Redundancy

Redundancy is a form of dismissal from your job. It usually happens when employers need to reduce their workforce.

Redundancy is potentially a fair reason for your employer to dismiss you, but just because you have been made redundant, does not mean your dismissal is fair. To decide whether a redundancy is fair, there are three things to consider:

1. Is there a genuine redundancy situation?
2. Did your employer follow a fair redundancy process?
3. Did your employer consider appropriate alternative roles before making you redundant?

If you believe you are under threat or “at risk” of redundancy, please see our webpage on the practical steps you can take.

If you are concerned that your employer is not following a proper redundancy process or is unaware of their legal obligations, you can download and show them our factsheet below.

Is there a genuine redundancy situation?

A genuine redundancy happens for one of three reasons:

• your place of work closes or moves (this can be temporary or permanent)
• the type of work you do will no longer be carried out at your place of work
• fewer employees are needed to do the particular type of work that you do

If your employer is seeking to make you redundant, and if one of the three reasons above does not apply, this may not be a genuine redundancy, which may mean you could have a claim for unfair dismissal or discrimination against your employer. Please see our pages on unfair dismissal or discrimination for further details. If your employer seeks to make you redundant while you are pregnant or on maternity leave, please see our page on redundancy and maternity leave.

Did your employer follow a fair redundancy procedure?

If there is a genuine redundancy situation, your employer has a number of legal obligations, including an obligation to follow a fair redundancy process.

A redundancy process may be unfair if a fair selection process has not been followed and if your employer fails to consult with you about the potential redundancy.

Following a fair selection process usually involves identifying an appropriate group of employees. This group of employees is often referred to as a “pool”, and your employer should give you and other employees in the pool as much notice as possible that they are “at risk” of redundancy. Your employer should also consult with you and the other individuals in the pool and should use objective selection criteria to decide who to select for redundancy.

If your employer is making 20 or more employees redundant, they need to carry out a collective consultation (which is a specific type of consultation where your employer is required to consult with either a recognised trade union or employee representatives). If they fail to collectively consult this may mean that you are entitled to an enhanced protective award. For more information on collective consultation, please see our page on collective consultation.

A fair redundancy process should have four stages:

1. the employer applies a fair selection process to decide which employee may be made redundant;
2. employees are warned about potential redundancies and consulted about the redundancy process;
3. the employer considers alternative employment that might be available to employees that have been selected to be made redundant; and
4. the employees who have been selected for redundancy have the opportunity to appeal the employer’s decision.

Identifying a redundancy pool

Your employer should identify an appropriate group or “pool” of employees to consider for redundancy. For example, if you work in an office and there are five of you doing one type of work (e.g., marketing), but there is only enough work for two people, all five of you should be placed in the “pool”.

There may be some situations where your employer is not required to identify a “pool” of employees who may be made redundant. For example, if your role is unique, and there are no other roles that are similar to yours, you may be the only employee in the “pool” and your employer may not have to apply any criteria to your selection, but they still should be able to demonstrate that there is a genuine redundancy situation and that they are following a fair process.

Apply selection criteria

Objective, and not subjective, selection criteria should be used to assess who is selected for redundancy from the pool. This means that the criteria should be measurable and not just based on personal opinion. Potential selection criteria might include:

• skills, knowledge, and experience;
• performance and ability, including performance appraisals;
• disciplinary records;
• length of service; and
• attendance records.

If attendance is used as part of the selection criteria, it is important that your employer considers any reasons for poor attendance. Your employer must be careful not to discriminate e.g. on the grounds of sex, pregnancy, maternity or disability – i.e., they should disregard any time away from work on family related leave or any pregnancy related sickness absence.

Your employer should decide the weight they will give to the different factors, depending on their importance to your employer. Ideally, there should be more than one person scoring you and the other employees who are at risk, but this might not always be possible.

Your employer will usually give you a score based on one or more measurements, then choose the people with the lowest scores for redundancy. They should:

• notify you of the selection criteria before or during your first meeting;
• score everyone in the pool fairly and using the same objective selection criteria;
• provide information on your scores and the scoring criteria if you request this from them; and
• only choose the people with the lowest score(s) for redundancy.

Your employer might not provide you with a copy of your scores. However, it is good practice for them to do so if you request this.

If the whole business is closing, or your employer is closing down a whole section of the company, then your employer should notify and consult with all those employees in that part of the business as they are “at risk” of redundancy. In these circumstances, they would not need to create or use selection criteria because they are making all employees in that part of the business redundant.

In certain circumstances, there may be a genuine redundancy situation, but the selection criteria used for redundancy could make the dismissal automatically unfair. For example, it is automatically unfair to select an employee for redundancy for any reason connected to pregnancy, disability, or another ‘protected characteristic’. If your employer selects you for redundancy because of these reasons, you may be able to make a claim for discrimination and potentially automatic unfair dismissal.

If you are on maternity, adoption, shared parental or paternity leave and your employer is making employees redundant, you have extra protection in a redundancy situation. Please see our webpage on redundancy while on maternity leave here.

Consultation

Your employer should consult with all of the individuals in the pool who may be at risk of redundancy. This will usually mean having an individual meeting with each person in the pool to let them know that they are at risk of redundancy. In the meeting, your employer should explain why there is a risk of redundancy, the number of employees expected to be dismissed, who is in the pool, the selection criteria they will use and the process going forward. They should also answer any questions you may have.

During your individual meeting, your employer must listen to your ideas and consider any alternatives to redundancy that you suggest. However, this does not mean that they have to agree with you.

You can ask to bring someone with you to your consultation meeting, like a colleague or a trade union representative. Although your employer is not obliged to allow you to bring someone to the consultation meeting, it is good practice for them to allow you to do so. If your employer has concerns about this request, you could reassure them that the person is only there to take notes and offer moral support. You should also check your employer’s policies, in case they cover this. If you have a disability, being accompanied to your consultation meeting may be considered a reasonable adjustment that your employer has to make for you.

Your employer should wait at least seven days after your consultation meeting before informing you if you have been made redundant.

See our page on what to do if you are at risk of redundancy for more information.

Did your employer consider suitable alternative roles before making you redundant?

As part of the redundancy procedure, your employer should consider whether there is another role that you could do, with or without a reasonable period of training. This may be in a group company or another department. Your employer should carry out a sufficiently thorough search for alternative roles, but they do not have to create alternative jobs if there are none available.

Your employer should give you enough information about any vacancies so you can decide if the alternative job is suitable for you. They may decide to advertise these roles via notice boards, the company intranet or they may contact you directly (for example, if you are on leave).

If a suitable alternative vacancy does come up, your employer should first ask you and other at risk employees to apply before asking for applications from the wider workforce or the public. If an alternative role could be suitable for you and more than one at risk employee, your employer has to act reasonably when choosing which employee will be offered the role but they do not have to apply objective criteria.

If you are on maternity leave when selected for redundancy, special rules apply about when you should be offered alternative roles. Please see our page here for further details.

If your employer does not offer you a suitable alternative role even though there is one available, you could have a claim for unfair dismissal.

If your employer offers you a suitable alternative role and you reject it, you will lose your right to a redundancy payment. For the role to be suitable alternative employment, your employer must consider:

• the nature of the job offered (status, work and terms, especially pay, hours and location); and
• the employee in question (whether the job is a good match for you considering your individual circumstances, your skills and experience, whether you meet the requirements of the job, and whether the new job is similar in terms of status, content, salary, responsibility, hours, and location).

A job may not be a suitable alternative for you if, for example, as part of the role, you are required to speak another language that you do not already know.

If you are unsure about accepting the alternative role, you can agree to trial the role for up to four weeks without putting your statutory redundancy payment at risk. If you decide during the trial period that the job is not suitable, you still have a right to a statutory redundancy payment.

If there are no suitable alternative roles, and you are made redundant following a fair procedure, you will still be entitled to a statutory redundancy payment, notice pay (provided you have worked for your employer for long enough) and pay for any accrued but untaken annual leave. See the question on redundancy and notice pay below for more information.

Appeals

If you are unhappy with your employer’s decision to make you redundant, your employer should generally offer you a right to appeal against the decision. Your employer is not legally required to offer you the opportunity to appeal the decision, however, it is good practice for them to do so. Sometimes it might be reasonable for your employer to refuse to allow you to appeal the decision, for example, if your place of work is closing.

Your employer should also explain the type of appeal and the appeal process. There are two types of appeal. A re-hearing would review the entire process, while a re-consideration would only focus on reviewing the decision made. The appeal may cover the entire redundancy process or just why you were selected. Normally, the appeal should be heard by a manager who was not involved in the dismissal stage, though this might not always be possible.

If your appeal is rejected, you will still be made redundant. If your appeal is considered but then dismissed, the redundancy process will also continue as planned from the date you receive the appeal outcome.

What payment should I receive if I am made redundant?

If you are made redundant, you may be entitled to:

1. redundancy pay
2. notice pay, or pay in lieu of notice (a PILON); and
3. accrued annual leave not yet taken 

Whether or not you receive redundancy pay and notice pay usually depends on how long you have worked for your employer. Your contract might also give you more than the legal minimum – you should always check your contract to see what it says.

Frequently asked questions

This advice applies in England, Wales and Scotland. If you live in another part of the UK, the law may differ. Please call our helpline for more details. If you are in Northern Ireland you can visit the Labour Relations Agency or call their helpline Workplace Information Service on 03300 555 300.

If you have further questions and would like to contact our advice team please use our advice contact form below or call us.

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