Redundancy is a type of dismissal where a role is no longer needed.
Employers should consider other options to try and reduce or avoid redundancies. They must consult workers.
Managing a Redundancy Process
The redundancy process is outlined below in 10 steps. Use this guidance to help navigate the process, check that any actions already taken are correct, and identify the next steps required at each stage.
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Step 1: Check redundancy is needed
Redundancy only applies to those with the legal status of employee.
Someone is not likely to be an employee if they are:
- an agency worker
- a casual worker
- on a zero-hours contract
You should only consider making redundancies if part or all of the organisation is closing, or has already closed, you are changing the types or number of roles needed to do certain work or you are changing location.
If you have concerns about an employee’s conduct or performance, you need to follow a disciplinary procedure.
When considering making redundancies, your first step should be to check:
- why you think redundancies are necessary
- what issues you are trying to solve
- other options that might be available
Look at other options
Before starting a redundancy process, you should consider ways to reduce, or avoid having to make, redundancies.
For example, you could see if you can:
- offer voluntary redundancy
- change working hours
- move employees into other roles
- let go of temporary or contract workers
- limit or stop overtime
- not hire any new employees
Offer voluntary redundancy
You can give employees the option to put themselves forward for voluntary redundancy.
It's your decision whether or not to accept the volunteers, taking into account the wider needs of the organisation. For example, if an employee is highly skilled in their role, you might need to keep them on.
It's a good idea to make this clear to employees early on.
Avoid discrimination
If you do give the option of voluntary redundancy, you:
- should offer it as widely as possible, not necessarily just to those at risk of redundancy
- should not pressure or single anyone out
- must select employees in a fair way
This can avoid the risk of indirect discrimination. For example, it could be age discrimination if you only select older employees.
Find out more about discrimination
Change working hours
There could be ways for you to save costs by having employees work more flexibly. You should always talk with employees and try to reach agreement first.
For example, you could offer employees:
- homeworking
- job shares
- to work fewer hours
Move employees into other parts of the organisation
You should see if you can move employees into different areas of your organisation ('redeploy') to avoid redundancies. For example, by consulting with employees and appropriate representatives about:
- what transferable skills employees have
- if there are other vacant or new roles in the organisation that require those skills
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Step 2: Follow the right process
If you do decide redundancies might be necessary, you should check if you have:
- a redundancy policy you must follow
- a collective agreement with a trade union with details of what you must do
You must follow a fair redundancy process. This should include consulting employees.
You must collectively consult employees if you are proposing to make 20 or more redundancies within a 90 day period.
You might not always be able to avoid redundancies. But by working with employees you could find ways to save jobs and better understand how to plan for the future.
Make a redundancy plan
You should make a redundancy plan that you'll share with all employees and put into action. It can help you follow a fair process and reduce the risk of legal claims.
The redundancy plan should include:
- options you have considered before deciding redundancies might still be needed
- consulting all employees affected, including those off work, for example on maternity or sick leave
- timeframes, for example to leave enough time for consultation
- agreeing on fair selection criteria
- how much notice and redundancy pay the employer would have to give if redundancies go ahead
- an appeals process for employees who think the redundancy process or their selection has been unfair
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Step 3: Tell employees
As soon as possible, you should inform your employees that you're considering making redundancies.
You should hold a meeting with all employees affected, not just those at risk of redundancy, where you explain:
- the risk of redundancy and the reason why it might be necessary
- how many redundancies you're considering
- what happens next, including how everyone will be consulted
You should encourage employees to ask questions. The meeting can be held online if people are working remotely.
For employees who are at risk of redundancy, you should also confirm in writing:
- that they're at risk of redundancy
- whether they have other options, such as voluntary redundancy or redeployment
- the outline of your consultation plans
You should continue to keep employees informed throughout the redundancy process.
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Step 4: Hold consultations
If you do not hold genuine and meaningful consultation before making redundancies, employees could claim to an employment tribunal for unfair dismissal.
Consultation is when you talk with and listen to affected employees. In 'collective consultation' you also consult with their representatives.
You should use consultation to try and agree actions wherever possible.
During consultation, you should discuss:
- the changes that are needed, what you propose to do, and why
- ways to avoid or make fewer redundancies
- the skills and experience needed for the future
- the criteria for selecting employees for redundancy
- any concerns employees may have
- how you can support and arrange time off for affected employees, for example to update their CVs and get training
Employees will often have good ideas that may help to avoid redundancies. You do not have to agree to their suggestions, but it's important to seriously consider any ideas that could avoid or reduce redundancies. Otherwise, employees could claim the redundancy process has been unfair.
If you have any questions about holding redundancy consultations you can contact the Acas helpline.
If you are making 20 or more redundancies in a 90 day period, you must hold collective consultation. Further information can be found here - Check if you need to hold collective consultation
How to hold individual consultation meetings
Some parts of consultation could be in small groups or team meetings. However, you should meet each affected employee in private, at least once.
Meetings can be on the phone if you both agree to it and there is a clear need, for example if someone works remotely.
You should consider allowing employees to be accompanied at any one-to-one meeting. A companion can be helpful as they can:
- give the employee support
- be a neutral person to observe
- speak for the employee if needed
You should make sure any managers who lead consultation meetings:
- have had training in managing the meeting appropriately
- are fully informed about the redundancy proposals and process
- can present the plan for the redundancy process clearly
- can provide everyone with a questions and answers document
Use Acas template letter to invite an employee to a consultation meeting
How long consultation lasts
There are no rules in legislation for how long individual consultation should last. But you should check if you have a policy or agreement in place that does have rules.
Consultation must be meaningful. You should be able to show you have genuinely considered any suggestions or points made by each employee. This includes suggestions you do not accept.
You do not need to reach an agreement for consultation to end.
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Step 5: Select employees
If you're proposing to make a whole team or specific group of employees redundant, you'll already have a list of roles you believe you might need to make redundant. For example, if you are having to cease a youth project, it will be the youth workers who will be consulted.
But if you need to reduce the number of employees in the organisation or team, you'll need to:
- set up selection criteria
- make a list of roles to be considered for redundancy (one or more 'selection pools')
Further information regarding selection criteria and pools and how to avoid discrimination can be found here - Step 5: Select employees - Managing a redundancy process - Acas
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Step 6: Work out redundancy pay
You must pay at least the 'statutory' (legal minimum) amount of redundancy pay to employees who have continuously worked for you for 2 years or more.
You should check employment contracts as they might say you need to pay more than the statutory amount. This can be called 'enhanced' or 'contractual' redundancy pay.
You can choose to pay higher amounts if you want to encourage voluntary redundancies.
Use the redundancy pay calculator on GOV.UK
There are maximum statutory levels of pay set for a redundancy payment and this rate can change each year. Maximum rates can be found here.
How many weeks' statutory redundancy pay someone is entitled to depends on both of the following:
- the employee's age
- how long they've continuously worked for you
Statutory redundancy pay is capped at the last 20 years that the employee has worked for you and is calculated as:
- 1 and a half week's pay for each full year they were aged 41 years or older
- 1 week's pay for each full year they were aged 22 or older, but aged under 41
- half a week's pay for each full year they were aged under 22
- 'Payment in lieu of notice' (PILON) is when an employee stops work straight away but you still pay them for the notice period.
If you have given the employee payment in lieu of notice, the relevant date is the date their employment would have ended if they had worked all of the statutory notice period.
You'll need to add on the statutory notice period when calculating how many years' work the employee will get redundancy pay for.
This might mean an employee has another year's work to base redundancy pay calculations on.
If the employee's pay changes from week to week
Work out their weekly pay by getting an average figure for a 12-week period. Use the 12 weeks up to the day they got their redundancy notice.
If they did not work for a whole week during that time – for example they were on holiday or off sick – replace it with an earlier week.
You must share in writing with employees how you've calculated redundancy payments.
When you must make the payment
You should pay redundancy when employment ends or on an employee's final pay day.
You can pay later than this if you both agree to another date in writing, for example in an email or letter.
You should tell employees when and how you’ll make the payment. For example, if it’ll be included in their monthly pay or as a separate payment.
If you do not pay an employee on time, they might be able to make a claim to an employment tribunal.
If you cannot afford redundancy pay
If your organisation cannot afford to make redundancy payments, you can ask the Redundancy Payments Service (RPS) for financial help.
Find out how to get financial help from the Redundancy Payments Service
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Step 7: Give notice
If you've selected someone for redundancy, you must give them notice. You can only give notice once you've finished the consultation and selection process.
You should meet with each employee who's been at risk of redundancy. It's best to do this face to face, but if this is not possible, you should talk with them on a call.
You should allow them to be accompanied at the meeting by a colleague or Trade Union representative, of which they are a member.
For those selected for redundancy, you should also put the details of their redundancy in writing. This can be by letter or email.
You should include:
- how they scored in the selection criteria and why they received that score
- their notice period and leaving date
- how much redundancy pay they'll get and how you calculated it
- any other pay due to them, for example holiday pay
- when and how you'll pay them
- how they can appeal the redundancy decision
Use ACAS redundancy letter templates
How much notice you should give
By law (Employment Rights Act 1996), there are 'statutory notice periods'. These are the minimum amounts of notice you must give.
If an employee has worked for you for:
- 1 month to 2 years – statutory notice is 1 week
- 2 to 12 years – statutory notice is 1 week for each full year they have worked
- 12 years or more – statutory notice is 12 weeks
Some contracts might have longer notice periods, but you cannot give less than the legal minimum.
Find out more about notice periods
If your employee wants to leave early
If you've given an employee notice of redundancy, including their dismissal date, they might want to leave early. For example, if they've already found another job.
To leave early and protect their right to redundancy pay, an employee needs to give you 'counter-notice' during the 'obligatory period'.
'Counter-notice' means the employee is giving their own notice to end employment, which is different from the notice you have given them. They must give you notice in writing, for example in a letter or email. They should give you as much notice as possible and the amount of notice that is contained within their contract of employment.
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Step 8: Offer alternative employment
You must try and move anyone selected for redundancy into other jobs within your organisation if there are vacancies available, or coming up. This is called offering 'suitable alternative employment'.
How to offer alternative employment
You must identify any available jobs in your organisation and talk to the affected employees to see if they agree they're suitable.
If a role is suitable, you should offer it instead of redundancy. If you do not, the employee could make a claim to an employment tribunal for unfair dismissal.
They should not have to apply for the role. If more than one employee is interested in the same role, you must:
- offer the role to any employees on maternity leave, shared parental leave or adoption leave first
- follow a fair process for all other employees, for example holding interviews for the role
When you offer an employee another role, it must be:
- put in writing
- offered before their current contract ends
- a different role to the one they're currently doing – you'll need to explain how it's different
- start within 4 weeks of their current role ending
There is extra redundancy protection for pregnant employees and new parents. You must offer them any suitable alternative vacancies as a priority over other employees.
Trial periods
Employees have the right to a 4-week trial period if they accept a new role. If they need more time to train for the role, you can agree to a longer trial period. It must be agreed in writing and have a clear end date.
The trial period should start after they've worked their notice period and their previous contract has ended. This avoids any confusion or disputes over dates if the trial does not work out. It's a good idea to set out the dates for the trial in writing.
If the employee is in the new role beyond the 4-week trial they will lose the right to redundancy. This is unless you have agreed a longer trial period with them.
If the new role is unsuitable, the employee can leave at any time in the 4-week trial period without having to give additional notice.
If you offer more than one job, the employee can try each one for 4 weeks.
If an employee turns down an alternative role
If an employee refuses your offer for a suitable alternative role, or turns it down after the trial period, they need to have a valid reason why it's not suitable.
Examples of reasons could include:
- the job is on lower pay
- health issues stop them from doing the job
- they have difficulty getting there, for example because of a longer journey, higher cost or lack of public transport
- it would cause disruption to their family life
If the employee has a valid reason to turn down the job, they'll be entitled to redundancy pay.
But if the employee does not have a valid reason for turning down the job, you could refuse to pay their redundancy pay.
For example, the employee's contract could say they have to work anywhere you ask them to. This is called a 'mobility clause'. This might mean that turning down a job because of its location could risk their right to redundancy pay.
You'll need to be able to prove the employee's decision was unreasonable if they make a claim to an employment tribunal.
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Step 9: Offer an appeals process
It's good practice to offer employees the chance to appeal if they:
- feel they were selected unfairly for redundancy
- believe this process was not followed properly
This should be set out in your redundancy plan. It might also be written in contracts or your redundancy policy.
An appeals process can help to:
- give you early warning the redundancy selection process might have been unfair and the chance to correct it
- deal with and resolve an employee's complaint, avoiding an employment tribunal claim
- show a tribunal that you have followed a fair process
If an employee is successful in an appeal, it’s likely to mean another employee will have to be made redundant in their place. This could be a very difficult situation, especially if the employee was previously told they were safe from redundancy. You should:
- prepare for how to handle the situation sensitively with the employees affected
- keep communication clear and open
- offer support
How an employee can appeal
If an employee thinks they've been unfairly selected or there was a problem in the redundancy process, you should give them the chance to appeal. This should be within a reasonable timescale of receiving their redundancy notice. For example, 10 working days could be reasonable. The employee should tell you in writing the reasons for their appeal.
The appeal meeting
When you receive an appeal, you should send a meeting invitation to the employee as soon as possible.
It's a good idea to allow them to be accompanied at the meeting by a work colleague or union representative.
A companion can be helpful, as they can:
- give the employee support
- be a neutral person to observe
- speak for the employee if needed
Where possible, arrange for a senior manager who has not been involved in the redundancy decision-making to lead the appeal meeting. In organisations where this is not possible, the person leading the appeal meeting should be as impartial as possible.
You could also consider using an independent consultant to help when making a decision.
Making an appeal decision
You should consider the appeal without unreasonable delay and make a decision to either refuse or agree to ('uphold') the appeal. You should put your decision in writing to the employee.
If you uphold an appeal during the redundancy notice period
If the employee's redundancy notice period has not yet ended and you uphold the appeal, their employment contract should continue.
This should be as though the employee had not been selected for redundancy in the first place.
If the employee's redundancy notice period has ended
If the employee's redundancy notice period has already ended, and you uphold the appeal, you should 'reinstate' them. This means putting them back in their role.
Their length of service ('period of continuous employment') will apply from when you first employed them.
You must pay any arrears of wages. This means paying them for the time between the end of the notice period and the time you reinstate them.
If you've already made a redundancy payment
If you uphold an appeal after making a redundancy payment to your employee, you should make it clear that this means they'll need to return the payment.
If you have any questions about how appeals can affect redundancy pay, you can contact the Acas helpline.
If you refuse the appeal
If you decide to refuse the appeal, the employee's redundancy dismissal, pay and notice continues as before.
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Step 10: Support your employees
Redundancy can create difficult situations and conversations in your organisation. It's important to support those affected.
How to support employees
You should think about how to support:
- employees at risk of redundancy
- managers who are breaking the news
- the people leading the consultation
- those staying on
You can support employees by providing:
- counselling
- additional face-to-face meetings
- help getting financial advice
- clear plans for the future
- time off for those selected for redundancy to look for new jobs or arrange training
Employees who are staying might experience stress from seeing colleagues and friends being made redundant. They'll also be part of a changing workplace and might feel uncertain about what the work and their roles will look like in future.
Help employees find another job or training
You must allow employees you've made redundant to request a reasonable amount of time off during their notice period to:
- look for another job
- arrange training
This applies if the employee has worked for you continuously for 2 years or more, including the notice period. How much time they need will depend on their individual circumstances, including:
- how difficult it will be for them to find work
- the length of their notice period
You can only refuse an employee's request for time off if you have reasonable grounds.
It's a good idea to talk to them about:
- how much time off they'll need
- when they'll need to take it
Paid time off for training or to look for another job
Pay time off to look for work or training is limited to 40% of a week's pay. This applies even if the employee takes more time for this during their notice period.
You do not have to pay more, unless the employee's contract says you will. If it does not, you can choose to. Either way, you should be consistent in your approach to your employees.
Organisations that can help
You can support employees with finding another job or training by signposting them to the following organisations.
The Jobcentre Plus Rapid Response Service can:
- help people get back into work and with writing or updating CVs
- give you useful information about finding work to pass on to your employees