Redundancy | Our Top FAQ's Answered

What does redundancy mean in the UK?

Redundancy is a type of dismissal which occurs when there is no longer a need for a role or when a business makes changes within the organisation so that that there is a reduced need for employees. Redundancy is not personal to the employee or a reflection on the employee’s performance, it is about reducing or eliminating  a role when it is no longer required by a business.

Some examples of common reasons for redundancy include where the business is:

• Changing processes, such as by introducing new machinery resulting in a reductions for employees to complete the work
• Moving the business to a new location
• Closing the business down entirely or in part
• Restructuring, such as if it is taken over by another company
• There is no longer a need for an employee’s skills

What are fair and genuine reasons for redundancy?

The Employment Rights Act 1996 requires that a redundancy is genuine which means that there must be a real business reason for dismissal.

Fair reasons for redundancy arise where the business is genuinely making changes to working arrangements and so the work done by an employee is no longer needed. For example, a business may adopt Artificial Intelligence (“AI”) into its processes which may reduce the need for employees to do certain manual work, as this can now be automated by AI software.

Any reason given for redundancy which is not a genuine business reason may amount to unfair dismissal. 

How much notice must an employer give?

Employers should either provide notice to an employee or, where they prefer the employee to leave immediately, offer them pay in lieu of notice (PILON).

• Employers should adhere to the following statutory notice period, depending on the length of the employee’s service:
  At least 1 weeks’ notice if employed between 1 month and 2 years.

1 weeks’ notice per full year of service (up to a maximum of 12 weeks) if employed for 2 years or more.

Who qualifies for redundancy pay?

A person should immediately qualify for redundancy pay as long as they are an employee, have at least 2 years of continuous service, and are dismissed by reason of redundancy. This excludes agency workers, those that are self-employed, and workers under zero-hours contracts.

Even if an employee meets these criteria, they may be excepted from receiving redundancy pay in some cases, including where their employer offers them suitable alternative work which is refused without good reason. 

How is statutory redundancy pay calculated?

As of 2025, redundancy pay is based on age, length of service (up to a maximum of 20 years), and weekly pay (as earned on average per week for 12 weeks before a redundancy notice was received). 

The calculation is made as follows:

• If the employee is under age 22: 0.5 weeks’ pay for each full year employed in this bracket
• If the employee is between ages 22-40: 1 weeks’ pay for each full year employed in this bracket
• If the employee is over age 41: 1.5 weeks’ pay for each full year employed in this bracket

The above is the calculation made for statutory redundancy pay. Employers may offer enhanced redundancy package either in the employment contract or within a company policy.

What is the redundancy consultation process?

Before making redundancies, employers should consult employees either individually or collectively. Individual consultation occurs when there are fewer than 20 redundancies made in a 90-day period, in which case it is expected that each affected employee will be directly consulted. Collective consultation is where there are over 20 redundancies in this period and so employers must consult with employee representatives or a trade union. Consultation should start at least 30 days before the first dismissal if between 20 and 100 redundancies are proposed, or at least 45 days if more than 100 redundancies are proposed.

How should redundancy selection be carried out?

The reason for making redundancies must be genuinely related to the business and not based on performance or conduct of an employee. However, when an employer creates a selection pool of employees for redundancy, they may consider factors like an employee’s skills, experience, performance, disciplinary record and attendance.  

Selecting employees on the basis of a protected characteristic (e.g., age, sex, disability, race, pregnancy), or on the basis of being a part-time or fixed-term employee, or in relation to their union membership or activities, would be automatically unfair. 

Can an employee challenge redundancy?

In the first instance, employees can challenge their redundancy with their employer, and appeal against any decisions that have been made. 
If all internal processes with their employer have been exhausted, employees can make a claim to an

Employment Tribunal if they believe:

• The redundancy reason was not genuine.
• The selection process was unfair or discriminatory.
• The consultation process was not properly followed.

Claims must usually be made within 3 months less one day of their dismissal.

Is there a right to time off to find a new job?

Employees with 2 or more years’ continuous service who are under notice of redundancy have the right to reasonable paid time off so that they can attend job interviews, arrange training or seek career advice.

What alternatives to redundancy should employers consider?

Employers should first consider alternatives to making employees redundant, including redeploying staff to other roles, temporary layoffs, offering early retirement or voluntary redundancy, or reducing overtime or agency staff.

Failure to consider alternatives before redundancy can potentially make a redundancy unfair.

If you are facing Redundancy and need advice on your next steps, contact our specialist Employment Team on: 01926 491181 or email: employment@moore-tibbits.co.uk.