Redundancy has a precise legal meaning in UK employment law. It covers business closure, workplace closure, or a reduced need for employees to do work of a particular kind. In everyday business language, it often gets used more broadly, but using redundancy to solve conduct or performance issues is risky and can be unlawful.
Getting redundancy right matters. The risks of non‑compliance include unfair dismissal and discrimination claims, protective awards, fines for failing to notify large‑scale redundancies, reputational damage, and the loss of trust with your remaining team. This guide gives employers a clear, step‑by‑step approach to the redundancy process: when it is legally justified, how to plan and consult, collective rules and HR1, notice and pay, suitable alternative employment, documentation and scripts, and where Kingfisher can support you with pragmatic advice and templates.
When Redundancy Is Legally Justified
Definition & valid reasons
Redundancy is legally justified where there is:
- Business closure (the whole undertaking or a distinct part),
- Workplace closure (closing a site or relocating without reasonable alternative), or
- Diminished requirements for employees to do work of a particular kind (for example, restructure, automation, loss of a contract, downturn).
Common pitfalls to avoid
- Using redundancy to address conduct or performance issues, use your disciplinary or capability procedures instead.
- “Sham” redundancies where the role still exists or selection is tainted by a protected characteristic (e.g., pregnancy, disability, age) or by whistleblowing/union activity. These situations can lead to automatic unfair dismissal and discrimination claims.
Step‑by‑Step Redundancy Process
1) Planning phase
- Test the business case: Is the redundancy genuine? Record the commercial rationale and explore alternatives to redundancy first (freeze recruitment, redeployment, reduced hours, job‑share, overtime controls, natural attrition).
- Define the scope: How many roles are affected? Over what timeframe? Are multiple locations involved and is each a separate establishment?
- Check thresholds: Count the number of employees proposed to be dismissed at each establishment within 90 days to see if collective consultation rules apply (20+). If you may reach the threshold, plan as if collective rules will apply.
- Identify selection pools: Group employees doing the same or similar work. Include potentially interchangeable roles. Document your rationale.
- Set objective selection criteria: e.g., skills/qualifications, relevant experience, demonstrable performance,). Weight criteria and prepare a scoring matrix with evidence sources.
- Competency & governance: Brief HR and line managers, allocate roles (chair, note‑taker), and prepare template packs (at‑risk letter, invite, scripts, scoring sheets, outcome letters, appeal).
2) Consultation
Individual consultation (under 20)
- Start in good time before decisions are final. Give an at‑risk letter, share the rationale, pooling and criteria, and invite views/alternatives.
- Hold at least one meeting (often 2–3), consider representations, and adjust proposals where appropriate. Keep notes and confirm in writing.
Collective consultation (20+ at one establishment in 90 days)
- Consult with recognised trade union reps or elected employee representatives. Provide the required written information: reasons, numbers/roles at risk, selection methods, consultation period, dismissal method/timing, and details of agency workers engaged.
- Minimum periods: start consultation at least 30 days before the first dismissal takes effect (20–99 redundancies) or 45 days (100+). These are calendar days.
- HR1 notification: Before issuing any individual notices of dismissal, notify the Redundancy Payments Service (on behalf of the Secretary of State) using form HR1 within the same 30/45‑day minimum. Failure to notify is a criminal offence.
- Keep minutes, action logs and representative feedback; continue individual consultation alongside collective processes.
Communication plan
- Map stakeholders (affected staff, wider workforce, clients, suppliers). Use clear, consistent messaging. Signpost support (EAP, job search services).
3) Suitable alternative employment
- Search proactively for suitable alternative roles across the organisation. Share vacancies during consultation; apply fair selection for alternative roles.
- Employees who accept an alternative role are entitled to a 4‑week trial (longer if a written extension is agreed for training). If the role proves unsuitable, statutory redundancy rights are preserved.
- If a suitable role is unreasonably refused, redundancy pay may be lost. Note special priority for suitable vacancies for pregnant employees and those on or recently returning from family leave.
4) Selection, outcomes and appeals
- Score against the matrix with two managers where possible. Quality‑assure evidence; avoid bias. Share provisional scores on request and allow challenge.
- Confirm selections provisionally; explore redeployment; then issue outcome letters with the right of appeal.
5) Notice & termination
- Give statutory or contractual notice (whichever is longer). You may use PILON (pay in lieu of notice) or garden leave if contractual.
- Provide a written statement of redundancy pay, holiday pay and other final payments. Manage company property return, confidentiality and post‑termination obligations.
Statutory Redundancy Pay & Entitlements
Employees are eligible for statutory redundancy pay if they have at least 2+ years’ continuous service.
Statutory pay is calculated using age bands and complete years of service (capped at 20 years) and is limited by the statutory cap on a week’s pay. From 6 April 2025, the weekly cap is £719, giving a maximum statutory redundancy payment of £21,570. Many employers offer enhanced packages by policy or agreement.
Employees are also entitled to other sums due, including accrued holiday pay and any outstanding wages, bonuses or commission in line with contract and policy.
To model entitlements accurately, use the official government calculator, and consider how PILON (pay in lieu of notice) may affect the “effective date” used in certain calculations.
Protected Employees & Discrimination Risks
- Pregnancy and family leave: The redundancy protected period now extends from pregnancy notification through to 18 months after birth or adoption placement (with specific rules for shared parental leave). Employees in this protected period have priority for suitable alternative vacancies.
- Disability, age, part‑time or fixed‑term status: Avoid direct or indirect discrimination. Example: do not count pregnancy‑ or disability‑related absence in attendance scoring; ensure part‑timers are not disadvantaged.
- Older workers: Be cautious with criteria that could indirectly disadvantage older employees (e.g., “last‑in, first‑out”). Use as a tie‑breaker only, not a primary criterion.
Documentation, Records & Legal Defensibility
Why documentation matters: Your paper trail demonstrates a genuine redundancy situation and a fair process.
Create a “Redundancy File” for each affected employee. It should include the business case and a before/after structure chart; the at‑risk letter, consultation invites and scripts; notes or minutes of meetings and any feedback; the pooling rationale, scoring matrix, supporting evidence and QA sign‑off; records of the redeployment search and any offers; the outcome letter together with notice/PILON details and the redundancy pay calculation; and the appeal correspondence and final decision.
Manager scripts. At‑risk meeting: “We are proposing changes because [business reason]. Your role is in a selection pool with [roles]. We’re consulting, no decisions are final. We want your views on alternatives and your evidence for the criteria.” Outcome meeting: “Following consultation and scoring, our decision is to [redeploy/confirm redundancy]. You have the right to appeal. Let’s cover notice, redundancy pay and support.”
Retention. Keep records for at least the duration of consultation, appeal and potential claim windows, and in line with your data‑retention policy and legal advice.
Avoiding Unfair Dismissal Claims
- Automatic unfair dismissal risks include selection/dismissal connected to pregnancy/maternity, whistleblowing, trade‑union membership, health and safety activities, or TUPE without a valid ETO reason. These claims do not require 2 years’ service.
- Common pitfalls: Predetermined decisions, inadequate or rushed consultation, unfair pools, subjective criteria, inconsistent scoring, ignoring redeployment, or failing to notify/consult collectively when required.
- Good practice: Start early, consult meaningfully, use objective criteria with evidence, quality‑assure, offer alternatives, and document everything.
Redundancy Timeline – Who Does What, When
Week 0–1: Planning
Directors/HR: confirm business case, scope, establishments, thresholds; draft plan, pools, criteria; prepare packs.
Week 1–2: Announce proposals
Issue at‑risk letters, start individual consultation; where 20+, begin collective consultation with union/elected reps and submit HR1.
Weeks 2–5+: Consult
Hold meetings; share and refine proposals; search and offer redeployment; run provisional scoring; gather and address feedback.
Weeks 4–7+: Confirm outcomes
Issue outcome letters, notice/PILON; continue redeployment and trial periods; manage exits and handover.
Post‑exit
Process final pay, benefits, and references; capture lessons learned and update policies.
How Kingfisher Can Help
We help employers plan and deliver fair, legally compliant redundancies while protecting culture and reducing risk. Our services include:
- End‑to‑end support: business case testing, process design, document packs (at‑risk letters, invites, scripts, outcomes), and collective consultation planning (reps, timelines, HR1).
- Selection & consultation expertise: bespoke selection criteria and scoring matrices, redeployment frameworks, manager coaching, and live adviser support in high‑risk meetings.
- Compliance assurance: template reviews, enhanced redundancy terms, settlement agreements, and rapid audits to reduce the risk of tribunal claims.
Our employment law consultants combine practical HR know‑how with deep legal expertise, so you meet your legal duties while treating people fairly.
Conclusion
A compliant redundancy process links a genuine business reason to a fair procedure: careful planning, objective pools and criteria, meaningful consultation, proper notice and pay, and thorough records. Shortcuts create legal and reputational risk. Use this guide as a checklist, then lean on Kingfisher for tailored support, whether you need templates, manager training or hands‑on delivery during a complex programme.