TRW & Co · UK employment law
The Redundancy Process in the UK: A Step-by-Step Guide for Employers
The redundancy process UK employers must follow turns on a genuine redundancy situation, a fair pool, objective criteria, real consultation and a search for alternatives. This guide sets out each step, the collective consultation rules, statutory redundancy pay from April 2026 and how the Employment Rights Act 2025 is raising the stakes.
Key pointThe cost of getting collective consultation wrong doubled in April 2026: the maximum protective award is now 180 days' gross pay per affected employee. And from 1 January 2027, employees with just six months' service can claim unfair dismissal with no cap on the compensatory award.
At a glance
Collective trigger
Collective consultation applies when 20 or more dismissals are proposed at one establishment within 90 days, with 30 or 45 days' minimum consultation depending on numbers.
Protective award doubled
For dismissals taking effect on or after 6 April 2026, a tribunal can award up to 180 days' gross pay per employee for failing to consult collectively.
Statutory redundancy pay
Employees with two years' service get an age-weighted payment; from 6 April 2026 a week's pay is capped at £751, giving a maximum of £22,530.
Unfair dismissal from 2027
For terminations on or after 1 January 2027, the qualifying period falls to six months and the cap on the compensatory award is removed.
Longer time limits
Where the relevant act occurs on or after 1 October 2026, most employment tribunal claims can be brought within six months rather than three.
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The redundancy process UK employers must follow: the short answer
The redundancy process UK employers must follow has five parts: a genuine redundancy situation, a fair selection pool, objective selection criteria, meaningful consultation, and a real search for alternative work before notice is given. Get any one of them wrong and a dismissal that was commercially justified can still be unfair in law.
Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation rules also apply. Those rules carry fixed minimum consultation periods, a duty to notify the government on form HR1, and a protective award of up to 180 days' gross pay per affected employee if the employer fails to consult properly.
Employees with two years' continuous service are entitled to a statutory redundancy payment. For dismissals on or after 6 April 2026, a week's pay for that calculation is capped at £751, which puts the statutory maximum at £22,530. Many employers pay more under contract or policy.
As of October 2026, the Employment Rights Act 2025 is changing the ground underneath all of this. Tribunal time limits have doubled, the protective award has doubled, and from 1 January 2027 the unfair dismissal qualifying period falls from two years to six months, bringing far more employees within the scope of an unfair redundancy claim.
The legal framework for redundancy in England and Wales
Redundancy sits across several statutes. The definition is in section 139 of the Employment Rights Act 1996. An employee is dismissed by reason of redundancy where the dismissal is wholly or mainly attributable to the employer ceasing (or intending to cease) the business, ceasing to carry it on at the place where the employee worked, or a reduced requirement for employees to carry out work of a particular kind.
That third limb is the one most employers rely on. It does not require the work to vanish; a reduction in the number of people needed to do it is enough. What it does not cover is replacing one person with a cheaper one doing the same job, which is a common source of claims.
Individual rights
The Employment Rights Act 1996 also governs unfair dismissal, statutory redundancy pay, statutory notice, time off to look for work and the trial period in a new role. Redundancy is a potentially fair reason for dismissal, but the tribunal will still ask whether the employer acted reasonably in treating it as sufficient, which in practice means looking at warning, pool, selection, consultation and alternatives.
Collective rights
Collective consultation is governed by section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The protective award for breach sits in section 189, which the Employment Rights Act 2025 amended so that the maximum protected period is 180 days rather than 90, for dismissals taking effect on or after 6 April 2026.
Discrimination and family leave protection
Selection that disadvantages people because of a protected characteristic under the Equality Act 2010 is unlawful, and there is no qualifying service or compensation cap for discrimination claims. Employees on maternity, adoption or shared parental leave already had priority for suitable alternative vacancies; that protection was extended in April 2024 to cover pregnancy and a period after return from leave.
The same core rules apply in Scotland. Northern Ireland has its own employment legislation, with different collective consultation provisions, so a UK-wide programme needs separate advice for any NI headcount. For an overview of wider reforms, see our guide to the Employment Rights Act 2025.
Pools, selection criteria and the bumping question
The pool is where a redundancy process UK tribunals find unfair most often goes wrong. Tribunals give employers a margin of discretion on the pool, but it must be a pool that a reasonable employer could have chosen. The usual starting point is everyone doing the same or interchangeable work, at the same location or across locations if people move between them.
A pool of one can be fair where the role is genuinely unique, but it attracts scrutiny. If two people do broadly similar jobs and only one is placed at risk, expect the employer to need a clear, documented explanation.
Selection criteria that survive challenge
Criteria should be objective, measurable and capable of being scored by more than one manager from records rather than impressions. Typical criteria include skills and qualifications needed for the future structure, documented performance, and disciplinary record. Attendance can be used, but absences linked to disability or pregnancy must be discounted, or the scoring becomes discriminatory.
"Last in, first out" is now rarely used on its own because it can indirectly discriminate on age. Where an employer restructures into new roles, it may instead run a competitive interview process, which is lawful but must still be fair and consistent.
Bumping
Bumping means moving an at-risk employee into another role and dismissing the incumbent instead. There is no absolute duty to consider it, but a tribunal may ask whether a reasonable employer would have done so, particularly for long-serving senior staff where a junior role was available.
The redundancy process UK employers should follow, step by step
The order matters. Each stage of the redundancy process UK tribunals review builds on the one before. Most unfair redundancy findings arise because a decision was in practice taken before consultation began, so consultation becomes a formality.
- Build the business case. Record why the requirement for work is falling, the proposed new structure and the options considered. Keep it as a proposal, not a decision.
- Count the numbers. Establish how many dismissals are proposed, at which establishment and over what period. If 20 or more fall at one establishment within 90 days, move to the collective track below.
- Define pools and criteria. Agree pools, selection criteria and scoring guidance, and check them for indirect discrimination before anyone is scored.
- Warn and consult. Tell affected employees in writing that they are at risk, explain the reasons and the selection method, and hold at least two individual meetings. Give them their scores and a real chance to challenge them.
- Look for alternatives. Share vacancies across the group, consider reduced hours, redeployment and voluntary redundancy, and record what was offered and why.
- Confirm the decision. Issue a written dismissal letter setting out the reason, notice, statutory and enhanced pay, and the right of appeal.
- Hear the appeal. Use a manager not previously involved where possible. An appeal can cure some earlier defects.
- Pay and close out. Pay notice (or pay in lieu where the contract allows), redundancy pay and accrued holiday, and consider a settlement agreement for senior or higher-risk exits.
Write the at-risk letter and the business case as genuine proposals. Phrases such as "the role will be deleted" in documents dated before consultation are routinely used in tribunal as evidence that the outcome was predetermined.
Collective consultation: thresholds, timing and the HR1
Collective consultation is the most technical part of the redundancy process UK employers run. When 20 or more dismissals are proposed at one establishment within 90 days or less, the employer must consult appropriate representatives: a recognised trade union, or elected employee representatives. Where none exist, the employer must arrange elections. Consultation must begin in good time, and in any event before the minimum period set out below.
| Proposed dismissals at one establishment within 90 days | Minimum consultation before first dismissal | HR1 notice to the Redundancy Payments Service | Consequence of failure |
|---|---|---|---|
| Fewer than 20 | No statutory minimum; individual consultation still required for fairness | Not required | Unfair dismissal risk for each eligible employee |
| 20 to 99 | 30 days | At least 30 days before the first dismissal | Protective award up to 180 days' gross pay per employee; offence for failing to notify |
| 100 or more | 45 days | At least 45 days before the first dismissal | As above |
The employer must disclose in writing the reasons for the proposals, the numbers and descriptions of employees affected, the total employed in each description at the establishment, the selection method, how dismissals will be carried out and how redundancy payments will be calculated. Consultation must cover ways of avoiding the dismissals, reducing the numbers and mitigating the consequences, with a view to reaching agreement.
Form HR1 is sent to the Redundancy Payments Service. GOV.UK confirms that failing to notify can lead to an unlimited fine. Notifying late does not shorten the minimum consultation period.
The organisation-wide threshold
The Employment Rights Act 2025 contains a power to extend collective consultation to cases where a threshold number of dismissals is proposed across the whole employer, not only at one establishment. The threshold must be set by regulations and, as of October 2026, those regulations are not yet in effect. Multi-site employers should nonetheless start tracking proposed dismissals across the business, because the rolling 90-day count will become harder to manage once the change lands.
Where a redundancy programme also involves changing the terms of retained staff, the new restrictions on fire and rehire are relevant. For transfers of a business, TUPE has its own information and consultation duty.
Statutory redundancy pay, notice and other money
An employee with at least two years' continuous service who is dismissed by reason of redundancy is entitled to a statutory redundancy payment. GOV.UK sets out the formula: for each complete year of service, half a week's pay for years when the employee was under 22, one week's pay for years aged 22 to 40, and one and a half weeks' pay for years aged 41 or over. Service is capped at 20 years.
For redundancies on or after 6 April 2026, a week's pay is capped at £751, making the maximum statutory payment £22,530. The limits are uprated each April under an Increase of Limits Order, so check the date of dismissal before using any figure.
Other sums to budget for
- Notice. The longer of contractual notice and statutory notice, which is one week per complete year of service after two years, up to twelve weeks.
- Holiday. Accrued but untaken holiday to the termination date.
- Enhanced pay. Any enhanced scheme in the contract, handbook or established custom and practice. A scheme paid consistently over years can become contractual.
- Time off. Employees with two years' service may take reasonable paid time off during notice to look for work or arrange training.
On tax, statutory and genuinely ex gratia redundancy pay can fall within the £30,000 exemption for termination payments, while payments in lieu of notice are taxed as earnings. Take payroll advice on the split before issuing letters.
An employee offered suitable alternative employment who unreasonably refuses it loses the right to a statutory payment. Where the new job differs, the employee has a statutory four-week trial period and can still claim redundancy pay if it proves unsuitable.
Illustrative scenario: a London services business reorganises
This scenario is illustrative only. It does not describe any real client or outcome.
A professional services company with offices in London and Manchester decides to centralise its finance function. It proposes to remove 24 finance roles in London and create 8 new roles in Manchester. Because 24 dismissals are proposed at one establishment within 90 days, it must consult collectively for at least 30 days and file an HR1 before consultation starts.
No union is recognised, so the company invites elections for employee representatives and briefs them in writing on the matters listed in section 188. It also opens individual consultation and offers the Manchester roles to everyone at risk, with relocation support.
Two employees are on maternity leave. The company offers each of them a suitable vacancy before anyone else, as the protection requires. One employee with fourteen months' service argues she is outside unfair dismissal protection; HR notes that if her termination date falls on or after 1 January 2027 she will be inside the new six-month qualifying period, and treats her consultation in exactly the same way as everyone else's.
Consultation produces a voluntary redundancy scheme that cuts compulsory dismissals to eleven. The company keeps minutes of every representative meeting and its written responses to each counter-proposal. That record is what it would rely on if a protective award claim were brought.
Risks and common mistakes in the redundancy process UK employers run
Treating consultation as a formality
The most common finding against employers is that the decision was made before consultation began. Tribunals look at board papers, emails and organisation charts dated before the at-risk meeting. If the new structure was already fixed and recruitment had begun, consultation was not genuine. Keep proposals open, record what employees say, and show how their points were considered. Where a suggestion is rejected, explain why in writing. Under the well-known Polkey principle, a procedurally unfair dismissal can still lead to reduced compensation if a fair process would have produced the same result, but that is a damage-limitation argument, not a strategy.
Counting dismissals at the wrong level
Collective duties are triggered by proposals, not by the numbers eventually dismissed. Employers sometimes split a programme into tranches to stay under 20 in each 90-day window, or count only compulsory dismissals. Proposed dismissals include those where employees are offered alternative roles on different terms that they may refuse. Splitting a single proposal into phases rarely works if the plan was formed at the outset. With the protective award now up to 180 days' gross pay per employee, the cost of miscounting has doubled.
Discriminatory selection criteria
Attendance scores that count disability-related or pregnancy-related absence, flexibility scores that penalise part-time workers or carers, and "potential" scores with no evidence behind them are frequent targets. Discrimination claims are uncapped and do not require qualifying service. Test criteria before use, give managers written scoring guidance, and have a second person moderate the scores. Disclose individual scores to the employee so they can challenge them; refusing to do so makes the process look closed.
Ignoring the 2026 and 2027 timing changes
For acts on or after 1 October 2026, most tribunal claims can be brought within six months rather than three, so exposure lasts longer. From 1 January 2027, employees with six months' service gain unfair dismissal rights and the cap on the compensatory award is removed for dismissals with an effective date of termination on or after that date. An exit planned for late December that slips into January can carry very different risk. Map termination dates against these changes before announcing a programme.
Using redundancy to remove a performance problem
Where the work is not reducing and a replacement is recruited, there is no redundancy situation, and the dismissal will usually be unfair. If the real issue is performance or conduct, use the proper disciplinary or capability procedure, or negotiate an exit under a protected conversation and settlement agreement.
Cross-border and group restructurings
International groups often plan reductions centrally, then discover that the redundancy process UK law imposes is longer than at home. In the UK, the duty to consult falls on the employing entity, even where the decision is driven by a parent company overseas. Representatives can ask awkward questions about the group's plans, so align global announcements, stock exchange disclosures and UK consultation timetables before anything is said publicly.
For groups headquartered in Bangladesh, the Gulf or Singapore, UK redundancy rules are usually more process-heavy than at home, and statutory redundancy pay is calculated differently. Employees seconded to the UK from overseas may have statutory rights in both places. Where a Bangladeshi parent is restructuring a UK subsidiary, our UK expansion team works alongside our Dhaka office to align the two.
Sponsored workers need particular care: a redundancy affects sponsor reporting duties and the worker's immigration status. See our guide to sponsor licence compliance.
What to do next: a checklist
- Write a business case that records the reasons and options as proposals.
- Count proposed dismissals per establishment across a rolling 90 days, and start tracking organisation-wide numbers too.
- Check termination dates against 1 October 2026 (six-month time limits) and 1 January 2027 (six-month qualifying period, uncapped compensation).
- Agree pools, criteria and scoring guidance, and screen them for discrimination.
- File HR1 on time where required and organise representative elections.
- Consult individually, disclose scores, and record alternatives offered.
- Calculate statutory and contractual pay using the limits in force at the dismissal date.
- Offer an appeal, and consider settlement agreements for higher-risk exits.
Our TUPE and redundancy team advises employers on the full redundancy process UK law requires, from structuring the proposal to running collective consultation and defending claims. If a claim is already in prospect, see our employment tribunal practice. To discuss a planned restructuring, contact our London office.
Frequently asked questions
01How long does a redundancy process take in the UK?
For fewer than 20 dismissals there is no statutory minimum, but a fair individual process with at least two consultation meetings, a search for alternatives and an appeal usually takes several weeks. Where 20 to 99 dismissals are proposed at one establishment within 90 days, collective consultation must start at least 30 days before the first dismissal; for 100 or more it is 45 days. Notice periods then run on top. Rushing the process is the most common reason redundancies are found unfair, so build in time for representative elections, counter-proposals and appeals.
02How much statutory redundancy pay will an employee get in 2026?
An employee needs two years' continuous service. For each complete year they receive half a week's pay for years under age 22, one week's pay for years aged 22 to 40, and one and a half weeks' pay for years aged 41 or over, counting a maximum of 20 years. For redundancies on or after 6 April 2026, a week's pay is capped at £751, so the maximum statutory payment is £22,530. Contractual or enhanced schemes can pay more, and notice pay and accrued holiday are paid separately.
03What is a protective award?
A protective award is compensation a tribunal can order where an employer fails to comply with the collective consultation duties in section 188 of TULRCA, for example by not consulting representatives, starting late or failing to provide the required information. For dismissals taking effect on or after 6 April 2026, the maximum protected period is 180 days' gross pay per affected employee, up from 90. The award is punitive rather than compensatory, so tribunals start from the maximum and reduce it only for mitigating circumstances.
04Do I have to consult if I am only making one person redundant?
Yes. Collective consultation rules only apply at 20 or more proposed dismissals, but individual consultation is part of acting reasonably for unfair dismissal purposes. A single employee should be warned in writing, told why the role is at risk and how the decision was reached, given at least one meaningful meeting, offered any suitable alternative role and given a right of appeal. A pool of one should be explained. Skipping consultation is likely to make the dismissal unfair, although compensation may be reduced if a fair process would have ended the same way.
05Can an employer choose who to make redundant?
Only through a fair process. The employer identifies a reasonable pool, applies objective criteria such as skills, documented performance and disciplinary record, and scores fairly and consistently. Criteria must not discriminate: absences linked to disability or pregnancy should be discounted, and part-time or flexible workers must not be penalised. Where new roles are created, a competitive interview process can be used. Employees on maternity and certain other family leave, and in some cases pregnant employees, have priority for suitable alternative vacancies.
06What changes to redundancy law are coming in 2027?
For dismissals with an effective date of termination on or after 1 January 2027, the qualifying period for unfair dismissal falls from two years to six months, and the statutory cap on the compensatory award is removed. The Employment Rights Act 2025 also allows the government to extend collective consultation to proposals that reach a threshold across the whole organisation, not just one establishment, but that change depends on regulations not yet in force as of October 2026. Statutory redundancy pay still requires two years' service.
Sources and official materials
- Employment Rights Act 1996, section 139 — Statutory definition of redundancy
- Trade Union and Labour Relations (Consolidation) Act 1992, section 188 — Duty to consult representatives on collective redundancies
- Employment Rights Act 2025 — Protective award, unfair dismissal and collective redundancy reforms
- Employment Rights (Increase of Limits) Order 2026 — Week's pay cap and compensation limits from 6 April 2026
- GOV.UK: Redundancy pay — Statutory redundancy pay formula and current maximum
- GOV.UK: Making staff redundant — Employer guidance on consultation and HR1 notification
- Acas: Redundancy — Good practice guidance on fair redundancy procedures
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.