Handling redundancies fairly: a step-by-step guide for employers

Making roles redundant is one of the hardest decisions a business can face. Handled well, it can be done fairly, lawfully and with real care for the people affected. Handled badly, it can lead to tribunal claims, damaged trust and lasting harm to your reputation. Here's how to get it right.

Step 1: Make sure redundancy is genuinely needed

A redundancy happens when a role is no longer needed, for example because part of the business is closing, relocating, or needs fewer people or different skills. It should never be used to deal with conduct or performance concerns, which need a separate, fair process.

Before deciding, consider the alternatives:

• Pausing recruitment, reducing overtime or ending temporary contracts.
• Reducing hours, job shares or other changes to working patterns (by agreement).
• Redeploying people into other roles.
• Inviting volunteers for redundancy, offered fairly and without pressure.

Step 2: Plan the right process

If you're proposing 20 or more redundancies at one establishment within 90 days, collective consultation rules apply:

• 20 to 99 redundancies: consult for at least 30 days before the first dismissal, and notify the Redundancy Payments Service (form HR1) at least 30 days before.
• 100 or more: consult for at least 45 days, and notify at least 45 days before.
• You'll need to consult through employee or union representatives. If none exist, affected employees can elect them.

Getting this wrong is costly. Since April 2026, a tribunal can award up to 180 days' pay per affected employee for failing to consult properly, double the previous maximum. Failing to notify the Redundancy Payments Service can also lead to an unlimited fine.

With fewer than 20 redundancies there are no set collective rules, but you must still consult each affected employee individually.

Step 3: Consult genuinely

Consultation must be meaningful: you should be open to changing your plans based on what you hear. Meet each affected employee privately at least once, and consider letting them bring a companion. Discuss:

• the reasons for the proposed changes
• ways to avoid or reduce redundancies
• the proposed selection criteria
• their concerns, ideas and any questions

Keep notes, and record how you considered each suggestion, including the ones you didn't take forward.

Step 4: Select fairly

Put all roles that are the same or similar into a selection pool, then score everyone using the same objective, measurable criteria, such as skills, performance, attendance or disciplinary record, backed by written evidence.

Never select someone because of a protected characteristic (such as age, disability, sex, race or pregnancy), family leave, trade union activity, part-time or fixed-term status, or whistleblowing. When scoring attendance, exclude absences related to disability, pregnancy or maternity.

Employees who are pregnant, or within 18 months of birth or adoption, have extra protection: if a suitable alternative vacancy exists, they must be offered it ahead of others.

Step 5: Offer suitable alternative roles

Look for other roles within the business and offer any suitable vacancy in writing. Employees shouldn't have to apply. Anyone who accepts a new role is entitled to a 4-week trial period (longer if agreed in writing, for example to allow training). If the role isn't right, they can leave during the trial and keep their right to redundancy pay.

Step 6: Get notice and redundancy pay right

Start by checking your own policies. Look at your employment contracts, employee handbook and any redundancy policy to see whether your business offers enhanced redundancy pay, meaning more than the legal minimum. If it does, you must pay what you've committed to. If there's nothing in writing, statutory redundancy pay applies. Also check whether enhanced payments have been made in the past, as a consistent practice can sometimes become an entitlement.

Employees with 2 or more years' service are entitled to statutory redundancy pay, based on age and length of service:

• Under 22: half a week's pay for each full year of service.
• 22 to 40: one week's pay for each full year.
• 41 and over: one and a half weeks' pay for each full year.

Service is capped at 20 years, and weekly pay is capped at £751, meaning a maximum statutory payment of £22,530 (for redundancies on or after 6 April 2026).

You'll also need to give the correct notice. The statutory minimum is one week for each full year of service up to 12 weeks, unless the contract gives more. Employees under notice are also entitled to reasonable time off to look for work or arrange training.

Step 7: Offer an appeal and support your people

Give everyone the chance to appeal, ideally heard by someone not involved in the original decision. Then think about support: a reference, help with CVs or interview preparation, signposting to wellbeing resources, and clear, compassionate communication with the team who stay. How you treat people at this point says a great deal about your business.

Need support with a restructure?

Redundancy processes are complex and emotionally demanding, and from January 2027 employees will be able to claim unfair dismissal after just six months' service, with no cap on compensation. I support businesses through every stage: planning the process, preparing managers for difficult conversations, scoring fairly and supporting the people affected. Get in touch for a free, confidential chat.

This article is general information, not legal advice. Figures apply to England, Scotland and Wales as of October 2026. Sources: gov.uk: making staff redundant, gov.uk: redundancy pay, Acas: managing redundancies.