Redundancy Process

A fair redundancy requires a genuine business reason for reducing headcount, fair selection criteria, individual consultation, consideration of alternative employment, and proper notice and redundancy pay. Collective consultation is required for 20+ redundancies.

Last updated: February 2025

20+ redundancies

Collective consultation trigger

100+ redundancies

45-day consultation

20-99 redundancies

30-day consultation

What the Law Says

Redundancy is a fair reason for dismissal under s.98 ERA 1996. The Trade Union and Labour Relations (Consolidation) Act 1992 requires collective consultation when proposing 20+ redundancies at one establishment. Section 139 ERA 1996 defines redundancy as business closure, workplace closure, or diminished need for employees to carry out particular work.

Your Obligations as an Employer

  • Establish a genuine redundancy situation
  • Apply fair and objective selection criteria
  • Consult individually with affected employees
  • Offer suitable alternative employment where available

What to Include in Contracts

Include a clause acknowledging the employer's right to make redundancies where a genuine business need arises, reference the consultation process, and detail any enhanced redundancy pay above statutory entitlement.

View related contract template

Common Mistakes

  • Using redundancy as a cover for performance management
  • Not conducting meaningful consultation before making decisions
  • Failing to consider suitable alternative roles within the organisation

FAQ

What makes a selection criteria fair?

Fair criteria are objective, measurable, and non-discriminatory. Common examples include attendance records (excluding disability/pregnancy), disciplinary records, skills and qualifications, length of service, and performance assessments. Last-in-first-out alone may be indirectly discriminatory.

Can an employee refuse alternative employment?

Yes, but if the alternative is suitable and the employee unreasonably refuses it, they may lose their right to statutory redundancy pay. What is 'suitable' depends on the terms, status, pay, location, and nature of the work compared to the original role.

Related Topics

Redundancy Pay Calculator

Statutory Redundancy Pay

Unfair Dismissal Rules

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This is guidance for UK employers, not legal advice. For complex employment law matters, consult a qualified employment solicitor or ACAS.

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