Redundancy process: step-by-step legal compliance
Redundancy is one of the five fair reasons for dismissal in UK employment law, but it is only fair if the process is correct. An unfair redundancy process — even where there is a genuine redundancy situation — is one of the most common sources of tribunal claims. Understanding each step, and doing it properly, protects both the employer and the employee.
Step 1: Identify a genuine redundancy situation
Redundancy arises in three situations: the employer is closing down entirely, the employer is closing a specific site or location, or the employer needs fewer employees to do a particular kind of work. If the situation does not fit one of these definitions, the dismissal is not a redundancy.
Step 2: Individual or collective consultation?
If you are proposing to make 20 or more redundancies within 90 days, collective consultation obligations apply: minimum 30 days of consultation for 20 to 99 redundancies, minimum 45 days for 100 or more. You must also notify the Redundancy Payments Service (HR1 form) before the consultation period begins. Failure to do this is a criminal offence for the employer and means affected employees can claim a protective award — up to 90 days' pay per employee.
For fewer than 20 redundancies, collective obligations do not apply but individual consultation is still required.
Step 3: Define and apply a fair selection pool
Where multiple employees might be selected for redundancy, you must define the pool fairly — all employees who do the same or interchangeable work. Selection from the pool must use objective criteria applied consistently: attendance (excluding disability-related absences), performance, skills, qualifications. Skills-only redundancy is riskier — the criteria must be genuinely related to the business need.
Step 4: Individual consultation meetings
Each employee at risk must be invited to an individual consultation meeting. The meeting should explain the situation, the proposed selection criteria, the employee's score, and what alternatives to redundancy have been considered. The employee must have a genuine opportunity to challenge the score or propose alternatives. This is not a formality — a challenge made in consultation must be genuinely considered.
Step 5: Consider alternatives
Alternative roles within the organisation must be explored. Where a suitable alternative is available, it must be offered — not just considered. An employee who is offered a suitable alternative and unreasonably refuses it loses the right to a statutory redundancy payment.
Step 6: Notice and redundancy payment
Employees with two or more years of continuous service are entitled to a statutory redundancy payment: one week's pay (capped at £700/week) per year of service under 22, one and a half weeks' pay per year between 22 and 41, and one week's pay per year over 41. Contracts may provide enhanced redundancy pay; the statutory minimum is the floor.
Protected employees — pregnant, on maternity leave, or on neonatal leave — must be offered suitable alternatives before others are made redundant from the pool. Failing to do so is automatically unfair.
See our ERA 2025 compliance checklist for how ERA 2025 affects redundancy, and employment tribunals after ERA 2025 for the current risk landscape.
Mellow's employee relations module tracks redundancy consultations, selection scores, and correspondence. [See Mellow pricing →](https://mellowhr.com/pricing)