Redundancy Rights

Key Points

What Is Redundancy?

Redundancy is one of the five fair reasons for dismissal under UK employment law. It occurs when your employer’s need for employees to carry out work of a particular kind ceases or diminishes, as defined by section 139 of the Employment Rights Act 1996 (ERA 1996).

In practical terms, a genuine redundancy situation arises in two main ways. First, your employer may close the business entirely, or close the particular location where you work. Second, your employer may simply need fewer people to do the kind of work you do, whether at your workplace or across the organisation generally.

The key word is “genuine.” Being made redundant should always be a last resort, and your employer cannot simply use redundancy as a convenient way to dismiss you. If the redundancy isn’t real, or if your employer doesn’t follow a fair process, you may have a claim for unfair dismissal.

Your Key Redundancy Rights

When facing redundancy, you have several important legal protections. Understanding these rights is essential, because employers frequently get the process wrong.

Right to a Fair Procedure

Your employer must follow a fair redundancy process. The leading case of Williams v Compair Maxam Ltd [1982] ICR 156 established the principles that employers are expected to follow when making redundancies. These include giving early warning, establishing a fair selection pool and objective criteria, consulting meaningfully with affected employees, considering suitable alternative employment, and allowing an appeal.

If your employer fails to follow these principles, your dismissal is likely to be found unfair by an employment tribunal.

Right to Statutory Redundancy Pay

If you have at least two years’ continuous service with your employer, you are entitled to a statutory redundancy payment. This is calculated using a formula based on your age, length of service, and weekly pay (currently capped at £719 per week from 6 April 2025).

The maximum statutory redundancy payment is £21,570. We explain exactly how this is calculated further below.

Right to a Notice Period

You are entitled to a statutory minimum notice period based on your length of service. This is one week’s notice for each complete year of service, up to a maximum of 12 weeks. Your contract may provide for a longer notice period, in which case the contractual notice applies.

If your employer asks you to leave immediately, they must pay you in lieu of the notice period you were entitled to.

Right to Time Off to Look for Work

Under section 52 of the ERA 1996, if you have been continuously employed for two years or more and are under notice of redundancy, you are entitled to reasonable time off during working hours to look for new employment or arrange training. Your employer must pay you for this time off.

Can You Be Made Redundant Unfairly?

Yes, you can. If you have the required qualifying service (currently two years, reducing to six months from 1 January 2027 under the Employment Rights Act 2025), you have the right not to be dismissed unfairly under section 98 of the ERA 1996.

There are two main ways to prove that a redundancy dismissal is unfair.

Sham Redundancy

If your role isn’t genuinely redundant, the dismissal is likely to be unfair. Common signs of a sham redundancy include your employer advertising your role externally after dismissing you, hiring someone else to do substantially the same job under a different title, or converting your part-time role into a full-time one (which actually shows an increased need, not a reduced one).

If any of these apply, your employer will struggle to prove that the redundancy was genuine.

Unfair Procedure

Even where the redundancy is genuine, your employer must follow a fair process. Procedural failings can include failing to consult with you, using an unfair selection pool or criteria, not considering alternative employment, or not allowing you to appeal.

The landmark case of Polkey v AE Dayton Services Ltd [1987] UKHL 8 confirmed that procedural failings can render a redundancy dismissal unfair, even if the outcome would have been the same had a fair process been followed.

Automatically Unfair Reasons

Some redundancy dismissals are automatically unfair, regardless of how long you have worked for your employer. These include being selected for redundancy because of:

• Any form of discrimination (age, race, sex, disability, religion, sexual orientation, gender reassignment, pregnancy or maternity)
• Whistleblowing (making a protected disclosure)
• Trade union membership or activities
• Working pattern, such as being part-time or requesting flexible working
• Exercising a statutory right
• Raising health and safety concerns
• Taking lawful industrial action
• Jury service

If any of these apply, you do not need any qualifying service to bring a claim.

“We see a lot of cases where the redundancy is clearly a sham. The employer replaces the person they’ve dismissed, or simply renames the role. If you suspect your redundancy isn’t genuine, keep any evidence you can find, such as job adverts or emails, because it will be crucial to your case.”

Tom Street Principal Solicitor, Tom Street & Co.

The Fair Redundancy Procedure

There is no single legally prescribed redundancy procedure, but case law has established clear expectations about what a fair process looks like. If your employer falls short of these standards, a tribunal may find your dismissal unfair.

Stage 1: Early Warning

Your employer should give all staff, not just those directly at risk, as much warning as possible about planned redundancies. This usually happens at a group meeting where your employer explains the business reasons behind the redundancies, how many roles are affected, and what process they intend to follow.

After this meeting, employees who are specifically identified as being at risk should receive written confirmation with details of the next steps.

Stage 2: Selection Pool and Criteria

Where your employer needs to choose between employees, they must identify a fair selection pool and apply objective selection criteria.

The pool is the group of employees from which your employer selects who will be made redundant. It should normally include employees doing the same or similar work at the same level of seniority, or employees whose roles are interchangeable. If the pool is too narrow, too wide, or not considered at all, the resulting dismissals are likely to be unfair.

The selection criteria should be objectively verifiable. Good criteria include attendance records, qualifications, disciplinary record, and skills assessments. Subjective criteria like “attitude” or “teamwork” are risky because they cannot be independently verified and are open to abuse.

Criteria that are directly or indirectly discriminatory will render any subsequent dismissal unfair. For example, if your employer scores you down for attendance but your absences were related to a disability, this could amount to disability discrimination. Similarly, using “last in, first out” (LIFO) as a criterion carries a risk of age discrimination.

Your employer must also apply the chosen criteria fairly and consistently. If you receive a score that doesn’t reflect your actual performance, or if you aren’t given the opportunity to see and challenge your scores, this lack of transparency can support a finding of unfair dismissal.

Stage 3: Individual Consultation

Your employer must hold meaningful individual consultation meetings with you. Consultation means genuine dialogue: your employer must explain the reasons for the redundancy, give you the opportunity to respond, and allow you to challenge the selection criteria and how they’ve been applied.

Simply informing you that you’re being made redundant is not consultation. The Employment Appeal Tribunal in Poat v Holiday Inn Worldwide made the point that it is “courteous and humane to consult people when you are thinking of making them redundant.”

Consultations that are insensitive or rushed may also be found defective. In Thomas v BNP Paribas Real Estate [2016] UKEAT, a manager with 40 years’ service was made redundant in an insensitive manner, which contributed to a finding of unfair dismissal.

There is no statutory minimum consultation period for individual redundancies. That said, the shorter the consultation, the easier it is to argue it was meaningless. Case law suggests that a week should be regarded as the bare minimum, but most fair consultations last two to three weeks at least.

You do not have a statutory right to be accompanied at redundancy consultation meetings, but it is generally considered good practice for employers to allow you to bring a colleague or trade union representative.

Stage 4: Collective Consultation

If your employer proposes to make 20 or more employees redundant at one establishment within a 90-day period, they must engage in collective consultation under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992).

This requires consultation with elected employee representatives or a recognised trade union. If your employer fails to comply, a tribunal can award a protective award of up to 90 days’ gross pay per affected employee. From 6 April 2026, under the Employment Rights Act 2025, this maximum doubles to 180 days’ gross pay.

A further change expected in 2027 will introduce a new cross-organisation threshold, meaning employers will need to consider the total number of redundancies across their entire business, not just at individual workplaces.

Stage 5: Suitable Alternative Employment

Before making you redundant, your employer must make reasonable efforts to find suitable alternative employment for you within the organisation. This duty applies throughout the process, from the point you are placed at risk through to the end of your notice period.

If you would be willing to accept a more junior role or one in a different department, make this clear to your employer. They cannot search for alternatives they don’t know you’d consider.

If your employer is hiring for roles you could do at the same time as making you redundant, this could seriously undermine the fairness of the dismissal.

Stage 6: Right of Appeal

If your employer decides to dismiss you, you should be given the right to appeal. While case law suggests that failing to offer an appeal doesn’t automatically make a redundancy unfair, it is a strong factor in assessing overall fairness.

Your appeal should be heard by someone who was not involved in the original decision. Employers typically allow five working days in which to submit your appeal.

How Much Redundancy Pay Are You Entitled To?

Statutory Redundancy Pay

If you have at least two years’ continuous service, you are entitled to statutory redundancy pay under section 135 of the ERA 1996. The formula is:

• Half a week’s pay for each complete year of service where you were aged under 22
• One week’s pay for each complete year of service where you were aged 22 to 40
• One and a half weeks’ pay for each complete year of service where you were aged 41 or above

A week’s pay is capped at £719 (from 6 April 2025), and the maximum service that counts is 20 years. This means the maximum statutory redundancy payment is £21,570 (20 years × £719 × 1.5).

Your “week’s pay” is based on your gross pay at the date you received notice of redundancy. If your pay varies, it is calculated as the average over the 12 weeks before you received your redundancy notice, as set out in sections 221 to 229 of the ERA 1996.

Enhanced (Contractual) Redundancy Pay

Some employment contracts include enhanced redundancy provisions that go beyond the statutory minimum. For example, your contract might entitle you to two full weeks’ pay for each year of service, or it might use your actual weekly pay rather than the statutory cap. Always check your contract, staff handbook, or any collective agreement that applies to you.

Tax Treatment of Redundancy Pay

The first £30,000 of any redundancy payment is tax-free. Since the maximum statutory redundancy payment is £21,570, your entire statutory payment will be tax-free in most cases.

If you receive an enhanced redundancy payment above £30,000, the excess is subject to income tax at your marginal rate. Separately, any notice pay (including payment in lieu of notice), holiday pay, and bonuses are always taxable as normal earnings.

Compensation for Unfair Redundancy

If you bring a successful claim for unfair redundancy at the employment tribunal, the compensation works slightly differently from other unfair dismissal cases.

In redundancy dismissals, you do not receive a basic award, because the basic award is calculated using the same formula as statutory redundancy pay. Since you will already have received a redundancy payment, it is offset against the basic award. You must also give credit for any enhanced redundancy pay, ex gratia payments, or notice payments (PILON) you received.

Your compensation comes in the form of a compensatory award. The tribunal will try to put you back in the financial position you would have been in had you not been unfairly dismissed. This typically means awarding your lost earnings from the date of dismissal until you find a new job, subject to your duty to mitigate your losses by actively looking for work.

The compensatory award is currently capped at the lower of £118,223 or 52 weeks’ gross pay. Under the Employment Rights Act 2025, this cap is being removed entirely. The timing of this change is not yet confirmed but is expected to coincide with the reduced qualifying period taking effect on 1 January 2027. This is a significant change that will particularly affect higher earners.

You may also be awarded compensation for lost benefits such as bonuses, commission, and pension contributions.

What to Do If Your Redundancy Is Unfair

If you believe your redundancy is unfair, you should take the following steps.

First, work out why you believe it is unfair. Is the redundancy itself a sham? Has your employer failed to follow a fair process? Or both? Gather any evidence that supports your position, such as job adverts for your role, emails about restructuring plans, or your selection scores.

Second, consider appealing internally. An appeal gives you a chance to make your case before committing to tribunal proceedings. You may also wish to seek legal advice before submitting your appeal, or ask a solicitor to help you draft the appeal letter.

Third, be aware of the time limit. You must begin the employment tribunal process within three months minus one day from the effective date of your dismissal (not the date of any appeal decision). This begins with early conciliation through Acas (the Advisory, Conciliation and Arbitration Service).

Under the Employment Rights Act 2025, this time limit is expected to extend to six months for most employment tribunal claims, though the commencement date for this change has not yet been confirmed.

“Don’t wait for your appeal outcome before getting legal advice. The tribunal time limit runs from the date of your dismissal, not from the date your appeal is decided. I’ve seen cases where people have missed the deadline because they assumed the clock stopped while their appeal was being considered.”

Tom Street Principal Solicitor, Tom Street & Co.

Redundancy Settlement Agreements

Instead of going through a formal redundancy process, your employer may offer you a settlement agreement. This is a legally binding document in which you agree to waive your right to bring tribunal claims in exchange for a financial package.

In a redundancy context, settlement agreements typically offer more than your basic statutory redundancy pay, because you are also agreeing to give up your legal rights. You can often negotiate a higher payment, an agreed reference, and other terms such as confidentiality provisions.

The main advantage for you is speed and certainty: you receive a guaranteed sum without the stress and delay of a tribunal claim. For your employer, it avoids the cost and management time of a formal redundancy process and the risk of litigation.

For a settlement agreement to be valid, you must receive independent legal advice from a qualified solicitor. Your employer is required to contribute to the cost of this advice.

Redundancy and Pregnancy or Maternity

If you are pregnant or on maternity, adoption, shared parental, or neonatal care leave, you have enhanced redundancy protections. Your employer cannot select you for redundancy because of your pregnancy or leave.

Crucially, if a suitable alternative vacancy exists, your employer must offer it to you in priority over other employees. This is one of the strongest protections in employment law: you don’t have to compete for the role or go through a selection process.

This priority right applies during an extended protected period of 18 months from the date of birth or placement of the child. The Employment Rights Act 2025 is expected to strengthen these protections further during 2027, including extending protection against non-redundancy dismissals during pregnancy.

If your employer selects you for redundancy because of pregnancy or maternity leave, this is automatically unfair dismissal and also constitutes pregnancy or maternity discrimination. You do not need any qualifying service to bring these claims, and compensation for discrimination is uncapped.

Alternatives to Redundancy

Before making redundancies, your employer should consider whether there are alternatives. Failing to explore alternatives can undermine the fairness of any subsequent dismissals. Common alternatives include:

• Reducing working hours or implementing short-time working
• Seeking volunteers for redundancy
• Redeploying affected employees to different roles within the organisation
• Implementing a recruitment freeze and relying on natural wastage
• Temporary pay reductions (with employee agreement)
• Lay-offs where contractually permitted
• “Bumping,” where a more senior employee is redeployed into a role held by someone with less service, and the less senior employee is made redundant instead

Your employer is not required to adopt any particular alternative, but they should be able to show the tribunal that they gave serious consideration to the options.

What If Your Employer Can’t Pay?

If your employer is insolvent and cannot pay your statutory redundancy entitlement, you can apply to the government’s Redundancy Payments Service (RPS) for payment. The RPS can cover statutory redundancy pay, arrears of wages (up to eight weeks), holiday pay (up to six weeks), and notice pay (up to the statutory minimum).

You can apply to the RPS through GOV.UK. If your employer is no longer trading but has not formally registered as insolvent, the process may be more complicated and you should seek legal advice.