The Basic Legal Steps in a Redundancy Process

Redundancy is a legal mechanism in employment law in England and Wales that allows an employer to reduce their workforce when a role is no longer required. However, the law requires that redundancies are carried out in a structured and fair manner. Following the correct legal steps is crucial to ensure the process is lawful, minimise the risk of employment tribunal claims, and protect employees' rights to consultation, notice, and redundancy pay. This article outlines the basic legal steps in a redundancy process, providing clear guidance for employees, employers, and solicitors.

Step 1: Identifying a Genuine Redundancy Situation

The process begins with determining whether there is a genuine redundancy. Under section 139 of the Employment Rights Act 1996, a redundancy exists if:

• the employer ceases or intends to cease business or a workplace;
• the employer no longer needs employees to perform work of a particular kind; or
• the employer no longer needs employees to perform work of a particular kind at a specific location.

Employers must document the business reasons for reducing staff, supported by financial data, business forecasts, or operational plans. A role cannot be labelled redundant merely for convenience or to dismiss an employee for unrelated reasons.

Step 2: Establishing the Pool for Selection

When multiple employees may be affected, employers define the selection pool, i.e., the group of employees performing the same or similar work. Careful consideration is required to ensure fairness. Selection should reflect the operational need and not target employees for discriminatory or arbitrary reasons.

Legal Considerations

• Employees should be objectively and fairly assessed.
• Protected characteristics (age, sex, disability, race, religion, pregnancy, union membership) must not influence selection.

Step 3: Applying Fair Selection Criteria

Once the selection pool is identified, employers apply objective criteria to determine which employees are at risk. Common criteria include:

• Skills, qualifications, and experience;
• Performance records or appraisals;
• Attendance records;
• Length of service.

Employers should maintain clear records demonstrating the fair application of criteria to avoid claims of unfair redundancy.

Step 4: Consulting Employees

Individual Consultation

For fewer than 20 redundancies, the employer must consult individually with affected employees. This involves explaining the reasons, discussing alternatives, and considering employee input. Consultation must occur before final decisions are made.

Collective Consultation

For 20 or more redundancies at a single establishment within 90 days, collective consultation rules apply:

• Consultation with employee representatives or recognised trade unions is mandatory;
• Minimum consultation periods are 30 days for 20–99 redundancies and 45 days for 100 or more.

Failing to consult properly can result in protective awards and tribunal claims.

Step 5: Considering Alternatives

Employers must actively consider alternatives to redundancy, such as:

• Redeployment within the organisation;
• Adjusting roles or workloads;
• Offering voluntary redundancy.

Employees should be given the opportunity to trial alternative roles, usually for up to four weeks, without losing statutory redundancy pay entitlement.

Step 6: Providing Notice

Employees must be given the statutory or contractual notice period before termination. Notice periods are based on length of service:

• 1 month's notice for 1–2 years of service;
• 1 week's notice for each year of service for 2–12 years;
• Maximum of 12 weeks' notice for service over 12 years.

Employers may pay payment in lieu of notice (PILON) if the employee is not required to work during the notice period.

Step 7: Redundancy Pay

Eligible employees - typically with at least two years' continuous service - are entitled to statutory redundancy pay, calculated based on age, length of service, and weekly pay, subject to statutory caps.

Redundancy pay does not affect the employee's right to other entitlements, such as accrued holiday pay or outstanding wages.

Step 8: Issuing Formal Dismissal Notice

After consultation, alternatives, and notice considerations, the employer issues a formal dismissal letter, detailing:

• Reason for redundancy;
• Selection criteria applied;
• Notice period;
• Redundancy pay entitlement;
• Right to appeal.

Step 9: Right to Appeal

Employees may appeal the redundancy decision. An appeal process allows for reconsideration of the decision or correction of procedural errors. Employers must handle appeals fairly and objectively.

Step 10: Employment Tribunal Considerations

Employees who believe the redundancy was unfair or discriminatory can bring a claim to an employment tribunal. Claims must generally be lodged within three months less one day from the dismissal date, following Acas Early Conciliation. Tribunals assess both:

• Substantive fairness - was there a genuine redundancy?
• Procedural fairness - were consultation and selection processes followed correctly?

Common Pitfalls in the Redundancy Process

• Failure to document genuine business reasons.
• Applying subjective or discriminatory selection criteria.
• Ignoring consultation requirements.
• Not considering alternative employment.
• Breaching notice or redundancy pay obligations.

Employers who overlook these steps risk tribunal claims, protective awards, and compensation payments.

Key Takeaways

A lawful redundancy requires a structured legal process. Employers must identify a genuine redundancy situation, define the selection pool, apply fair criteria, consult with employees, consider alternatives, provide notice, pay statutory redundancy pay, and allow appeals. Compliance with these steps reduces the risk of claims, ensures fairness, and protects both employees' rights and the employer's legal standing.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.