Understanding redundancy in the UK

Redundancy occurs when an employer needs fewer employees to do a particular kind of work. This may result from business closure, relocation, automation, or restructuring. Redundancy is not about individual performance but about the role itself disappearing or diminishing.

For example, a manufacturing company in Sheffield introducing new machinery may no longer require as many assembly workers. Similarly, a small business closing a branch office may make all staff at that location redundant.

The stages of a redundancy process

A lawful redundancy process involves several stages designed to ensure fairness. First comes the identification of the need to reduce staff. Employers must demonstrate a genuine business reason, such as falling demand or financial pressures.

Consultation is a crucial stage. Employers are expected to discuss the situation with affected employees, explore alternatives, and consider suggestions. In larger redundancy programmes, collective consultation with employee representatives may be required.

Selection follows, using fair and objective criteria such as skills, qualifications, performance, or attendance records. Targeting individuals without justification can lead to claims of unfair dismissal.

Notice of redundancy is then given, allowing employees time to prepare and seek other work. During this period, employees are often entitled to reasonable time off to attend interviews or training.

Finally, termination takes effect, and redundancy payments are made where applicable.

What employees should do during redundancy

Facing redundancy can be stressful, but proactive steps can protect your position. Engage fully in consultation meetings, ask questions, and request written explanations of selection criteria. If you believe the process is unfair, raise concerns promptly.

Keeping records of communications is important, particularly if you suspect discrimination or flawed selection methods. An employee in Glasgow who notices that only older workers are selected for redundancy might gather evidence to challenge the decision.

Exploring alternative roles within the organisation is also worthwhile. Employers should consider suitable alternative employment where possible. Refusing a reasonable offer without good reason can affect redundancy payments.

What employers should do to comply with the law

Employers must follow a fair and transparent process. This includes genuine consultation, objective selection, and consideration of alternatives. Failure to do so can result in costly tribunal claims.

Communication should be clear and compassionate. Redundancy affects livelihoods, and mishandling the process can damage morale and reputation even among remaining staff.

Statutory rights and redundancy payments

Employees with at least two years of continuous service are generally entitled to statutory redundancy pay. The amount depends on age, length of service, and weekly pay, subject to a legal cap. Younger workers receive a lower multiplier per year of service than older workers, reflecting the assumption that older employees may face greater difficulty finding new work.

In addition to redundancy pay, employees are entitled to notice pay, payment for unused holiday, and any contractual benefits owed. Some employers offer enhanced packages above the statutory minimum.

Settlement agreements may also arise, particularly in complex situations. These are legally binding contracts where the employee agrees not to pursue claims in exchange for compensation or other terms. Independent legal advice is required before signing.

Consider a long serving office manager in Cardiff made redundant after fifteen years. She receives statutory redundancy pay, three months of notice pay, and an enhanced ex gratia payment under a settlement agreement, along with a positive reference. This package helps bridge the gap while she searches for new employment.

Moving forward after workplace disputes

Employment law exists to balance power between employers and workers and to provide remedies when things go wrong. Whether dealing with a grievance or redundancy, understanding your rights and acting methodically can make a significant difference to the outcome.

For many people, the hardest part is recognising that a situation has crossed from ordinary workplace difficulty into something legally significant. Once that threshold is reached, careful documentation, timely action, and informed advice can turn uncertainty into a clear path forward.