offer it. Whether a job is suitable depends on how similar the work is, its terms, the employee's skills and circumstances, and its pay, benefits, status, hours and location.

Employees who are pregnant, or on or recently back from maternity, adoption or shared parental leave, must be offered any suitable alternative vacancy ahead of other employees.

An employee offered a different job has the right to a 4-week trial period. You can extend it for retraining, but only if you agree the extension in writing before the trial starts. If the employee decides during the trial that the job is not suitable, they keep their right to statutory redundancy pay. An employee who unreasonably turns down a suitable offer may lose that right.

Notice and time off to look for work

Once consultation is complete, give each employee at least the statutory notice, or longer if their contract says so:

• 1 month to 2 years' service: at least 1 week
• 2 to 12 years' service: 1 week for each full year
• 12 years or more: 12 weeks

Notice pay is based on average weekly pay over the 12 weeks before notice starts. You can end employment straight away with a payment in lieu of notice if the contract allows it or the employee agrees; deduct tax and National Insurance from it, and include any contractual benefits for the notice period.

An employee with 2 years' continuous service by the end of their notice is entitled to reasonable time off during notice to look for work or arrange training. However much time they take, you only have to pay up to 40% of one week's pay.

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.

Weekly pay is the average over the 12 weeks before the employee received notice, up to the cap shown above. When you pay, give the employee a written statement showing how you worked out the amount.

Tax treatment: Statutory redundancy pay is tax-free up to the threshold shown above, and no National Insurance is payable on it.

Appeals

An appeal is not a legal requirement, but offering one is good practice and helps show a tribunal that the process was fair. Set it out in your redundancy plan and in the redundancy letter.

• Give a reasonable time to appeal in writing with reasons, for example 5 days from the redundancy notice.
• Hold an appeal meeting promptly and let the employee bring a colleague or trade union representative.
• Where possible, have a senior manager who was not involved in the decision hear it.
• Decide without unreasonable delay and confirm the outcome in writing.

If you uphold an appeal during notice, the contract simply continues. If notice has ended, reinstate the employee with continuous service and pay the wages they missed; any redundancy payment already made must be returned. Upholding an appeal may mean reopening the selection for others in the pool.

Penalties for getting it wrong

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

Other risks

• Unfair dismissal claims: Basic award plus a compensatory award capped at the lower of 52 weeks' pay and the statutory maximum (£123,543 in 2026/27)
• Discrimination claims: Unlimited compensation for discriminatory selection
• Criminal penalties: A fine for failing to notify (HR1), and a fine for not giving a written statement of the redundancy payment
• 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, but a higher week's pay cap set by Northern Ireland legislation
• Employment tribunals operate under Industrial Tribunals (NI) rules

Redundancy process step by step