How to Run a Fair Redundancy Process in the UK: Step by Step

Redundancy is one of the most legally risky things you can do as an employer. An unfair redundancy process can result in an unfair dismissal claim, a discrimination claim, or, if it involves 20 or more employees, a protective award that now runs up to 180 days' pay per employee.

This guide covers the full redundancy process, from the initial business case through to final payments. Follow it and you significantly reduce your legal exposure. Skip steps and you are taking a serious financial risk.

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Before You Start: Is It Really Redundancy?

Redundancy has a specific legal meaning. It applies when:

• The business closes (wholly or in a particular location)
• A type of work has ceased or diminished (the role no longer exists, or there is less need for it)

Redundancy is not a general performance management tool. If you want to dismiss an underperforming employee, use your disciplinary or capability procedure instead. Trying to dress up a performance dismissal as redundancy is one of the most common mistakes employers make, and employment tribunals are experienced at identifying it.

Before you start:

• Write down the genuine business reason for the redundancy
• Confirm that it relates to the closure of the business or a reduction in the need for work of a particular kind
• Check whether the reason might actually be capability, conduct, or SOSR (some other substantial reason)

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The Two Types of Redundancy

Individual Redundancy

Applies when: Fewer than 20 employees are being made redundant within a 90-day period at a single establishment.

You must still follow a fair process, including individual consultation, but there is no fixed minimum consultation period.

Collective Redundancy

Applies when: 20 or more employees are being made redundant at a single establishment within any 90-day period.

This triggers the collective redundancy rules under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), including:

• Mandatory minimum consultation period (45 days if making 100 or more redundant; 30 days if making 20-99 redundant)
• Obligation to notify the Secretary of State (HR1 form) before consultations begin
• Obligation to consult with elected employee representatives or recognised trade union representatives

Post-6 April 2026: the protective award has doubled. If you fail to follow the collective consultation rules, an employment tribunal can award up to 180 days' gross pay per affected employee (previously 90 days). For an employer making 25 redundancies at an average weekly wage of £600, a full protective award would cost £1.56 million. This is not a theoretical risk.

Full guide: Collective Redundancy Protective Award 2026

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The Redundancy Process: Step by Step

Step 1: Establish the Business Case

Before telling any employee anything, document the business reason for the redundancy. You should be able to answer:

• Why does the business need to reduce headcount or close this function?
• What is the financial or operational justification?
• Is this a genuine and objective assessment of business need?

Write this down. If the redundancy is later challenged, this document becomes evidence. A clear, contemporaneous business case is strong evidence of genuine redundancy. A post-hoc justification assembled after the tribunal claim is filed is weak.

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Step 2: Define the Pool for Selection

The "selection pool" is the group of employees from whom those to be made redundant will be selected.

For single-role redundancies (where only one person does the job and that job is disappearing), the pool is that one person.

For redundancies where several employees do similar roles and you need to reduce from, say, five to three, you need to define the pool correctly. Failing to include the right people in a pool is a common cause of unfair dismissal findings.

How to define the pool:

• Include all employees doing similar or interchangeable work
• Do not exclude someone from the pool simply because you want to keep them
• Document your reasoning for the pool definition

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Step 3: Establish Objective Selection Criteria

Where you are selecting from a pool, you need objective criteria to decide who is made redundant.

Fair selection criteria examples:

• Skills and qualifications required for the remaining work
• Performance (using documented appraisal data, not subjective impressions)
• Attendance record (using actual records, and excluding pregnancy/disability-related absences)
• Length of service (can be a factor but not the only factor, as it can indirectly discriminate against younger employees)
• Disciplinary record

Criteria to avoid:

• Part-time status (indirect sex discrimination risk)
• Pregnancy or maternity leave (automatically unfair)
• Trade union membership (automatically unfair)
• Age (direct age discrimination risk if used without justification)

Document your criteria in writing before applying them. Do not change them halfway through to produce a preferred outcome.

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Step 4: Score the Pool

Apply the selection criteria to each person in the pool. Score them consistently, using documented evidence where possible.

Keep all scoring records. If your selection is challenged, you will need to demonstrate that:

• The criteria were applied consistently
• Scores were based on documented evidence (not gut feeling)
• The lowest-scoring employees were selected for redundancy

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Step 5: Consider Alternatives to Redundancy

Before moving to consultation, you must genuinely consider whether redundancy can be avoided. This is a legal obligation, not a formality.

Alternatives to consider (and document):

• Reducing or eliminating overtime
• Stopping agency worker use in relevant roles
• Voluntary redundancy or early retirement
• Redeployment to suitable alternative roles
• Reducing hours (with agreement)
• Pay cuts or other cost savings (with agreement)

Document what you considered and why each option was or was not viable. This evidence matters if a consultation meeting is challenged.

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Step 6: For Collective Redundancies, Notify the Secretary of State

If you are making 20 or more redundancies within 90 days, you must notify the Secretary of State using the HR1 form before you start consulting employees. This is a legal requirement.

Notification periods:

• 20-99 redundancies: notify at least 30 days before the first dismissal takes effect
• 100 or more redundancies: notify at least 45 days before the first dismissal takes effect

Failure to notify is a criminal offence (fine up to £5,000 per affected employee under older rules; penalties may increase under ERA 2025 enforcement provisions).

Submit the HR1 form online at GOV.UK.

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Step 7: Start Consultation

Consultation must be genuine. This means sharing information, listening to responses, and genuinely considering whether the redundancy can be avoided or the number reduced. It is not a box-ticking exercise.

For individual redundancy:

Hold at least one formal consultation meeting with the at-risk employee. Ideally hold two or more, with time between them for the employee to consider alternatives and propose responses. The employee has the right to be accompanied by a colleague or trade union representative.

At each meeting:

• Explain the business case for the redundancy
• Explain how the selection was made (if selecting from a pool)
• Share the alternative roles available (if any)
• Listen to the employee's representations
• Give the employee a chance to propose alternatives
• Confirm the outcome in writing

For collective redundancy:

You must consult with elected employee representatives (or recognised trade union representatives if you have them) for the minimum consultation period (30 or 45 days, depending on numbers).

Consultation must cover:

• The reasons for the proposals
• The numbers and descriptions of employees affected
• The proposed selection method
• The procedure and timing
• The method for calculating redundancy payments beyond statutory minimum

Employee representatives must be given time off with pay to carry out their duties, and must not be dismissed or subjected to detriment for exercising their role.

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Step 8: Issue At-Risk Notices

During consultation, employees should be informed they are "at risk" of redundancy. This is not the same as issuing notice of dismissal. It is the notification that their role may be made redundant, and that consultation is underway.

An at-risk notification should:

• Explain that the employee's role is at risk of redundancy
• Explain the business reason
• Confirm that consultation is beginning
• Invite the employee to a consultation meeting
• Confirm the right to be accompanied

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Step 9: Explore Suitable Alternative Employment

Before issuing redundancy notices, you must check whether there are any suitable alternative roles in the business (or in any associated employer) that the employee could be offered.

A role is "suitable" if it is broadly comparable in terms of skills, pay, status, and location. You do not have to offer a role that is clearly unsuitable, but you do have to genuinely look.

If you offer a suitable alternative and the employee unreasonably refuses it, they may lose their entitlement to statutory redundancy pay.

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Step 10: Issue Redundancy Notices

After consultation is complete (or if no alternative has been found), issue written notice of dismissal by reason of redundancy.

The notice period must be:

• Statutory minimum notice (one week per year of service, up to twelve weeks) or
• Contractual notice (if longer)

The redundancy notice letter should state:

• The reason for dismissal (redundancy)
• The notice period and last day of employment
• The redundancy payment due
• The right to appeal

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Step 11: Pay Statutory Redundancy Pay

Employees with at least two years' continuous service are entitled to statutory redundancy pay.

Calculation:

• 0.5 week's pay for each year worked under the age of 22
• 1 week's pay for each year worked between ages 22 and 40
• 1.5 weeks' pay for each year worked aged 41 or over

Weekly pay is capped (£719 per week in 2025/26 tax year). Maximum statutory redundancy payment is £21,570 in 2025/26.

Important: your employment contract may provide for enhanced redundancy pay above the statutory minimum. Check your contract.

Statutory redundancy pay is tax-free up to £30,000.

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Step 12: Allow the Right of Appeal

Employees should be given the right to appeal the redundancy decision. Appeal should be heard by a different manager if possible.

The appeal process:

• Employee must request appeal within a reasonable time (typically five working days)
• Appeal meeting held promptly
• Decision confirmed in writing

An employer who refuses to conduct an appeal hearing risks an uplift on any tribunal award.

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The ERA 2025 Changes You Need to Know

From 6 April 2026:

• The maximum protective award for failure to collectively consult has doubled from 90 to 180 days' gross pay per employee

From January 2027:

• The unfair dismissal qualifying period drops to six months. Employees made redundant who have six months' service can claim unfair dismissal if the redundancy process was not fair. (Previously you needed two years' service.)

From 2027 (date TBC):

• The collective consultation threshold (currently 20 employees) may change. Watch for updates.

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Redundancy Process Checklist

• [ ] Written business case documenting the genuine reason for redundancy
• [ ] Selection pool correctly defined and documented
• [ ] Objective selection criteria established in writing before scoring
• [ ] Selection scores based on documented evidence
• [ ] Alternatives to redundancy genuinely considered and documented
• [ ] HR1 form submitted to Secretary of State (if 20+ redundancies)
• [ ] Minimum consultation periods observed (30 days for 20-99, 45 days for 100+)
• [ ] Individual consultation meetings held (all employees at risk)
• [ ] Employees offered right to be accompanied at meetings
• [ ] Suitable alternative employment considered and offered where available
• [ ] Redundancy notice issued in writing with correct notice period
• [ ] Statutory redundancy pay calculated and paid correctly
• [ ] Right of appeal offered

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FAQ: Redundancy Process UK

How long does a redundancy process take?

For individual redundancy (fewer than 20 employees), there is no fixed minimum, but you need to allow enough time for genuine consultation, typically two to four weeks. For 20-99 redundancies, at least 30 calendar days. For 100+ redundancies, at least 45 calendar days.

Do I have to offer a right of appeal in redundancy?

There is no specific statutory right to appeal a redundancy dismissal, but the ACAS Code of Practice (and tribunal decisions) strongly indicate that it is best practice to offer one. Not doing so increases the risk of an unfair dismissal finding and the risk of an uplift on any award.

Can I make someone redundant while they are on sick leave, maternity leave, or other absence?

The short answer is yes, but with significant caveats. Employees on maternity leave have enhanced redundancy rights and must be offered suitable alternative employment in priority over other redundant employees. Making someone redundant while they are on sick leave is not automatically unfair, but you must still follow the full consultation process and consider whether the sickness relates to a disability.

What is a "pool of one" redundancy?

Where only one person does a specific role, and that role is being eliminated, that person is the whole selection pool. You still need a genuine business reason and a proper consultation process, but there is no selection exercise required.

Can the employee appeal if they think the selection criteria were unfair?

Yes. If an employee believes the selection criteria were discriminatory, inconsistently applied, or not genuine, they can raise this at appeal. If you have followed the process and documented your scoring, you are in a strong position to defend the selection.

What happens if I do not consult before making redundancies?

For individual redundancy, an employment tribunal may find the dismissal unfair and award compensation including the ACAS Code uplift (up to 25%). For collective redundancy, the tribunal can award a protective award of up to 180 days' gross pay per affected employee (from 6 April 2026). Not consulting is one of the most expensive mistakes an employer can make.

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Get Your Redundancy Process Reviewed

If you are planning redundancies, or if you have an existing redundancy policy that has not been updated since the ERA 2025 changes, get it checked.

EmployerKit Audit from £49. We check your redundancy process documentation against current legal requirements and tell you exactly what is missing.

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Last updated: April 2026