Redundancy Process Guidelines for Employers

Making employees redundant is a difficult decision for any business. However, where redundancies are necessary, employers must take care to follow a fair and legally compliant process. A genuine redundancy situation can still result in an unfair dismissal claim if an employer fails to consult properly, uses unfair selection criteria or does not consider suitable alternatives. Employers must also be alert to discrimination risks and the specific rules that apply to collective redundancies. Understanding the redundancy process for employers can help businesses make informed decisions, treat employees fairly and reduce the risk of employment tribunal claims. What Is Redundancy? Redundancy occurs when an employer needs to dismiss an employee because their role is no longer required, rather than because of something the employee has done. Under section 139 of the Employment Rights Act 1996, a dismissal may be a redundancy where it is wholly or mainly attributable to circumstances such as: The employer has stopped or intends to stop carrying on the business. The employer has stopped or intends to stop carrying on the business at the location where the employee works. The employer’s requirement for employees to carry out work of a particular kind has ceased or diminished, or is expected to do so. A redundancy situation should therefore be based on a genuine business reason. For example, an employer should not use redundancy as a way of dismissing an employee because of poor performance or misconduct. Those circumstances may require a capability or disciplinary process instead. What Is the Redundancy Process for Employers? There is no single redundancy procedure that will apply in exactly the same way to every business. The appropriate process will depend on the number of employees affected, the circumstances of the business and whether collective consultation requirements apply. However, a typical redundancy process for employers should involve: Establishing the business reason for redundancy. Considering alternatives to redundancy. Identifying affected roles and appropriate selection pools. Developing fair and objective selection criteria. Informing employees that they are at risk. Carrying out meaningful consultation. Conducting collective consultation where legally required. Considering suitable alternative employment. Reviewing the consultation responses. Making the final redundancy decision. Providing the appropriate notice. Calculating redundancy pay and other final payments. Employers should document each stage carefully so there is a clear record of how and why decisions were made. Step 1: Establish a Genuine Reason for Redundancy Before starting the redundancy process, an employer should establish why redundancies are necessary. Potential reasons may include: A reduction in demand for products or services Financial difficulties Business restructuring Closure of part of the business Closure or relocation of a workplace Changes in technology A reduction in the amount of work available Changes to the way the business operates Employers should also consider whether redundancies can be avoided or reduced. Possible alternatives may include: Recruitment freezes Voluntary redundancy Reduced overtime Reduced working hours Redeployment Retraining Temporary changes to working arrangements Considering alternatives can demonstrate that redundancy is not being used as the first or easiest option. Step 2: Identify Roles at Risk of Redundancy The next stage is to identify which roles may be affected. Where an entire role or department is disappearing, it may be relatively straightforward to identify the employees affected. However, if an employer needs to reduce the number of employees performing similar roles, it may need to establish a selection pool. For example, if a business has ten employees performing similar administrative roles but only needs six positions, the employer may need to select four employees for redundancy using fair and objective criteria. Employers should ensure that the selection pool is appropriate and that employees are not included or excluded for discriminatory or otherwise unfair reasons. Step 3: Create Fair Redundancy Selection Criteria Where employees need to be selected from a pool, employers should establish fair and objective criteria. Possible criteria may include: Skills Qualifications Relevant experience Performance Disciplinary record Attendance, where appropriate Adaptability Business-critical skills The criteria should be relevant to the future needs of the business and applied consistently. Employers should also consider whether a particular criterion could disadvantage employees because of a protected characteristic. For example, using attendance as a selection criterion may create difficulties where absences are related to disability, pregnancy or another legally protected circumstance. Step 4: Inform Employees They Are at Risk Employees should be informed that their role is at risk of redundancy before a final decision has been made. An employer may provide a formal letter explaining: Why redundancies are being proposed The number of roles potentially affected The relevant selection pool Proposed selection criteria The consultation process Possible alternatives to redundancy The next steps Details of the consultation meeting It is important that the letter makes clear that the redundancy decision has not yet been finalised. What Should a Redundancy Letter Include? A redundancy-at-risk letter should provide employees with enough information to understand the proposed changes. It may include: Reason for the proposed redundancy Explain why the business is considering redundancies. Roles affected Explain which roles or areas of the business may be affected. Selection pool Where applicable, explain which employees are being considered together. Selection criteria Provide details of the proposed criteria and explain how employees will be assessed. Consultation Provide details of the consultation process and proposed meetings. Alternatives Explain that the employer will consider suggestions and possible alternatives to redundancy. Next steps Provide information about what will happen during the next stage of the process. Step 5: Carry Out Meaningful Consultation Consultation is one of the most important parts of the redundancy process. Employers should not make a final redundancy decision before meaningful consultation has taken place. Consultation should give employees an opportunity to: Understand why redundancy is proposed Ask questions Challenge information where appropriate Comment on selection criteria Suggest alternatives to redundancy Raise concerns about their selection Identify suitable alternative roles Put forward proposals that could avoid redundancy Consultation should be genuine rather than a process where the employer has already made its final decision. For individual redundancies, there is no fixed statutory minimum consultation period. Employers should allow sufficient time for meaningful consultation based on the circumstances. (gov.uk) Step 6: Collective Redundancy Consultation Additional rules apply when an employer proposes to make 20 or more employees redundant at one establishment within a 90-day period. In these circumstances, the employer must carry out collective consultation with appropriate employee representatives or recognised trade union representatives. The minimum consultation periods are: Proposed redundancies Minimum consultation period 20 to 99 employees 30 days 100 or more employees 45 days These periods must be completed before dismissals take effect.  Employers may also need to notify the Redundancy Payments Service using form HR1 within the relevant statutory deadlines. Failure to comply with collective redundancy consultation requirements can result in a protective award. From 6 April 2026, the maximum protective award increased to 180 days’ pay per affected employee.  Step 7: Consider Suitable Alternative Employment Employers should consider whether suitable alternative employment is available within the business or, where relevant, an associated company. An alternative role may involve changes to: Duties Location Pay Working hours Responsibilities Status Whether a role is suitable will depend on the circumstances and the individual employee. Certain employees, including those who are pregnant or on certain family-related leave, may have enhanced rights to be offered suitable alternative vacancies in a redundancy situation. (acas.org.uk) Where an employee accepts suitable alternative employment, a statutory four-week trial period can generally apply. A longer period can be agreed in writing where additional training is required. Step 8: Review Consultation Responses After consultation, the employer should carefully consider everything raised by employees and their representatives. This could include: Suggestions for avoiding redundancies Challenges to the selection criteria Errors in scoring Requests for alternative roles Voluntary redundancy proposals Requests for changes to working arrangements Concerns about discrimination Employers should be prepared to reconsider their proposals where new information or viable alternatives are identified. Step 9: Make the Final Redundancy Decision Only after consultation has been properly completed should the employer make a final decision. If redundancy remains necessary, the employer should inform the employee of the decision and explain: Why they have been selected The outcome of the selection process Their notice period Their redundancy payment, if applicable Their leaving date Any outstanding holiday or other payments Any right of appeal Employers should retain records showing how the decision was reached. Step 10: Give the Correct Notice Employees selected for redundancy are generally entitled to statutory or contractual notice, depending on the terms of their employment. The statutory minimum notice is generally: At least one week’s notice after one month of employment and up to two years. One week’s notice for each completed year of employment between two and twelve years. A maximum of twelve weeks’ statutory notice after twelve years’ continuous employment. An employment contract may provide a longer notice period. An employer may also make a payment in lieu of notice where permitted by the contract or otherwise agreed. Step 11: Calculate Redundancy Pay Employees who meet the statutory eligibility requirements may be entitled to statutory redundancy pay. For statutory redundancy pay, the calculation generally takes account of: The employee’s age Length of continuous service Weekly pay For redundancies taking effect on or after 6 April 2026, the statutory weekly pay limit is £751, with a maximum statutory redundancy payment of £22,530.  Employers should ensure that redundancy payments are calculated correctly and that any contractual or enhanced redundancy scheme is also considered. How Long Does the Redundancy Process Take? There is no universal redundancy process timeline for every employer. For fewer than 20 proposed redundancies, there is no statutory minimum consultation period, although the employer should allow sufficient time for meaningful consultation. For collective redundancies: 20 to 99 proposed redundancies: consultation must begin at least 30 days before dismissals take effect. 100 or more proposed redundancies: consultation must begin at least 45 days before dismissals take effect. The overall redundancy process may take longer depending on the number of employees involved, the complexity of the proposed changes and the outcome of consultation. Redundancy Process Timeline for Employers A typical redundancy process timeline may look like this: Stage 1: Business planning Identify the reason for redundancy and consider alternatives. Stage 2: At-risk notification Inform affected employees that their roles are potentially at risk. Stage 3: Consultation Discuss the proposal, alternatives, selection criteria and possible solutions. Stage 4: Selection Where necessary, apply fair and objective selection criteria. Stage 5: Alternative employment Identify and consider suitable vacancies. Stage 6: Final decision Review consultation responses and decide whether redundancy remains necessary. Stage 7: Notice and payments Issue dismissal letters, provide notice and calculate redundancy and other payments. The exact timing will depend on the circumstances of the business and whether collective consultation rules apply. Redundancy and Discrimination Risks Employers must take care to ensure that redundancy decisions are not discriminatory. Protected characteristics under the Equality Act 2010 include: Age Disability Race Sex Pregnancy and maternity Religion or belief Sexual orientation Gender reassignment Marriage and civil partnership For example, an employee should not be selected for redundancy because they are pregnant, disabled, older or because of their race. Employers should also consider whether apparently neutral selection criteria could place particular groups at a disadvantage. A discriminatory redundancy process can expose an employer to claims even where the employee would not otherwise qualify for ordinary unfair dismissal protection. What Happens If an Employer Gets the Redundancy Process Wrong? A flawed redundancy process can expose an employer to employment tribunal claims. Potential problems include: Failing to establish a genuine redundancy situation Failing to consult properly Making a final decision before consultation Using unfair selection criteria Applying selection criteria inconsistently Failing to consider suitable alternative employment Discriminatory selection Failing to comply with collective consultation requirements Incorrectly calculating redundancy payments Failing to provide the correct notice Depending on the circumstances, an employee may potentially bring claims including unfair dismissal, discrimination or claims arising from a failure to comply with collective consultation requirements. Redundancy Process Checklist for Employers Before completing a redundancy process, employers should consider whether they have: Established a genuine redundancy situation Considered alternatives to redundancy Identified appropriate selection pools Developed fair selection criteria Informed employees they are at risk Conducted meaningful consultation Complied with collective consultation requirements where applicable Considered suitable alternative employment Considered discrimination risks Reviewed consultation responses Made a final decision only after consultation Provided the correct notice Calculated redundancy payments correctly Kept appropriate records Followed any relevant contractual or internal procedures How KLG Law Can Help With the Redundancy Process Redundancy can create significant legal and practical challenges for employers, particularly where multiple employees are affected or the business is restructuring. At Kalra Legal Group, our employment lawyers can provide advice and support throughout the redundancy process, including: Planning redundancy exercises Reviewing redundancy proposals Advising on selection pools Drafting redundancy letters Advising on consultation Collective redundancy consultation Reviewing selection criteria Advising on suitable alternative employment Calculating redundancy entitlements Managing redundancy-related disputes Advising on potential employment tribunal claims Getting legal advice before starting the process can help employers identify potential risks and ensure that the redundancy procedure is handled fairly and appropriately. For expert advice on the redundancy process for employers, contact Kalra Legal Group on 01689 663851 or contact our legal team online.