Insight
Redundancy process
Redundancy process
Last Updated: August 17th, 2025

Redundancy procedure guide for employers
Follow the correct process, and you can lawfully dismiss employees by reason of a redundancy or restructuring. In other words, it is very difficult for an employee to legally challenge the decision of the employer to make redundancies. So, process is crucial for lawful dismissals.
Failing to understand what amounts to a lawful redundancy process, or fairly to apply it, and you risk an unfair dismissal claim and possibly a discrimination claim with a time-consuming dispute, possibly an Employment Tribunal case, and potentially a compensation award.
We see many employers getting the redundancy process wrong. To help you we have explained below some of the basics.
If you need to make staff redundant and want to ensure you get it right, we are a cost effective, highly experienced team of employment lawyers.
Redundancy Process best practice
The redundancy process requires planning, well drafted documentation and meticulous record keeping. Nevertheless employers can execute the process quickly and effectively. The basic steps to be followed are :
- Decide that redundancies are necessary - document how you came to this decision.
- Decide which roles are redundant - document how you decided this.
- Decide on the redundancy selection criteria - document this process.
- Advise staff who are at risk of redundancy.
- Check your employment contracts and any employee or staff handbooks - do these include a redundancy process? If so, follow that.
- Will the redundancies be of over 20 roles in a 90 day period? - if so, you need to undertake a collective consultation - see further here.
- Consult with your employees who are in the redundancy pool - documenting everything, hold meetings with at risk employees and explore any alternatives with them to making them redundant.
- Communicate decision to employees who have been chosen for redundancy - in writing, including giving then employees the right to appeal
- Deal with any appeals
What are the rules about redundancy consultation?
An employer planning a redundancy must follow defined steps to identify and then consult with affected employee(s). Employers are obliged to consult with employees individually. Employers who will make over 20 employees redundant in a 90 day period are obliged to consult collectively with employees, failing which can lead to punitive damages awards of up to 12 weeks’ pay per employee.
Are there rules about selection criteria?
Employers must identify the pool of possible employees at risk. There are no fixed rules as to correct criteria. Some employers favour last in first out but the most important thing is to establish your criteria and ensure they are applied fairly and consistently.
The most common way of identifying employees who will be at risk is to use a range of objective criteria, appropriately weighted as factors. The most obvious example of 1 of the criteria is length of service. Redundant employees often challenge this scoring as unfair, especially if the employer did not consult.
A score based system is not mandatory for employers nor is it the only way of choosing which employees should be at risk. Legally, employers only need to demonstrate that the process they adopt is reasonable and fairly followed through.
The potential pool of employees at risk
A redundancy pool refers to selecting a number of employees who are then placed in an at risk of redundancy pool of people. There are no fixed rules about how to define a redundancy pool. If employers show their choice of pool was reasonable in the circumstances, an employment tribunal is unlikely to challenge the decision. The choice of pool generally starts with :
- identifying the kind of work that is no longer needed.
- which employees do this work.
A wider pool may be required, especially if the work is “low-skilled” and the skills are interchangeable. Hence, the business should consider the extent to which employees do similar work, and their jobs are interchangeable. Look at the reality of employees’ day-to-day activities, as well as the employment documentation.
Possible alternatives to redundancy?
An employer is obliged to consider alternatives to dismissal which may include :-
- Suspending or restricting recruitment.
- Terminating relationships with non-employees - such as contractors or consultants or not renewing their contracts.
- Looking at alternative roles - perhaps at a different group company, involving retraining and a statutory trial period.
- Bumping - dismissing a different employee.
- Offering different working conditions - such as reduced hours, pay reductions, or other cost savings.
- Inviting voluntary redundancy - potentially offering employees a settlement agreement.
The stage of considering alternative options to making staff redundant is a common area of pitfalls and mistakes for employers. Our employment lawyers can ensure you are protected and everything is documented the right way.
Statutory redundancy payments
An employee with at least two years’ continuous employment at the “relevant date” is entitled to a statutory redundancy payment if they are dismissed by reason of redundancy.
Statutory redundancy pay is calculated according to a formula and is based on age, length of service and pay. Length of service and pay are both capped. From 6 April 2023, the statutory cap for weekly pay will increase from £571.00 to £643.00 and the maximum statutory redundancy pay you can get will be £19,290.00 (30 weeks’ pay).
Employers face a minefield of legislative requirements when conducting a redundancy process. Nevertheless, it is possible to make employees redundant, reducing the risks of claims for unfair dismissal, if you follow correct procedure and apply that procedure fairly.

Let us take it from here
Let us take it from here
Call us on 020 7438 1060 or complete the form and one of our team will be in touch.

Alex Kennedy
I know that in times of difficulty what you need is a solid platform behind you working on your side to find resolution. I set about that task as quickly as possible.
Related Content
Subscribe to our Newsletter
Subscribe to our Newsletter
To stay up to date with our news and information, please enter your email address. You can unsubscribe at any time. For more information please see our Privacy Policy.