Redundancy is one of the areas small business owners get most nervous about, usually for good reason - get it wrong and it stops being a redundancy and becomes an unfair dismissal, with all the cost and stress that comes with it. Here's the actual minimum process, stripped of jargon.
What makes a redundancy genuine
Redundancy has to be about the role, not the person. The legal definition covers three situations: the business is closing entirely, a particular workplace is closing, or there's reduced need for employees to do a particular kind of work. If you're using "redundancy" as a way to remove someone you'd rather not manage, and the role isn't genuinely disappearing, that's not a redundancy - it's a dismissal, and it needs to be handled as one.
The minimum process
- Identify the pool. If more than one person could plausibly do the affected work, you need to consider all of them as part of the "selection pool," not just pick the person you'd prefer to lose.
- Use fair, objective selection criteria. Things like skills, experience, performance records, and attendance (excluding disability-related or maternity-related absence) are defensible. Personal opinion isn't.
- Consult individually, genuinely, before any decision is final. This means explaining the situation, sharing how selection was done, and giving the employee a real chance to respond or suggest alternatives - not presenting redundancy as already decided.
- Consider alternatives to redundancy. Could they move to a different role? Reduced hours? This doesn't have to succeed, but you do have to genuinely consider it.
- Give proper notice in line with their contract or the statutory minimum, whichever is longer.
- Offer a right of appeal. Not always a strict legal requirement depending on circumstances, but it's good practice and makes the whole process far more defensible if challenged.
Collective consultation - if you're making 20+ redundant
If you're proposing to make 20 or more employees redundant at one establishment within a 90-day period, formal collective consultation rules kick in, with strict minimum timescales before any dismissals can take effect. Getting this wrong is expensive - since the Employment Rights Act 2025, the maximum protective award for failing to consult properly has doubled from 90 days' to 180 days' pay, per affected employee.
Statutory redundancy pay
Employees with at least two years' continuous service are entitled to statutory redundancy pay, calculated by age band and length of service, based on a capped "week's pay":
- Half a week's pay for each full year worked under age 22
- One week's pay for each full year worked aged 22-40
- One and a half week's pay for each full year worked aged 41+
The weekly pay figure used in this calculation is capped - currently £751 per week (rising each April) - and the calculation is capped at 20 years' service, giving a current maximum statutory redundancy payment of £22,530.
This is general guidance, not advice tailored to your specific situation. Employment law is genuinely fact-specific - if you want to talk through what this actually means for your business, get in touch.