Redundancy Policy UK: Fair Process for Employers

What this document is

A Redundancy Policy is an internal document that sets out how your organisation will approach redundancy situations if they arise. It isn't a legal requirement to have one, but running a redundancy process without a clear written framework tends to cause problems: inconsistent decisions, confused managers, and employees who feel the outcome was arbitrary.

A good policy explains when redundancy applies under the Employment Rights Act 1996, how the business will consult with affected staff, the selection criteria that will be used to decide who goes, how suitable alternative employment will be considered, and how statutory and any enhanced redundancy pay will be calculated. It also sets out appeal rights and timelines.

The policy should sit alongside your wider employment documentation and be applied consistently. Tribunals look closely at whether an employer followed its own stated process, so a policy that's ignored in practice can actually weaken your position rather than strengthen it. Keep it realistic, keep it aligned with current legislation, and review it when the law changes.

How to use this document

1. Confirm the redundancy situation is genuine. Before anything else, satisfy yourself that the role (or roles) really do meet the statutory definition. A business closure, a site closure, or a reduction in the need for particular work are the recognised grounds. If the real reason is performance or conduct, redundancy is the wrong route and using it will likely be unfair.
2. Plan the consultation properly. Consultation must be meaningful, which means starting it before final decisions are made. For individual redundancies, consult directly with the employee at risk. Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation obligations kick in, with minimum consultation periods and a duty to notify the Secretary of State.
3. Set fair selection criteria and apply them consistently. Where you're selecting from a pool, the criteria need to be objective and measurable: skills, qualifications, performance records, attendance (used carefully), and disciplinary history. Avoid anything that could be discriminatory. Score people honestly, keep the evidence, and be ready to explain your scoring if challenged.
4. Look for suitable alternative employment. Employers are expected to consider whether redundancy can be avoided by offering another role within the business or group. If a suitable alternative is offered and unreasonably refused, the employee may lose their right to redundancy pay. A trial period in a new role is available and worth using where the fit isn't obvious.
5. Confirm dismissal, pay entitlements and offer an appeal. Once consultation is complete and no alternative is available, confirm the redundancy in writing with the termination date, notice pay, statutory redundancy pay (for those with two or more years' service), any contractual enhancement, and accrued holiday. Give the employee the right to appeal, and time off to look for work.

Common questions