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Redundancy Policy UK: Fair Process for Employers

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Part ofUK Employment Law Guide for Employers (2025)

Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
Letting people go is one of the hardest calls any employer has to make. When a role genuinely isn't needed anymore, whether because the business is shrinking, restructuring, or closing a site, the legal route out is redundancy. But 'redundancy' isn't a shortcut for ending employment you'd rather not continue. It's a defined concept under the Employment Rights Act 1996, and getting the process wrong can turn a difficult decision into an unfair dismissal claim at an employment tribunal. This guide walks through what a Redundancy Policy should cover, how a fair procedure runs from start to finish, and the rights employees keep throughout. Whether you're drafting a policy for the first time or working out how to handle a specific round of redundancies, the principles below will help you run a process that stands up to scrutiny and treats people with the fairness they deserve.

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

Q When does a dismissal legally count as redundancy?
A dismissal is a redundancy under the Employment Rights Act 1996 when the employer has stopped (or intends to stop) carrying on the business, has stopped operating at the place where the employee works, or needs fewer employees to do work of a particular kind. If the real reason for dismissal is something else, such as performance, it isn't redundancy even if the employer calls it that.
Q How much statutory redundancy pay is an employee entitled to?
Employees with at least two years of continuous service qualify for statutory redundancy pay, calculated using a formula based on age, length of service (capped) and a weekly pay figure (also capped). The weekly pay cap is reviewed each year, so check gov.uk for the current amount. Employers can pay more than the statutory minimum if their contracts or policies provide for it.
Q What is collective consultation and when does it apply?
Collective consultation is triggered when an employer proposes 20 or more redundancies at one establishment within a 90 day period. It involves consulting with recognised trade unions or elected employee representatives, following minimum consultation timeframes, and notifying the Secretary of State using form HR1. Failure to follow these rules can lead to protective awards of up to 90 days' pay per affected employee.
Q Can an employee refuse an offer of alternative work?
They can, but the consequences depend on whether the alternative is 'suitable' and whether the refusal is 'reasonable'. If the role is genuinely suitable (similar pay, status, location, hours) and the employee unreasonably turns it down, they may lose their statutory redundancy pay. Employees are entitled to a four week trial period in the new role without losing their rights.
Q What selection criteria are considered fair?
Fair criteria are objective, measurable and capable of being evidenced. Common examples include skills and qualifications, standard of work, performance ratings, experience and disciplinary record. Attendance can be used but must be handled carefully to avoid disability discrimination. Avoid anything subjective like 'attitude' and never use criteria linked to a protected characteristic under the Equality Act 2010.
Q Do employees get time off to look for a new job?
Yes. Employees under notice of redundancy who have at least two years of continuous service are entitled to reasonable paid time off to look for work or to arrange training for future employment. The statutory cap on pay during this time off is limited, but many employers take a more generous approach in practice to help people transition.
Q Can an employee challenge a redundancy decision?
Yes. Employees should be offered a right of appeal against the redundancy decision as part of a fair procedure. Beyond that, an employee with at least two years' service can bring an unfair dismissal claim at an employment tribunal if they believe the redundancy wasn't genuine, the selection was unfair, or consultation was inadequate. Discrimination claims don't require a minimum service period.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.