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Based on official UK statutory limits updated for 2025, including weekly and total payment caps.
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Expert guidance for employees and employers navigating redundancy processes and entitlements.
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Understanding Redundancy Pay
Statutory redundancy pay is a legal entitlement for employees with at least 2 years of continuous service who are made redundant.
How It's Calculated
- 0.5 week's pay for each full year under 22
- 1 week's pay for each full year aged 22 to 40
- 1.5 weeks' pay for each full year aged 41 and over
Important Limits
- Maximum of 20 years' service counts
- Weekly pay capped at £719 (from 6 April 2025)
- Maximum payment of £21,570
Your Redundancy Rights in the UK
Understanding your statutory rights and protections is essential when facing redundancy. UK employment law provides comprehensive safeguards for employees during the redundancy process.
Fair Selection Process
Employers must use objective, fair selection criteria when choosing who to make redundant. Discrimination based on age, gender, disability, or other protected characteristics is unlawful.
Consultation Requirements
Individual consultation is required for all redundancies. For 20+ redundancies within 90 days, collective consultation with employee representatives is mandatory with specific minimum timeframes.
Alternative Employment
Your employer must take reasonable steps to offer suitable alternative employment within the organisation if available. You have the right to a trial period for any new role offered.
Time Off to Look for Work
Employees with 2+ years' service are entitled to reasonable paid time off during their notice period to look for new employment or arrange training for future employment.
Protection from Unfair Dismissal
Redundancy must be genuine. If the redundancy is a sham or selection was unfair, you may have grounds for an unfair dismissal claim at an employment tribunal.
Written Statement of Reasons
You have the right to receive a written statement explaining the reasons for your redundancy. This is particularly important if you're considering whether the redundancy was fair.
Common Redundancy Scenarios
Redundancy can happen in various circumstances. Understanding common scenarios helps you recognise genuine redundancy situations and know your entitlements.
1Business Closure or Relocation
When a business closes entirely or relocates to a different geographical area, redundancy is usually genuine. If relocation is within reasonable commuting distance, it may be considered suitable alternative employment. Employees facing closure often receive their full statutory entitlements including redundancy pay, notice pay, and holiday pay.
2Restructuring and Reorganisation
Organisational restructuring often leads to redundancy when job roles are eliminated or significantly changed. This might include merging departments, introducing new technology, or changing business strategy. Employers must follow a fair selection process and consult properly, even during restructures.
3Reduced Demand or Downsizing
When businesses face reduced demand for their products or services, they may need to reduce headcount. This is a common redundancy scenario, particularly during economic downturns. Employers must demonstrate a genuine need to reduce workforce and use fair, objective selection criteria.
4TUPE Transfers and Acquisitions
When businesses are sold or services are outsourced, TUPE (Transfer of Undertakings Protection of Employment) regulations usually protect jobs. However, redundancies can occur if there's an Economic, Technical or Organisational (ETO) reason. Your continuous employment is normally preserved under TUPE.
Typical Redundancy Timeline
Understanding what to expect during the redundancy process
Initial Communication
Employer announces potential redundancies and begins consultation process. This is when you should start gathering information about your entitlements.
Consultation Period
Individual meetings to discuss reasons, selection criteria, and alternatives. For 20-99 redundancies: minimum 30 days. For 100+: minimum 45 days.
Redundancy Confirmed
Formal notice of redundancy given in writing. Your notice period begins, during which you may be required to work or placed on garden leave.
Notice Period
Work your notice (or garden leave/PILON). You're entitled to paid time off to look for new work if you have 2+ years' service.
Final Day of Employment
Your employment ends. You should receive all final payments including redundancy pay, notice pay, holiday pay, and any outstanding wages.
Post-Employment
Ensure all payments received correctly. Consider tax implications, claim benefits if needed, and seek new employment. Keep all documentation.
When to Seek Professional Advice
Whilst many redundancy situations are straightforward, certain circumstances warrant professional guidance from employment solicitors, ACAS, or Citizens Advice.
Unfair Selection or Discrimination
If you believe you were selected unfairly or due to discrimination (age, gender, disability, pregnancy, race, religion, or other protected characteristics), seek immediate legal advice.
- •Selection criteria appear discriminatory
- •Pool selection seems unfair or arbitrary
- •You were recently on maternity/paternity leave
Inadequate Consultation
Employers must consult properly before finalising redundancies. Failure to consult adequately can make a dismissal unfair, even if the redundancy situation was genuine.
- •No individual consultation meetings held
- •Decision appears pre-determined
- •Collective consultation requirements not followed
Settlement Agreements
If your employer offers a settlement agreement (formerly compromise agreement) with enhanced terms, you should obtain independent legal advice before signing.
- •Settlement agreement offered with enhanced pay
- •Complex terms or conditions to understand
- •Legal advice usually funded by employer
Employer Responsibilities During Redundancy
Employers have legal obligations throughout the redundancy process. Understanding these helps ensure your rights are protected and the process is handled fairly.
Consultation Obligations
Employers must consult with employees before confirming redundancy decisions. This means meaningful discussions about:
- ✓Reasons for proposed redundancies
- ✓Numbers and descriptions of employees affected
- ✓Selection criteria and how they'll be applied
- ✓Ways to avoid or reduce redundancies
- ✓Alternative employment opportunities
Collective consultation with employee representatives is mandatory when 20 or more employees are at risk within a 90-day period.
Payment and Notice Requirements
Employers must provide proper notice and ensure all payments are made correctly and on time:
- ✓Statutory or contractual notice (whichever is longer)
- ✓Statutory redundancy pay (if 2+ years' service)
- ✓Payment for all untaken holiday entitlement
- ✓Any outstanding wages, bonuses, or commission
- ✓Written statement of all payments and deductions
All payments should normally be made on or before the last day of employment. Delays in payment may result in additional compensation claims.
Fair Selection Criteria
Selection for redundancy must be based on fair, objective criteria applied consistently:
Skills, qualifications, performance records, attendance records (excluding disability-related absence), disciplinary records, experience, and standard of work.
Age, gender, pregnancy/maternity, disability, race, religion, sexual orientation, trade union membership, or part-time/fixed-term status.
The selection process must be documented and scoring matrices should be available for review during consultation.
Notification Requirements
Employers must notify relevant authorities when making multiple redundancies:
- ✓Notify the Insolvency Service (via HR1 form) when proposing 20+ redundancies within 90 days
- ✓Notification must be made before consultation begins
- ✓Include details of redundancy proposals and consultation arrangements
- ✓Provide copy to employee representatives
Failure to notify can result in financial penalties and may delay the redundancy process.
Quick Access to Tools and Guides
Everything you need to understand and calculate your redundancy entitlements
Redundancy Calculator
Calculate statutory redundancy pay instantly
Tax Calculator
Estimate tax on your redundancy package
Notice Pay Calculator
Calculate statutory notice requirements
Holiday Pay Calculator
Calculate untaken holiday entitlement
Employee Guide
Your rights and entitlements explained
Employer Guide
Managing redundancy legally and fairly
FAQs
Answers to common redundancy questions
Timeline Calculator
Calculate consultation deadlines