Redundancy is one of the most difficult situations both employers and employees face. For employers, it involves tough business decisions and the need to follow legal obligations. For employees, it can mean uncertainty about finances, career, and personal security.
Handled properly, the redundancy process can and should be fair, transparent, and minimise legal risks. Done poorly, it can lead to claims for unfair dismissal, reputational damage, and unnecessary conflict.
This article sets out the key steps for managing redundancy the right way.
- Establish a Genuine Redundancy Situation
Before starting the process, employers must ensure the reason for redundancy is genuine. Common reasons include:
- Closure of the business or workplace
- Reduced need for employees to do certain work
- Organisational restructuring
If the role still exists or the dismissal is motivated by performance or conduct issues, it is not redundancy and may be challengeable as unfair dismissal.
- Plan and Document the Process
Preparation is essential:
- Identify the business rationale for redundancy.
- Decide which roles are at risk.
- Prepare a clear timeline for consultation, selection, and notice periods.
- Review company redundancy policies and check for enhanced redundancy terms.
- Consultation with Employees
Consultation is not just a box-ticking exercise – it’s a legal requirement.
- Individual consultation: All employees at risk must be given the chance to discuss the situation, explore alternatives, and ask questions.
- Collective consultation: If 20 or more redundancies are proposed within 90 days, consultation with employee representatives or unions is required by law (in the UK and many other jurisdictions).
Consultations should be genuine, with the possibility of alternatives (such as redeployment, job-sharing, or reduced hours) encouraging proposals to be put forward and to be considered.
- Fair and Transparent Selection
If more than one employee is at risk, employers must apply fair, objective selection criteria. These might include:
- Skills, qualifications, and experience
- Performance and appraisal records
- Attendance (excluding disability or pregnancy-related absence)
- Disciplinary record
Selection must avoid discrimination – criteria must not disadvantage employees based on age, sex, race, disability, pregnancy, or other protected characteristics.
Protected Characteristics – What Employers Must Avoid
Employment law prohibits redundancy decisions that directly or indirectly discriminate against individuals based on protected characteristics. In the UK (under the Equality Act 2010), these are:
- Age – Older or younger employees must not be disadvantaged without a fair, objective reason. For example, automatically selecting employees nearing retirement is unlawful.
- Disability – Selection must not penalise employees for absence or performance issues linked to a disability. Employers should consider reasonable adjustments.
- Gender reassignment – Employees must not be treated less favourably because they are transitioning or have transitioned.
- Marriage and civil partnership – Being married or in a civil partnership cannot be used as a redundancy factor.
- Pregnancy and maternity – Employees must not be selected due to pregnancy-related absence or the fact that they are on maternity leave. In fact, women on maternity leave have priority for suitable alternative vacancies.
- Race – Includes colour, nationality, and ethnic or national origins. Selection criteria must be applied consistently and objectively.
- Religion or belief – Employees cannot be disadvantaged because of their faith, belief, or lack of belief.
- Sex – Men and women must be treated equally. Indirect discrimination can occur if criteria disproportionately affect one sex.
- Sexual orientation – Employees cannot be treated less favourably based on whether they are heterosexual, gay, lesbian, or bisexual.
Employers should carefully test their selection criteria against these protected characteristics to ensure fairness and compliance. Even unintentional discrimination can give rise to claims.
Whistleblowing – Protection from Retaliation
In addition to these protected characteristics, employees are also safeguarded if they have made a protected disclosure – commonly known as whistleblowing, which I will cover more in future articles.
- Whistleblowing occurs when an employee raises concerns about wrongdoing, such as health and safety breaches, financial misconduct, environmental risks, or other unlawful practices.
- It is unlawful for an employer to dismiss, select for redundancy, or subject an employee to any detriment because they have made a protected disclosure.
- Sometimes employers attempt to disguise retaliation as redundancy. For example, an employee who raised concerns about an unlawful data breach might suddenly be placed "at risk" of redundancy, even though their role is still required.
If redundancy is being used as a cover for whistleblowing retaliation, this can amount to automatically unfair dismissal, and employees may have strong grounds for a legal claim.
Provide Appropriate Notice
Employees must be given statutory notice (or longer if their contract provides for it):
- At least 1 week if employed between 1 month and 2 years
- 1 week per complete year of service (up to a maximum of 12 weeks)
Employers may offer pay in lieu of notice (PILON) if contracts allow.
Redundancy Pay
Employees with at least two years’ continuous service are usually entitled to statutory redundancy pay, which is calculated based on:
- Age
- Length of service (capped at 20 years)
- Weekly pay (subject to a statutory cap)
Many employers also offer enhanced redundancy packages to support employees and reduce the risk of disputes.
Settlement Agreements
Sometimes, instead of going through the full redundancy process, employers offer a settlement agreement. This allows the employee to receive compensation in exchange for waiving their right to claim unfair dismissal or redundancy pay.
Settlement agreements must be reviewed by an independent legal adviser to be valid. Employers usually contribute towards the cost of that advice.
Support and Next Steps
Good practice includes:
- Providing outplacement or career transition support
- Offering references to assist employees in finding new work
- Communicating respectfully and sensitively throughout
Employees should also be informed of their right to appeal or raise concerns about the process.
Redundancy
A fair redundancy process is about more than compliance – it’s about treating people with dignity and respect during a very difficult time.
For employers, following the right process reduces the risk of costly claims. For employees, it ensures they receive the pay, notice, and support they are legally entitled to.
If you are facing redundancy – as an employer or an employee – taking proper advice early can make all the difference.
For employees during a redundancy process, keeping detailed records is essential. Create a clear audit trail by:
- 📅 Recording dates and times of all meetings, calls, and correspondence.
- 📝 Noting who was present and what was discussed.
- 📧 Saving emails, letters, and messages related to the process.
- 📄 Requesting minutes or written confirmation of meetings wherever possible.
- 🎙️ Keeping transcripts or recordings (where lawful) for accuracy.
- 🔍 Highlighting inconsistencies or points that need clarification.
A well-documented record makes it easier to look back, pass onto an adviser, understand what has happened, and make confident, informed decisions at critical stages.
Get in touch if I can help with your employment related experiences at www.gracelegal.net or DM me at @grace.legal2025 or contact me via info@gracelegal.net.