Redundancy and Redundancy Pay.

Redundancy is a type of dismissal that can arise where an employer:

• closes the business;
• closes a particular workplace;
• moves the business to another location; or
• needs fewer employees to carry out work of a particular kind.

Redundancy normally concerns the role rather than the individual employee. An employer should not use redundancy as a substitute for addressing misconduct, capability issues, or other unrelated reasons for dismissal.

This guide principally covers redundancy law in England, Wales, and Scotland. Northern Ireland has separate rules and statutory payment limits.

Who Has Redundancy Rights?

Statutory redundancy rights generally apply to people with the legal status of an employee.

Agency workers, casual workers and genuinely self-employed contractors will not normally qualify for statutory redundancy pay. However, their status should be assessed from the actual working relationship rather than the label used in the contract.

Some redundancy rights require two years' continuous employment, but other protections apply from the beginning of employment.

When Can Redundancy Arise?

A genuine redundancy situation may arise because of:

• business closure;
• workplace closure or relocation;
• restructuring;
• automation or new technology;
• reduced demand;
• loss of funding or contracts;
• merging roles;
• outsourcing; or
• a reduced need for employees to perform particular work.

The fact that some duties continue does not necessarily mean there is no redundancy. A role may disappear while its remaining duties are redistributed.

However, replacing an employee with another person carrying out substantially the same role may raise questions about whether redundancy was the true reason.

A Fair Redundancy Process

A fair process will normally involve:

• identifying a genuine redundancy situation;
• warning affected employees that they are at risk;
• consulting before a final decision is made;
• identifying an appropriate selection pool where required;
• using fair and objective selection criteria;
• considering ways to avoid dismissal;
• searching for suitable alternative employment;
• allowing representations and correcting errors;
• giving the correct notice;
• paying redundancy and other sums due; and
• offering an appeal.

The appropriate process depends on the number of proposed redundancies and the organisation's circumstances.

Consultation

Consultation should be genuine and take place while proposals are still open to influence.

The employer should normally explain:

• why redundancies are proposed;
• which roles are affected;
• the proposed selection pool;
• the selection criteria;
• the likely timetable;
• the number of proposed dismissals;
• ways redundancies might be avoided;
• alternative employment opportunities; and
• how redundancy pay will be calculated.

The employee should have a reasonable opportunity to ask questions, challenge information and suggest alternatives.

Consultation may consider:

• a recruitment freeze;
• reduced overtime;
• voluntary redundancy;
• redeployment;
• retraining;
• reduced hours;
• job sharing;
• temporary lay-off;
• salary-saving proposals; or
• other ways of reducing costs.

Where a Single Role Disappears

An employer may not need a competitive scoring exercise where a unique role genuinely disappears, and there are no comparable employees.

This does not mean that no process is required.

The employee should normally still be consulted about:

• whether the role is genuinely redundant;
• whether the selection pool should include other roles;
• whether the work is continuing elsewhere;
• whether alternatives exist; and
• whether suitable alternative employment is available.

Collective Consultation

Collective consultation is required where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

The employer must consult:

• a recognised trade union; or
• elected employee representatives where no recognised union applies.

Collective consultation must begin in good time and at least:

• 30 days before the first dismissal where 20 to 99 redundancies are proposed; or
• 45 days before the first dismissal where 100 or more are proposed.

The employer must also notify theGovernment'ss Redundancy Payments Service in accordance with the required procedure.

Collective consultation does not replace individual consultation.

Failure to Consult Collectively

Affected employees may claim a protective award where collective consultation obligations are breached.

For dismissals from 6 April 2026, the maximum protective award is up to 180 days' gross pay for each affected employee.

Two years' service is not required for a protective award claim.

Selection Pools

Where the employer needs fewer people to perform similar work, it should normally identify a reasonable selection pool.

The pool may include:

• employees doing the same role;
• employees doing similar or interchangeable work;
• employees whose work has been reduced; or
• employees across more than one team or location where appropriate.

An artificially narrow pool may make the dismissal unfair.

The employer should be able to explain why particular employees or roles were included or excluded.

Selection Criteria

Selection criteria should be objective, relevant and capable of being supported by evidence.

Possible criteria include:

• skills and qualifications;
• relevant experience;
• performance;
• disciplinary record;
• attendance;
• flexibility;
• customer or business requirements; and
• the ability to perform the remaining work.

Subjective criteria such as attitude, enthusiasm or whether a person "fits the team" can create unfairness unless they are clearly defined and supported by evidence.

Performance and Disciplinary Records

Performance scores should be based on reliable records rather than personal opinion.

Employers should consider:

• formal appraisals;
• objective targets;
• quality records;
• relevant qualifications;
• live disciplinary warnings; and
• consistent evidence covering a reasonable period.

Expired warnings should not normally be relied upon without a proper reason.

Attendance Records

Attendance may be used where relevant, but the employer should avoid counting absences connected with:

• disability;
• pregnancy or maternity;
• family leave;
• work-related injury;
• trade union activities;
• jury service;
• whistleblowing; or
• another protected statutory right.

Last In, First Out

Length of service may be used as one factor, but relying solely on "last in, first out" can indirectly discriminate against younger employees and may not identify the skills the business needs.

Service-based criteria should be objectively justified and used carefully.

Length of service remains relevant to the statutory redundancy payment calculation.

Discrimination and Automatically Unfair Selection

An employee must not be selected because of a protected characteristic, including:

• age;
• disability;
• gender reassignment;
• marriage or civil partnership;
• pregnancy or maternity;
• race;
• religion or belief;
• sex; or
• sexual orientation.

Selection may also be automatically unfair where it relates to matters such as:

• pregnancy or family leave;
• trade union membership or activities;
• whistleblowing;
• health and safety activities;
• asserting statutory employment rights;
• working-time rights;
• minimum wage rights;
• jury service; or
• certain employee-representative duties.

Discrimination claims do not require two years’ service.

Pregnancy and Family Leave

Employees who are pregnant or taking certain forms of family leave receive additional protection when suitable alternative vacancies are available.

In qualifying circumstances, the employer must offer a suitable available vacancy to the protected employee in priority to other redundant employees.

The protection can extend beyond the employee's return to work for the statutory protected period.

Employers should obtain current advice because family-leave redundancy protections have changed in recent years.

Voluntary Redundancy

An employer may invite employees to volunteer for redundancy.

Volunteering does not automatically mean the application must be accepted. The employer may refuse if losing that employee would damage the business or remove essential skills.

Before volunteering, an employee should check:

• the proposed payment;
• notice entitlement;
• pension consequences;
• whether benefits will continue;
• the proposed termination date;
• tax treatment;
• whether restrictive covenants remain effective; and
• whether the arrangement requires a settlement agreement.

Voluntary redundancy is still normally treated as redundancy rather than resignation where the employer accepts the application under a redundancy programme.

Suitable Alternative Employment

An employer should search for suitable alternative employment within its organisation and, where appropriate, associated organisations.

Where a suitable vacancy exists, the employer should offer it to an employee at risk of redundancy.

The employee should not normally have to compete against external candidates for a vacancy that amounts to suitable alternative employment. However, a fair selection process may be required where several redundant employees are interested in the same role.

Is the Alternative Suitable?

Relevant factors include:

• the nature of the work;
• skills and experience;
• status and responsibility;
• pay and benefits;
• working hours;
• workplace and travelling distance;
• job security;
• personal circumstances; and
• the terms of the new role.

Suitability has both an objective and a personal element. A role that appears suitable to the employer may be unsuitable for the employee due to travel, caring responsibilities, health, or another genuine reason.

Four-Week Trial Period

An employee accepting alternative work is normally entitled to a four-week statutory trial period.

The new role should generally begin within four weeks of the end of the old employment.

Where retraining is required, a longer trial period may be agreed in writing before the trial begins.

If the role proves unsuitable during the valid trial period, the employee may still retain the right to redundancy pay.

Refusing Suitable Work

An employee who unreasonably refuses suitable alternative employment may lose entitlement to statutory redundancy pay.

The employer must establish both that:

• the role was suitable; and
• the refusal was unreasonable.

An employee should explain objections clearly and in writing.

Statutory Redundancy Pay

An employee will normally qualify for statutory redundancy pay where they:

• have at least two years' continuous employment;
• are dismissed because of redundancy; and
• have not unreasonably refused suitable alternative work.

The employer may offer a more generous contractual or enhanced payment.

How Statutory Redundancy Pay Is Calculated

The calculation is based on age, complete years of continuous service and weekly pay.

For each complete year of service, the employee normally receives:

• half a week's pay for each year under age 22;
• one week's pay for each year aged 22 to 40; and
• one and a half weeks' pay for each year aged 41 or over.

Only the most recent 20 years of employment can be counted.

Age is assessed during each relevant year of employment, not only at the termination date.

Current Statutory Limits

For redundancies taking effect on or after 6 April 2026:

• a week's pay is capped at £751; and
• the maximum statutory redundancy payment is £22,530.

Statutory limits normally change each April.

The Government redundancy calculator can be used to estimate entitlement.

Weekly Pay

Weekly pay is normally based on average earnings during the 12 weeks before the redundancy notice was given.

Special calculations may apply where:

• hours vary;
• the employee receives commission;
• the employee was absent;
• pay recently changed;
• the employee was on family leave; or
• normal working hours are not fixed.

Tax on Redundancy Payments

The first combined £30,000 of qualifying statutory and enhanced redundancy payments is normally free from Income Tax.

Amounts above £30,000 are generally taxable.

Other payments are usually taxed in the normal way, including:

• wages;
• holiday pay;
• bonuses;
• commission;
• payment instead of notice; and
• other amounts treated as earnings.

The tax treatment depends on what each part of the termination payment represents.

Employees Who May Not Qualify

A person may not qualify for statutory redundancy pay where:

• they have less than two years' continuous service;
• they are not legally an employee;
• they unreasonably refuse suitable alternative employment;
• their employment continues with an associated employer;
• they leave before the redundancy date without agreement;
• a specific statutory exclusion applies; or
• they are dismissed for another genuine reason.

Special rules may apply to apprentices, share fishermen, Crown servants, members of the armed forces and certain public-sector occupations.

Redundancy Notice

Once consultation and selection are complete, the employer must give notice of dismissal.

The statutory minimum is:

• one week for employment lasting between one month and two years;
• one week for each complete year between two and twelve years; and
• twelve weeks for twelve or more years' service.

The contract may provide a longer period.

The employee should normally continue to receive pay and contractual benefits during the notice period.

Payment in Lieu of Notice

The employer may make a payment instead of notice where the contract permits it or the parties agree.

Notice pay is generally subject to tax and National Insurance.

Garden Leave

An employee may be placed on garden leave where the contract permits. They remain employed and normally continue to receive pay and benefits during the notice period.

Time Off to Look for Work

An employee who will have at least two years' continuous service by the end of the notice period is entitled to reasonable time off during working hours to:

• look for another job; or
• arrange training for future employment.

Reasonable time may include attending interviews, visiting employment agencies or arranging training.

The amount of time off depends on the circumstances.

Statutory paid entitlement is capped at 40% of one week's pay in total, regardless of the amount of time taken. An employer may offer more generous paid leave under the contract or redundancy policy.

Appealing a Redundancy Decision

An employee who believes the decision is unfair should appeal promptly in writing.

The appeal might challenge:

• the reason for redundancy;
• the selection pool;
• the scoring;
• incorrect evidence;
• discrimination;
• lack of consultation;
• failure to consider alternatives;
• failure to offer a suitable vacancy; or
• the redundancy payment calculation.

The employer should arrange an impartial review where possible.

Unfair Redundancy

A redundancy dismissal may be unfair where:

• there was no genuine redundancy situation;
• consultation was inadequate;
• the selection pool was unreasonable;
• criteria were subjective or manipulated;
• scoring was inaccurate;
• the employee was selected for a prohibited reason;
• alternatives were not considered;
• suitable alternative work was ignored; or
• the employer had already made a final decision before consultation.

Ordinary unfair dismissal currently normally requires the applicable qualifying period of continuous employment, subject to automatically unfair reasons for which no qualifying period is required.

Employment Tribunal Time Limits

As of July 2026, most unfair dismissal claims must normally be started within three months less one day of the employment ending.

Before bringing most claims, the employee must notify ACAS and consider Early Conciliation.

Internal consultation, appeals and grievances do not normally stop the tribunal deadline.

A claim specifically for unpaid statutory redundancy pay normally has a longer limit of six months less one day from the date of termination.

The general tribunal time limit is due to increase in October 2026, but employees should continue to work to the current shorter limit until that change takes effect.

If the Employer Is Insolvent

Where an employer cannot pay because it is formally insolvent, qualifying employees may claim certain sums from the Redundancy Payments Service.

Claims may include:

• statutory redundancy pay;
• limited unpaid wages;
• holiday pay;
• statutory notice pay; and
• certain unpaid pension contributions.

Statutory caps and eligibility rules apply.

Lay-Off and Short-Time Working

Lay-off occurs where an employee is not provided with work for at least one working day. Short-time working occurs where hours and pay are reduced.

In qualifying circumstances, an employee may claim a redundancy payment where lay-off or short-time working continues for:

• four consecutive weeks; or
• six weeks within thirteen weeks, with no more than three consecutive weeks.

Strict notice and counter-notice procedures apply, so advice should be obtained before making a claim or resigning.

Settlement Agreements

An employer may offer an enhanced payment as part of a settlement agreement.

The agreement may waive claims relating to:

• unfair dismissal;
• discrimination;
• notice;
• consultation;
• bonus or commission;
• holiday pay; and
• other employment rights.

For the agreement to be legally binding, the employee must receive advice from an independent qualified adviser.

The employer commonly contributes towards the cost of that advice.

Information to Request

An employee at risk of redundancy may ask for:

• the business reason for the proposal;
• the selection pool;
• the selection criteria;
• their scores;
• the evidence supporting those scores;
• details of vacancies;
• the proposed timetable;
• the redundancy-pay calculation;
• notice arrangements; and
• the appeal procedure.

Putting questions and objections in writing creates a useful record.

How a Redundancy Solicitor Can Help

An employment solicitor may assist with:

• assessing whether there is a genuine redundancy;
• reviewing consultation;
• challenging selection pools and scores;
• discrimination and family-leave protections;
• suitable alternative employment;
• redundancy and notice calculations;
• appeals and grievances;
• collective consultation;
• protective award claims;
• Acas Early Conciliation;
• unfair dismissal proceedings;
• settlement agreements; and
• advising employers on fair redundancy procedures.

Finding a Redundancy Solicitor

A genuine business need to reduce roles does not remove the employer's obligation to follow a fair process. Consultation, selection, alternative work, notice and payments should all be considered before employment ends.

Strict tribunal deadlines apply. An employee should seek advice promptly and should not wait for an internal appeal to finish before checking the deadline.

Use the search facility at the top of this page to find an employment solicitor experienced in redundancy, unfair dismissal and settlement agreements.

This guide provides general information about redundancy law in Great Britain. It does not constitute legal advice and should not replace advice about a particular redundancy process or dismissal.