Redundancy Process: How to Handle It

How does redundancy work?

Redundancy happens when an employer needs to reduce their workforce, usually because a role is no longer needed. It's a legal process with set steps: employers must consult with affected staff, explain their reasons, consider alternatives, and pay redundancy pay where it's owed. Understanding each stage can make a stressful situation feel a lot more manageable.

Redundancies remain a significant part of the UK labour market. The redundancy rate stood at 4.6 per 1,000 employees in the quarter to February 2026, and 2025 saw the highest level of redundancy warnings since the pandemic. If you're facing redundancy or think you might be soon, here's exactly what should happen and what you're entitled to.

What is redundancy?

Redundancy is when an employer ends someone's employment because their role is no longer needed, rather than because of anything the person has done. Common reasons include changing business needs, restructuring, a location closing, new technology replacing a role, or financial difficulty.

This is an important distinction: redundancy isn't the same as being dismissed. Dismissal usually relates to conduct or performance. Redundancy relates to the role, not the person doing it. If your employer says your role is redundant but then hires someone else to do the same job shortly afterwards, that may not be a genuine redundancy, and it's worth seeking advice.

Your redundancy rights

By law, UK employers must:

• Consult with employees before making a final decision, giving them a genuine chance to respond and suggest alternatives
• Explain clearly why the role is being made redundant
• Consider suitable alternative roles within the business, where they exist
• Give the correct notice period
• Pay redundancy pay to anyone who qualifies

Skipping or rushing these steps can make a redundancy unfair, even if the underlying business reason is genuine.

The redundancy consultation process

Consultation is one part of the process that's easy to misunderstand, partly because the rules differ depending on how many people are affected.

Individual consultation applies whenever a single role is at risk. Your employer should meet with you (usually more than once), explain the situation, explore any alternatives, and listen to your feedback before making a final decision.

Collective consultation applies when an employer proposes 20 or more redundancies at one workplace within a 90-day period. In that situation, the employer must consult with employee representatives (a recognised trade union or elected reps) for a minimum period before any dismissals take effect:

• At least 30 days, where between 20 and 99 redundancies are proposed
• At least 45 days, where 100 or more redundancies are proposed

Employers must also notify the government using an HR1 form. If an employer fails to consult properly, employees can claim a protective award, and from 6 April 2026 the maximum award doubled from 90 to 180 days' pay per affected employee, so there's now a much stronger incentive for employers to get this right.

How redundancy selection works

• A selection pool: the group of employees whose roles are being compared, typically those doing similar work
• Selection criteria: objective, measurable factors used to score people in the pool, such as skills, qualifications, attendance, or disciplinary record

"Last in, first out" (selecting by length of service alone) is rarely used on its own any more, since it can indirectly discriminate against younger employees. A fair process uses a combination of criteria applied consistently and transparently, with employees given the chance to see and challenge their own scores.

Redundancy notice periods

You're entitled to at least the statutory minimum notice period, based on length of service:

• Under 2 years' service: 1 week's notice
• 2 to 12 years' service: 1 week's notice per full year worked
• 12 or more years' service: 12 weeks' notice

Your contract may entitle you to more than this statutory minimum, so it's worth checking your individual terms.

Redundancy pay explained

Statutory redundancy pay

You qualify for statutory redundancy pay if you're an employee with at least 2 years' continuous service. It's calculated using your age, length of service, and weekly pay:

• Half a week's pay for each full year worked while under 22
• One week's pay for each full year worked between 22 and 40
• One and a half weeks' pay for each full year worked at 41 or over

Length of service is capped at 20 years, and weekly pay is capped too. From 6 April 2026, that weekly pay cap is £751, meaning the maximum possible statutory redundancy payment is £22,530. If you were made redundant before that date, slightly lower caps apply. You can use the government's redundancy pay calculator to work out your own figure.

Some employers offer enhanced or contractual redundancy pay above the statutory minimum, so it's always worth checking your contract or any redundancy policy alongside the statutory calculation.

Is redundancy pay taxable?

Statutory redundancy pay is not taxed. More broadly, the first £30,000 of a redundancy payment is tax-free, covering both statutory and most contractual redundancy pay. Anything above £30,000 may be subject to income tax. Notice pay and any outstanding holiday pay are treated as normal earnings and are taxed as usual, even when they're paid alongside a redundancy settlement.

What if you think your redundancy is unfair?

A redundancy can be challenged as unfair if the process wasn't followed properly, if you weren't genuinely consulted, if the selection criteria were unfair or applied inconsistently, or if the "redundancy" doesn't hold up (for example, if your role wasn't really removed). If any of this sounds familiar, it's worth speaking to ACAS or an employment solicitor before accepting an outcome you're not comfortable with.

Remember: it's the role, not you

In the majority of cases, businesses make roles redundant because of market challenges, restructuring or financial pressure, not because of anything to do with individual performance. It's worth holding on to that distinction. Your role is being made redundant. You are not.

What happens next

Once you understand where you stand on process, rights and pay, the next question is usually: what now? We've put together a full guide on what to do if your role is made redundant, covering everything from updating your CV to getting job search support.

Next steps

Looking for your next role? Get in touch to discuss your next steps, upload your CV or check out our live vacancies.