Redundancy Basics

Redundancy is a specific legal reason for dismissal under the Employment Rights Act 1996. A genuine redundancy situation arises when:

• The employer ceases to carry on the business altogether
• The employer closes the specific workplace where the employee works
• The employer's requirement for employees to carry out a particular kind of work has diminished or ceased

It is not redundancy if the employer is simply replacing you with someone else to do the same job. Employers sometimes misuse the term "redundancy" to disguise what is actually a performance dismissal or a dismissal for some other reason. If the underlying reason for your dismissal is not genuinely one of the three above, the dismissal may be unfair.

Redundancy can affect one individual or large numbers of people. Individual redundancy most commonly occurs when a specific role is no longer needed. Collective redundancy — affecting 20 or more employees — triggers additional obligations under the Trade Union and Labour Relations (Consolidation) Act 1992.

To qualify for statutory redundancy pay, you need at least two years of continuous service. The amount is calculated as follows:

• Age under 22: Half a week's pay for each complete year of service
• Age 22 to 40: One week's pay for each complete year of service
• Age 41 or over: One and a half weeks' pay for each complete year of service

Length of service is capped at 20 years and weekly pay is capped at £751 (2025/26). The maximum statutory redundancy pay is therefore £22,530. Your employer may offer a higher contractual redundancy package — check your contract or any applicable redundancy policy.

Statutory redundancy pay is tax-free up to £30,000. Any amounts above £30,000 (including combined payments for notice and ex-gratia settlements) are taxable. You can use the GOV.UK redundancy pay calculator to work out your exact entitlement.

Even a genuine redundancy can be an unfair dismissal if the employer does not follow a fair procedure. The key elements of a fair redundancy process are:

• Meaningful consultation: Your employer must consult with you individually about the redundancy situation, proposed selection, and any alternatives. This must happen before any final decision is made.
• Objective selection criteria: If selecting from a pool of employees, the employer must use fair, objective criteria — such as attendance records, skills assessments, or performance — not subjective or discriminatory factors.
• Consideration of alternatives: The employer must genuinely consider whether there are any suitable alternative roles that could be offered to you before making you redundant.
• Right of appeal: You should be given the opportunity to appeal against the redundancy decision.

For collective redundancies (20+ employees), the employer must notify the government (via the HR1 form) and consult with elected employee representatives or a recognised trade union for at least 30 days (or 45 days if 100+ are affected) before any notices are given.

If you believe your redundancy was not genuine, or that the process was unfair, you may have grounds for an unfair dismissal claim at the Employment Tribunal. You need two years of continuous service to bring most unfair dismissal claims (though no qualifying period applies to automatically unfair dismissals, such as redundancy related to whistleblowing or trade union activity).

Common grounds for challenging redundancy include:

• The role has not actually disappeared — a replacement has been hired
• You were selected based on discriminatory criteria (e.g. pregnancy, disability, age)
• There was no meaningful consultation
• You were not considered for suitable alternative vacancies

You must notify Acas to begin Early Conciliation before making a tribunal claim. The time limit is three months less one day from the date of dismissal. Keep copies of all correspondence, your redundancy notice letter, and any selection criteria used.