Redundancies in the workplace are never easy, both for employers and employees. Whether driven by economic pressures, restructuring, or changes in business strategy, the need to reduce headcount can be a challenging and sensitive process.
As such, handling redundancies with clarity, fairness, and compassion is essential to maintaining trust, minimising disruption, and ensuring legal compliance.
This article explores fair reasons for redundancy dismissals, best practices, and supportive measures that can be used to manage redundancies effectively.
Note: The Employment Rights Act 2025 introduces significant changes to redundancy law.
These include:
- From 6 April 2026: the maximum protective award for failing to collectively consult will double from 90 to 180 days’ pay per affected employee.
- Expected in 2027: collective consultation rules will be strengthened so employers may have to assess thresholds across the whole organisation, not just a single establishment (details to be confirmed in secondary legislation).
- Expected from October 2026 / January 2027: tribunal claim time limits are expected to extend to 6 months (Oct 2026) and unfair dismissal rights are expected to apply after 6 months’ service with uncapped compensation (Jan 2027).
Employers should ensure redundancy processes are carefully planned and compliant in light of these enhanced risks.
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When is redundancy a fair reason for dismissal?
Before you carry out a redundancy process, it is important you ensure that redundancy is the real reason for dismissal in your company’s circumstances. So how do you do that?
There are certain criteria that must be satisfied to ensure it’s a genuine redundancy situation. And section 139(1) of the Employment Rights Act holds the answer.
A dismissal is by reason of redundancy where:
- the employer ceases to carry on the business in which the employee was employed;
- the employer ceases to carry on that business in the place where the employee was employed;
- the needs of the business for employees to carry out work of a particular kind cease or diminish; or
- the needs of the business for employees to carry out work of a particular kind in the place where the employee was employed cease or diminish.
Therefore, for a redundancy to be a fair reason for dismissal under the Employment Rights Act 1996, it needs to fall within one of the above definitions.
An example of a redundancy situation would, therefore, be if an employer decided to close one of its premises (the employer would cease to carry on the business at the place in which the employee worked).
Similarly, if an employer determined that they needed to streamline their business and have fewer employees carrying out the same job, this might also amount to a redundancy situation.
It’s really important to remember when considering redundancies that you demonstrate you’ve acted reasonably when dismissing an employee. The simplist way to show this is to adopt a fair redundancy procedure.
We’ve provided a summary of the key things to consider below.
How to carry out a redundancy process
A fair redundancy procedure includes the requirement to consult with employees on an individual basis. This is required no matter how many dismissals are proposed. What’s more, it’s important that you give employees as much notice as possible of the proposed redundancies.
The process will vary depending on the number of proposed redundancies. However the first part of this guide looks at the process for redundancies involving less than 20 employees.
The redundancy process for less than 20 employees
Individual consultation
There is no set timescale that employers must follow when carrying out individual consultation. However you do need to demonstrate that the consultation process has been meaningful.
In order to demonstrate a meaningful consultation process, as an employer you need to show that you have given the affected employees every opportunity to ask questions and consider alternatives before the consultation concludes and any dismissals take place.
Breaking the news
Usually the initial step in this process is “breaking the news”. This will involve a discussion with either an individual or group of employees, to notify them that the business is proposing to make redundancies.
During this discussion, managers should explain:
- the business rationale for the proposals;
- alternatives that have been considered; and
- what will happen next – including details regarding the pool of affected employees and the selection matrix to be used.
You should give employees an opportunity at this stage to raise any questions. In addition, you should advise the affected employees that you intend to carry out a genuine consultation exercise and that no final decisions will be taken until the consultation process is complete.
At this stage, if voluntary redundancy is an option, you should set this out and let employees know how to submit a request for voluntary redundancy. This should be followed with a deadline in which they need to make submissions by.
Redundancy pools and scoring criteria
Where a number of employees in the same role are affected, they will be placed into a redundancy pool and scored. If this is applicable, at the breaking the news meeting, you should provide employees with the proposed selection criteria that you intend to use and consult on this.
This means asking for employees’ feedback on the selection method before using it. There is a requirement to consult on the selection process; therefore, doing so at an early stage is likely to speed up the process later down the line.
Next, once the selection method has been determined, you should score the affected employees (there’s more detail on this below).
Once this selection exercise has been carried out, you should notify employees in writing if they have been provisionally selected for redundancy because they have scored lower than their colleagues.
The employees that are no longer at risk of redundancy should also be notified at this stage.
Scoring
Where there is a pool of employees at risk of redundancy and an employer is required to select a number of employees to make redundant from that pool, it’s important to base the selection on fair and objective criteria in order to ensure the redundancy process is fair.
The method of scoring adopted for a redundancy process should be objective and measurable. This will minimise the risk of a successful discrimination claim. However, the scoring criteria used should vary according to the role.
Typical criteria may include, for example:
- performance
- disciplinary record; and
- attendance.
Note: individual circumstances should be considered (particularly if using attendance in scoring criteria) due to the potential associated discrimination risks.
Selection Interviews
An alternative method of selection is carrying out selection interviews. This may be the preferred method of selection where a restructure is taking place.
If the selection will be based on an interview assessment, it’s important that the employees are informed in advance about how the selection will be made and what information will be considered before making that selection.
Where the manager holding the interviews has prior knowledge or a relationship with the employees being interviewed, which will be likely in most cases, it’s important that any decisions are not based on subjective opinions. It’s, therefore, important for the employees to be informed about any other information that will be considered when reaching a decision. For instance, this may include appraisal records or disciplinary records.
When carrying out interviews, it is always best practice for them to be carried out by a panel rather than one manager. Whilst this may not always be possible, a suitable approach would be to include a hiring manager, independent manager and an HR representative to ensure objectivity.
Employees are likely to find a competitive interview challenging, particularly when they have been placed at risk of redundancy. Therefore employers may wish to consider offering further support to employees which could include coaching or additional guidance.
Commmunicating the scoring
It’s best practice for scoring to be carried out and then moderated by another manager to ensure objectivity. Once this process has concluded, you should consult on an individual basis with employees that have been provisionally selected for redundancy.
During the consultation, you should provide employees with a copy of their individual score and allow them to comment on it and challenge the score or how it has been allocated.
Failure to do so is likely to lead to a successful claim for unfair dismissal.
Individual consultation meetings
A fair procedure will typically include at least two consultation meetings with the individual. However, more meetings may be required depending on the questions asked, suggestions put forward, the nature of the consultation, and the employee.
Employees do not have a statutory right to be accompanied by a work colleague or a trade union representative at individual meetings. However, it is good practice for you to allow this as it demonstrates that you intend to act reasonably and can be of assistance in what can be a difficult time for both the employer and employee.
What to discuss in the individual consultation meeting
During the consultation meetings, you should recap the proposal and invite the employee to raise any questions that they have. You should also give the the employee an opportunity to put forward suggestions to mitigate the redundancy situation and discuss any alternative roles that could be offered to avoid compulsory redundancies.
By way of a summary, these are some of the things you should discuss during the individual consultation meeting:
- the method on which the employee had been selected, this should include the criteria used for selection and their individual score;
- any suggestions the employee makes to avoid redundancy;
- alternative employment;
- details of the redundancy payment that the employee will receive if the redundancy is confirmed;
- the notice period that will apply if the redundancy is confirmed, and details regarding whether the employee would be expected to work their notice period or be paid in lieu of this;
- any support that would be made available including outplacement services or time off to look for other work; and
- any issues or questions the employee brings up.
You should document the consultation meetings, ensuring that minutes (notes) are taken during each meeting and shared with the employee afterwards.
Communicating the decision
Once the consultation process has been concluded, and if no alternative to redundancy has been identified, you would need to notify the employee(s) in the final consultation meeting that they are being made redundant and follow this up in writing.
In the dismissal letter you should:
- confirm that the reason for dismissal is redundancy;
- detail the notice period and if they are expected to work their notice period;
- state the final date of service; and
- state the total redundancy payment.
There is no statutory right to be able to appeal a redundancy dismissal. However, it is best practice to give the employee the right of appeal to address any outstanding issues internally. This would help to avoid tribunal claims from employees who feel they have been unfairly treated. The aim is that throughout consultation, the employee would have ample opportunity to challenge their selection and put forward suggestions.
The redundancy process for 20 or more employees
Collective consultation
The definition of redundancy for collective consultation is actually wider than the one used in the Employment Rights Act.
Under the Trade Union and Labour Relations (Consolidation) Act 1992, redundancy includes any dismissal that isn’t related to the individual. So, things like business restructures or changes in working conditions can fall under this, even if they don’t look like a typical redundancy. In other words, employers might still need to consult collectively even if they’re not officially calling it a redundancy, as long as dismissals could be the end result.
That’s why, if an employer is proposing to dismiss 20 or more employees at one location within a 90-day period, they’re legally required to carry out collective consultation with employee representatives. This includes voluntary redundancies too… they’re still counted as dismissals for this purpose. The law also makes it clear that consultation should cover both the dismissals and any related changes or measures.
Employment Rights Act Changes
What applies right now (February 2026)
At present, collective consultation is required where an employer proposes to dismiss 20 or more employees at one establishment within a 90-day period.
Change coming from 6 April 2026: higher financial penalty
From 6 April 2026, the maximum protective award for failure to collectively consult will increase from 90 to 180 days’ pay per affected employee.
Change expected in 2027: organisation-wide threshold
Further changes are expected in 2027, introducing an additional trigger based on redundancies across the whole organisation (details to be set in secondary legislation). This means multi-site employers will need to monitor proposed redundancies across the business, not just site-by-site.
Timescales for collective consultation
The timescales for collective consultation are more rigid. If an employer is proposing to make between 20 and 99 redundancies at one establishment within a 90-day period, consultation must begin at least 30 days before the first dismissal takes effect.
For 100 or more proposed redundancies, that period increases to at least 45 days.
These minimum timeframes are designed to give employees and their representatives a fair opportunity to be consulted before any final decisions are made.
What do you need to communicate?
Under the Trade Union and Labour Relations Act 1992, you must inform either the employee representatives or the recognised trade union at the start of the process and in writing:
- the reason for the proposals;
- the number of proposed redundancies;
- the total number of employees affected;
- the proposed selection criteria;
- the procedure to be followed; and
- how redundancy pay will be calculated.
As with individual consultation, collective consultation must be meaningful. Employers are legally required to genuinely explore ways to avoid redundancies, reduce the number of redundancies, or lessen their impact.
In addition, if an employer is proposing to dismiss 20 or more employees within a 90-day period, they must notify the Secretary of State for Business and Trade using an HR1 form. This notification must be submitted at least 30 days before the first dismissal (or 45 days if 100 or more redundancies are proposed). While it’s good practice to share the HR1 with employee representatives, it’s not a legal requirement.
Failure to notify is a criminal offence and can lead to an unlimited fine.
Consulting with representatives in the collective redundancy process
It’s a requirement for the employer to consult with representatives of the employees during a collective redundancy process.
Where there is a recognised trade union, you would need to consult with the relevant trade union representatives.
Alternatively, where there is no recognised trade union, employee representatives would need to be elected and consultation would take place with those representatives.
The number of representatives required would vary depending on the number of staff affected by the proposals.
Electing employee representatives
Where there is no recognised trade union within the company, employee representatives must be elected.
Alternatively, if representatives are already established, for instance there is a staff council/committee, the employer may consult with them instead.
The number of representatives is up to the employer to decide but it does need to be sufficient. This means that the number of representatives needs to be sufficient to represent the interests of the affected parties. Much will depend on the nature of the consultation and the groups of staff that are impacted, for instance, an employer may require a representative from each affected department. Likewise, if the organisation is geographically spread out, representatives are likely to be needed for each location for practical reasons.
The consultation with the representatives must begin at least 45 days before the first dismissal takes effect where 100 or more redundancies are proposed, or at least 30 days before, if 20 to 99 redundancies are proposed.
Therefore prior to the consultation period commencing, employee representatives will need to be elected. An employer will therefore need to allow enough time for writing to employees with instructions on how to nominate reps, receiving nominations, counting votes and announcing the results. The time taken for this will naturally vary according to the size of the organisation and the number of reps required.
A key point when electing representatives is that the elected rep must be affected themselves by the consultation process in order to represent their colleagues.
If insufficient nominations are received, individuals can nominate themselves.
Individual consultation for redundancy processes affecting 20+ employees
Remember, regardless of the number of redundancies, employers are always required to consult on an individual basis with employees who may be selected with redundancy.
Where collective consultation is required, this should usually take place before the individual consultation meetings. However, if necessary, you can start individual consultation with the employees that have been provisionally selected for redundancy before the collective consultation process has been concluded.
For instance, this could be where collective consultation has been carried out in relation to the selection method, but is ongoing in relation to the terms of the redundancy package.
It’s important to ensure absent employees are also consulted with, for instance those on sick leave or maternity leave.
The best approach is to ask for the employee to confirm how they would prefer to be communicated with during their absence.
A failure to consult with these individuals could lead to any subsequent dismissal being unfair.
How to support your employees during a redundancy process
Survivor Syndrome
Inevitably there will be winners and losers in any redundancy process. After a restructure or redundancy process, unless the business has ceased trading, there will be employees who have “survived” the redundancy process.
Employees who may not have been directly impacted by the redundancy process can still suffer from “survivor syndrome” and as a result may be less motivated, less productive, and experience higher levels of stress.
It’s important that a redundancy process is carried out fairly to minimise the risk of ‘survivor syndrome’ impacting the remaining workforce. This will not only reduce the risk of tribunal claims from redundant employees but also demonstrate to the surviving staff that their colleagues have been treated fairly.
The key point is ensuring that communication is clear and transparent.
More guidance on how to support ‘survivors’ can be found in our article:
How to keep your team motivated after redundancies at work
Outplacement
Similarly, employers may wish to provide additional support to redundant employees in the form of outplacement. Employers can help redundant employees to find a new job through professional services including counselling, coaching, CV writing, and interview skills.
Although this does attract additional costs, this will support redundant employees to find alternative work. An additional benefit is that this will portray the business in a more positive light to surviving employees, clients, and the public and can, therefore, have a significant impact on reputation.
Employee Assistance Programmes (EAPs)
EAPs can play a valuable role in redundancy processes by providing confidential support to affected employees. They typically offer services such as counselling, financial advice, and wellbeing resources, helping individuals cope with the emotional and practical impact of redundancy.
Employers who promote access to EAPs during consultation and notice periods can help reduce stress, maintain morale, and support a smoother transition for both those leaving and those staying within the organisation.
You can read our complete guide to this valuable employee benefit here:
The Employer Guide to Employee Assistance Programmes
Top tips for carrying out a redundancy process
To recap the key points in this guide to carrying out a redundancy process, we’ve included some top tips below:
- Remember employees must be consulted individually regardless of the number of proposed redundancies. This includes anyone who is absent, for example, those on sick leave or a period of family leave.
- Follow a fair redundancy procedure, whether or not collective consultation is required, including informing employees at an early stage of the proposal and consultation regarding the selection method.
- Decide on the timetable for consultation and ensure that consultation is meaningful by enabling employees to express their views and give due consideration to those views.
- Where collective consultation is required ensure the timescales are adhered to.
- Make no final decisions until the consultation process has concluded.
- Consider alternative employment for employees selected for redundancy.
- Ensure meetings are documented accurately.
- Looking ahead:
The Employment Rights Act 2025 changes are expected to increase employer risk over the next 12–18 months. Tribunal claim time limits are expected to extend from 3 months to 6 months from October 2026, and unfair dismissal protection is expected to apply after 6 months’ service from January 2027, alongside removal of the compensatory award cap.
We hope you found this employer’s guide to carrying out a redundancy process useful. If you have any questions, or if you would like our support in handling redundancies please do contact our team.
