Employer Guide to Redundancy

Navigate the redundancy process fairly and legally whilst supporting your employees

Planning Redundancies

Making redundancies is never easy, but proper planning and following correct procedures protects both your business and employees. Key considerations include:

1
Business Case: Document clear business reasons for redundancies
2
Selection Criteria: Use fair, objective criteria that can be measured
3
Alternatives: Consider redeployment, retraining, or voluntary redundancy
4
Budget: Calculate redundancy costs including pay, notice, and holiday

Consultation Requirements

UK law requires employers to consult with employees before making redundancies. The type and length of consultation depends on how many employees are affected:

Individual Consultation

1-19 employees

Meet with each affected employee individually. No minimum timeframe, but must be meaningful consultation.

Collective Consultation

20+ employees

20-99 employees: Minimum 30 days
100+ employees: Minimum 45 days

Failure to Consult

Failing to follow proper consultation procedures can result in protective awards of up to 90 days' pay per affected employee, plus potential tribunal claims for unfair dismissal.

Calculating Statutory Redundancy Pay

As an employer, you must pay statutory redundancy to eligible employees (2+ years service). The calculation is based on age, service length, and weekly pay:

Calculation Formula:

0.5 week's pay for each full year under 22
1 week's pay for each full year aged 22-40
1.5 weeks' pay for each full year aged 41+

Statutory Caps (from 6 April 2025)

Weekly pay capped at £751.00
Maximum 20 years' service counts
Maximum total payment: £22,530.00

Many employers offer enhanced redundancy packages that exceed statutory minimums as part of their employment policies.

Avoiding Discrimination

Selection for redundancy must not discriminate on the basis of protected characteristics: age, disability, gender reassignment, marriage/civil partnership, pregnancy/maternity, race, religion/belief, sex, or sexual orientation.

Use objective, measurable criteria such as skills, qualifications, performance records, and disciplinary records. Ensure the process is fair, transparent, and consistently applied to all employees in the affected pool.

Useful Tools for Employers

Redundancy Pay Calculator

Calculate statutory redundancy payments for employees

Consultation Timeline

Generate compliant consultation schedules and checklists

Related tools and guidance

Reference material for costing and running a redundancy process.

Current redundancy pay rates — the statutory limits you must meet
Redundancy pay table — weeks owed for any age and service combination
Settlement agreement calculator — value and structure an offer
Unfair dismissal exposure — what getting it wrong could cost
TUPE redundancy calculator — continuity of service after a transfer

Professional Advice: This guide provides general information only. For specific legal advice about redundancy procedures, consult an employment law solicitor or HR professional. Consider also contacting ACAS for free advice and guidance.