Making employee redundant
Many employers contact me for guidance on making employee redundant for advice about the laws around redundancy and because the conversations can be uncomfortable. Even when the business reasons are sound, employers worry about saying the wrong thing or missing a step that later causes problems at a tribunal. Redundancy is one of the most difficult areas of UK employment law, and even experienced managers seek advice.
In this article I explain how making employee redundant works in real workplaces. I also share examples from cases I have supported over the years, as these situations often help employers understand what fairness looks like in practice. Redundancy is not about fault. It is about circumstances changing. When handled correctly, it can be calm and respectful, even in difficult business conditions.
When making employee redundant becomes necessary
Most redundancies happen because the business needs fewer people doing the same type of work. I supported a small manufacturing employer whose incoming orders dropped sharply over six months. They needed to reduce staff, but they wanted to avoid upsetting morale. After a careful review of the roles and structure, they entered into a fair consultation process. Transparency helped the employees feel informed, even if the news was unwelcome.
Sometimes the reason is technology. A retailer I advised introduced a new stock system that removed several manual tasks. They needed fewer administrative hours. The change was practical rather than personal. Once the employer explained that the role itself had disappeared, the affected employee accepted the situation more easily.
If you want a clear starting point for understanding the redundancy process, the page on making staff redundant gives a useful overview for employers.
How to start the process when making employee redundant
When making employee redundant, the first step is identifying the genuine business reason. Tribunals look carefully at this. Once the reason is clear, you can begin consultation. Consultation does not have to be long, but it must be meaningful. If the employer rushes the first meeting, the employee may feel unheard and raise a grievance. Slowing the process down and allowing for further meetings can lead to a more satisfactory outcome.
Employers often ask how honest they should be about finances. In my experience, being open helps build trust. You do not need to share confidential information. A clear and simple explanation is usually enough.
If multiple employees are at risk, you must explain the selection approach. The page on redundancy selection criteria helps employers understand common methods used in UK workplaces.
What fair consultation looks like
Fair consultation is more than a single conversation. It is a chance for the employee to understand what is happening and to respond. I once advised a logistics employer whose employee suggested an alternative way of working that would reduce the need for redundancy. The employer had not considered it. After reviewing the suggestion, they were able to keep the employee. This is exactly what tribunals want to see. Consultation must be genuine and not just a formality.
Even when the outcome is likely to be redundancy, employers should listen to any proposals. Sometimes the suggestion is not workable. Even so, the act of listening shows fairness and reduces the risk of dispute.
If you want practical guidance on the steps involved, the page on making employees redundant offers a well-structured guide for employers.
Selection, scoring and fairness
The selection stage creates the most anxiety for employers. It feels personal, even when the criteria are objective. A hospitality employer I supported used a simple scoring sheet that looked fair on paper, but it included a criterion that favoured newer staff. After revising the criteria, the process became more balanced. Tribunals often examine this part of the redundancy process closely. They want to see that the employer used criteria that were reasonable and applied consistently.
Employers should keep notes explaining why each score was given. This helps if the decision is challenged later. It also reassures the employee during consultation.
Some employers worry about conflicts between staff. I once handled a case where an employee believed the selection was influenced by a personal disagreement. Because the employer’s scoring notes were clear and well-recorded, the allegation did not go any further. Accuracy helps protect you.
Payments and notice when making employee redundant
Redundant employees may qualify for statutory redundancy pay, notice and holiday pay. Employers sometimes forget that part time hours must also be included in these calculations. A retail employer I advised miscalculated holiday pay because they used old rotas. Once corrected, the employee was paid the correct amount and left on good terms.
If you offer enhanced redundancy pay, make sure the terms are written clearly. Ambiguous wording often leads to disputes. Many employers choose to offer a redundancy settlement agreement to bring everything to a clean close. This is especially helpful when the situation is sensitive or when the employee has raised concerns during consultation.
If at any point you need clearer guidance, you can find employment law advice for employers on our homepage. It summarises the support available when redundancy situations become more complex.
Borderline situations when making employee redundant
Some redundancy situations are straightforward. Others fall into grey areas. A good example is when a role partly changes but does not disappear completely. Employers sometimes assume this counts as redundancy. It may not. The correct approach is to explore whether the role is genuinely being removed or whether it can be reshaped. Tribunals take this point seriously.
Another borderline issue arises when sickness or performance issues overlap with redundancy. Redundancy must not be used as a shortcut to avoid disciplinary or capability procedures. One employer I advised felt frustrated with an underperforming employee and considered redundancy as a quicker option. We discussed the risks and they followed a proper capability process instead. This avoided what would almost certainly have become an unfair dismissal claim.
Timing also matters. Making employee redundant during maternity leave or long term sickness can be lawful, but employers must handle these cases carefully. A mistake at this stage can be costly.
Making staff redundant
Guide to making employees redundant
Redundancy selection criteria
Free employment law guidance for employers