Redundancy process

Redundancy procedure guide for employers

A fair redundancy process is essential to reducing the risk of unfair dismissal and discrimination claims. Employers must have a genuine redundancy situation and follow a fair procedure, including appropriate consultation and consideration of alternatives.

We regularly help employers navigate redundancy processes. The key steps and legal requirements are outlined below.

If you need to make staff redundant, we provide experienced, cost-effective employment law support to help you manage the process.

Redundancy Process best practice

A redundancy process requires planning, clear documentation and accurate record-keeping. The main steps are:

• Decide why redundancies are necessary and document the business reasons.
• Identify the roles affected and record the rationale.
• Establish fair selection criteria and apply them consistently.
• Inform employees that they are at risk of redundancy.
• Check employment contracts and staff handbooks and follow any applicable procedures.
• Consider collective consultation if 20 or more redundancies are proposed at one establishment within 90 days.
• Consult individually with affected employees, considering their feedback and alternatives to redundancy.
• Confirm decisions in writing, including the right of appeal.
• Consider and respond to appeals.

What are the rules about redundancy consultation?

Employers should consult individually with employees at risk and consider their representations before making a final decision. Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation obligations also apply. Failure to comply can result in a protective award of up to 90 days’ pay for each affected employee.

Are there rules about selection criteria?

Employers should identify an appropriate selection pool and use fair, objective criteria applied consistently. There is no single mandatory method, and length of service should be used with care. A scoring system is common but not compulsory. The overall approach must be reasonable and fairly implemented.

The potential pool of employees at risk

There are no fixed rules for defining a redundancy pool. Employers should consider the work that is reducing or disappearing and which employees perform it. Relevant factors include the similarity of roles, interchangeability of skills and employees’ actual day-to-day duties, as well as their job descriptions and contracts.

Possible alternatives to redundancy?

Employers should consider suitable alternatives before dismissing employees. Options may include:

• Restricting recruitment.
• Reducing reliance on contractors or consultants.
• Offering suitable alternative roles, including within an associated company where appropriate.
• Bumping, where another employee is dismissed instead.
• Considering changes to working arrangements, where agreed or otherwise lawful.
• Inviting voluntary redundancy, potentially alongside a settlement agreement.

Considering alternatives is an important part of a fair process. We help employers assess the options and document their decisions.

Statutory redundancy payments

Employees with at least two years’ continuous employment will generally qualify for statutory redundancy pay if dismissed by reason of redundancy. The payment is calculated using age, length of service and weekly pay, subject to statutory limits. Employers should check the applicable limits at the time of dismissal.

With careful planning, fair consultation and consistent procedures, employers can manage redundancies while reducing the risk of employment claims.