How to Conduct a Fair Redundancy Process in the UK

When is Redundancy Appropriate?

Redundancy is a potentially fair reason for dismissal under the Employment Rights Act 1996. It arises when:

• The employer ceases, or intends to cease, carrying on the business
• The employer ceases, or intends to cease, carrying on the business at a particular location
• The requirements for employees to do work of a particular kind have ceased or diminished

Redundancy must be genuine. Using it as a way to dismiss employees for performance or conduct reasons is unfair dismissal.

The Redundancy Process Step by Step

Step 1: Establish the Business Case

• Document why the redundancy is necessary (financial pressures, restructuring, technology changes, market conditions)
• Identify the pool of employees at risk
• Consider whether alternatives to redundancy exist (reduced hours, redeployment, voluntary redundancy)

Step 2: Define the Selection Pool

• The pool should include all employees doing the same or similar work
• Using a pool of one is sometimes justified but carries higher legal risk
• Document your reasoning for the pool definition

Step 3: Apply Fair Selection Criteria

Selection criteria must be objective and measurable. Common criteria include:

• Attendance record (excluding disability-related and pregnancy-related absence)
• Performance ratings and appraisal scores
• Skills, qualifications, and experience
• Disciplinary record
• Length of service (though this alone may be age-discriminatory)

Avoid subjective criteria like "attitude" or "flexibility" that cannot be evidenced.

Step 4: Consult with Employees

Individual consultation is required in all redundancy situations. This means:

• Informing at-risk employees of the situation
• Explaining the selection criteria and their individual scores
• Genuinely considering any representations they make
• Exploring alternatives to redundancy
• Allowing reasonable time for consultation (there is no statutory minimum for individual consultation, but rushing is a risk)

Collective consultation is required when proposing to dismiss 20 or more employees at one establishment within a 90-day period:

• 20-99 redundancies: consultation must begin at least 30 days before the first dismissal
• 100+ redundancies: consultation must begin at least 45 days before
• Must consult with recognised trade union representatives or elected employee representatives
• Must notify the Redundancy Payments Service (form HR1)

Step 5: Consider Suitable Alternative Employment

• Search across the whole organisation for vacancies the employee could fill
• Offer any suitable alternative roles before dismissal
• Employees have a 4-week statutory trial period in a new role
• Unreasonable refusal of a suitable alternative may forfeit redundancy pay

Step 6: Give Notice and Make Payments

Notice periods (statutory minimum):

• Less than 2 years' service: 1 week
• 2-12 years: 1 week per year of service
• 12+ years: 12 weeks

Statutory redundancy pay (for employees with 2+ years' continuous service):

• 0.5 week's pay for each full year of service aged under 22
• 1 week's pay for each full year of service aged 22-40
• 1.5 weeks' pay for each full year of service aged 41+
• Weekly pay is capped at £719 (2025/26)
• Maximum of 20 years' service counts

Step 7: Provide a Right of Appeal

• Offer the employee the right to appeal the redundancy decision
• The appeal should be heard by a different, more senior manager
• Genuine appeals are a mark of a fair process

Common Pitfalls

• Failing to consult genuinely (going through the motions)
• Using subjective or discriminatory selection criteria
• Not searching hard enough for alternative employment
• Ignoring collective consultation obligations
• Selecting someone for redundancy because of pregnancy, trade union membership, or whistleblowing

How Grove HR Supports Redundancy

Grove HR provides redundancy pay calculators, document templates for consultation letters and meeting notes, a structured workflow to ensure every legal step is followed, and an audit trail that demonstrates fair process in the event of a tribunal claim.