Making employees redundant is one of the most challenging tasks any employer faces. I’m John Bloor from EBS Law, and in this article I explain the legal framework, consultation obligations, and practical steps to ensure the redundancy process is fair, lawful, and handled with sensitivity.
What redundancy means in UK employment law
A redundancy situation arises when an employer needs fewer employees to carry out work of a particular kind, relocates operations, or closes part or all of the business. It is not about individual performance or conduct but about the reduced requirement for employees in certain roles. Therefore, making employees redundant must be based on a genuine business need, not used as a shortcut to dismiss for other reasons.
Common redundancy situations
- Business closure or relocation
- Departmental restructure or merger
- Introduction of new technology reducing the need for staff
- Falling demand leading to reduced workloads
Legal obligations when making employees redundant
Employers must follow statutory procedures, including consultation, fair selection, and payment of statutory redundancy pay where applicable. Employees with two or more years’ continuous service are entitled to redundancy pay and protection from unfair dismissal. In addition, you must consider whether suitable alternative employment exists before finalising redundancies.
Risks of mishandling the process
Failure to handle redundancies correctly can lead to unfair dismissal claims, protective awards for lack of consultation, or discrimination claims if selection criteria are unlawful. Compensation at tribunal can be significant, and reputational damage is often greater. That is why making employees redundant requires careful planning and thorough documentation.
If you would like free advice, John Bloor and the team are here to help. Call John today on 01625 875587 or email enquiries@ebslaw.co.uk for tailored support.
Consultation requirements
Consultation is a legal requirement when making employees redundant. For fewer than 20 redundancies, consultation must be meaningful and individual. For 20 or more redundancies within 90 days, collective consultation with employee representatives is mandatory. Failure to consult can lead to protective awards of up to 90 days’ gross pay per affected employee.
Fair selection criteria
You must apply objective, measurable criteria to decide which employees are at risk. Typical criteria include:
- Skills, qualifications, and experience
- Performance and attendance records
- Disciplinary history
Avoid discriminatory criteria such as age, gender, disability, pregnancy, or part-time status. Every criterion should be evidence-based and consistently applied.
Suitable alternative employment when making employees redundant
Employers must consider whether alternative roles exist within the organisation. Affected employees should be offered suitable alternatives where possible. If the employee unreasonably refuses such a role, they may lose their right to redundancy pay. If the role is unsuitable or materially different, they retain the right to redundancy pay. Government guidance on redundancy rights can be found here: gov.uk: redundancy rights.
Notice and redundancy pay
Employees are entitled to statutory notice based on length of service, unless contractual notice is longer. Redundancy pay is calculated based on age, length of service, and weekly pay (capped at the statutory maximum). Employers should also confirm accrued but untaken holiday pay and any outstanding wages or bonuses.
Documentation and record keeping
Keep clear records of the redundancy rationale, consultation meetings, selection criteria, and offers of alternative employment. Strong documentation protects your organisation if the decision is later challenged.
Process steps when making employees redundant
A fair redundancy process usually involves:
- Identifying a genuine redundancy situation
- Planning and documenting objective selection criteria
- Consulting individually (and collectively if 20+ redundancies)
- Considering alternative roles and training opportunities
- Confirming decisions in writing with notice and redundancy pay
- Allowing an appeal process for fairness and transparency
Special considerations
Certain employees have enhanced protections. For example, employees on maternity leave must be offered suitable vacancies before others. Disabled employees may require adjustments in the process. Failure to consider these factors risks claims of discrimination or automatic unfair dismissal.
Communicating redundancies professionally
Redundancy decisions can impact morale across your workforce. Communicate with clarity, sensitivity, and respect. Provide written information promptly, avoid vague language, and be open about business reasons. Offering support services, such as CV workshops or career counselling, can also soften the impact and protect your reputation as an employer.
Settlement agreements
Sometimes, a settlement agreement provides a clean exit where redundancy is contested or complex. This can protect both employer and employee, avoiding prolonged disputes. Settlement agreements must be signed with independent legal advice for the employee and should include an appropriate payment and confidentiality clauses.
Checklist before finalising redundancies
- Is the redundancy genuine and supported by business evidence?
- Have you applied fair and objective selection criteria?
- Have you conducted meaningful consultation with affected staff?
- Have you considered all suitable alternative vacancies?
- Have you confirmed notice, redundancy pay, and holiday pay entitlements?
Why professional advice matters
Every redundancy case is different, and the risks are high if mistakes are made. Employers who seek advice before acting are more likely to avoid claims and maintain staff morale. At EBS Law, we draft redundancy letters, guide consultation meetings, and defend employers at tribunal where needed.
Contact John Bloor today for expert support at EBS Law. We’re here to ensure your business stays protected every step of the way. Call 01625 875587 or email enquiries@ebslaw.co.uk.
You may also find these EBS Law resources helpful:
- Redundancy Consultation Process UK Employers Guide
- Redundancy Selection Criteria UK
- Time off to Job Hunt – Redundancy: What UK Employers Need to Know
Disclaimer: This article provides general guidance only and does not constitute legal advice. For tailored advice on your specific situation, please contact us directly.