How To Lawfully Make Someone Redundant In The UK

Redundancies are one of the toughest decisions you’ll make as a business owner. Whether demand has dipped, your structure is changing or you’re automating tasks, you might need to reduce headcount to protect the rest of the team and keep the business viable.

The key is doing it lawfully and fairly. If you get the process wrong, you risk unfair dismissal claims, discrimination issues or costly delays. The good news is that with a clear plan, proper consultation and the right documents, you can make redundancies in line with UK law and reduce risk for your business.

Below, we break down exactly how to make someone redundant in the UK - step by step - including what counts as a genuine redundancy, consultation requirements, entitlements, tricky scenarios to watch, and the core documents you’ll need.

What Counts As A Genuine Redundancy?

Redundancy is a specific legal reason for dismissal under the Employment Rights Act 1996. It’s about the role disappearing - not the individual doing it. A dismissal is likely to be a genuine redundancy if it’s wholly or mainly due to one of the following:

• Your business stops or intends to stop operating altogether or in a particular location.
• The business needs fewer employees to carry out work of a particular kind (e.g. reorganisation, cost cutting, new tech, loss of a contract).
• Work has diminished or ceased at the location where the employee works.

By contrast, issues like attendance, capability or behaviour are usually not redundancy - they’re conduct or performance matters and should be handled under a fair performance or disciplinary process instead. If you’re actually ending employment for other reasons, follow a fair process for ending an employment contract fairly to avoid claims.

Two more points to keep in mind:

• Redundancy is about roles, not people. You should identify the role(s) to remove and then fairly select who’s affected based on objective criteria.
• Consultation matters. Even where a role is clearly disappearing, you must consult meaningfully before confirming a dismissal. Skipping consultation often leads to unfair dismissal findings.

Step-By-Step Process For Making Someone Redundant

Every business is different, but most lawful redundancy processes follow these core steps. Adapting these to your scale and circumstances will help you make robust, defensible decisions.

1) Build Your Business Case And Identify The “Pool”

Start with a clear rationale: why do you need fewer employees doing a particular kind of work? Capture the commercial background (e.g. loss of client, cost pressures, restructure) and your proposed new structure.

Then define the selection “pool” - the group of employees doing the same or similar work who could be affected. This pool might be a single job title or a broader set of roles with overlapping duties. Think carefully; setting an artificially narrow pool can be challenged as unfair.

2) Choose Fair, Objective Selection Criteria

If you have more employees in the pool than roles available, you’ll need objective criteria to score and rank. Common criteria include:

• Skills, qualifications and experience relevant to future needs
• Performance (based on evidence, not subjective impressions)
• Attendance records (excluding pregnancy- and disability-related absences)
• Disciplinary record

Avoid criteria that could be discriminatory (for example, penalising part-time status, maternity leave or disability-related absence). Under the Equality Act 2010, you must not discriminate on protected characteristics. Document your scoring method and retain evidence behind scores in line with data protection law.

3) Inform And Consult

Notify potentially affected employees in writing that they are at risk of redundancy and start consultation. Consultation must be meaningful - i.e. you’re genuinely considering feedback and alternatives before making final decisions.

Typical individual consultation looks like this:

• At Risk Meeting: Explain the business case, the selection pool and criteria, and what happens next.
• Provide Scores/Evidence: Share selection scores where used and invite comment.
• Explore Alternatives: Discuss suitable alternative roles, voluntary redundancy or reduced hours.
• Follow-Up Meetings: Consider representations and adjust proposals if appropriate.

If you propose 20 or more redundancies in one establishment within 90 days, you must carry out collective consultation (see the “Tricky Scenarios” section below) in line with the Trade Union and Labour Relations (Consolidation) Act 1992.

4) Seek And Consider Suitable Alternative Employment

You must take reasonable steps to find suitable alternative employment within your organisation (and group companies, if applicable). Share internal vacancies early and keep an open dialogue. A trial period of four weeks applies if someone accepts a potentially suitable alternative role; if the trial fails, they may still be redundant.

5) Decide, Confirm In Writing And Provide Appeal

After consultation, make your final decision. If redundancy is confirmed, issue a dismissal letter setting out:

• The reason for redundancy and the selection process used
• Notice period (worked or pay in lieu)
• Statutory and/or contractual redundancy pay
• Holiday pay and any other final payments
• Right of appeal and how to raise it

It’s sensible to offer an appeal to show procedural fairness. Where appropriate, you can also explore an agreed exit on terms via a settlement agreement (see “Documents” below).

6) Pay Entitlements And Issue Final Paperwork

Pay all sums due on time (notice pay, redundancy pay, holiday pay, expenses, etc.), provide P45s and update payroll. Keep accurate records of consultation notes, selection scoring, letters and payment calculations - these are essential if your process is later scrutinised.

If you’d like tailored guidance through each step - from letters to selection matrices - our team can help via Redundancy Advice.

Pay, Notice And Redundancy Entitlements

Employees with at least two years’ continuous service are generally entitled to statutory redundancy pay. You’ll also need to factor in notice (or pay in lieu), accrued but untaken holiday, and any contractual entitlements.

Statutory Redundancy Pay

For eligible employees, statutory redundancy pay is based on age, length of service (capped) and weekly pay (subject to the statutory weekly cap). The calculation is:

• 1.5 weeks’ pay for each full year of service aged 41 or older
• 1 week’s pay for each full year of service aged 22 to 40
• 0.5 week’s pay for each full year of service under 22

Only the last 20 years of service count, and there’s a statutory cap on weekly pay. Redundancy pay up to £30,000 is generally tax-free, but always check payroll implications at the time.

Your contracts or policies might promise more generous terms (often called enhanced redundancy pay). If so, you must follow those too.

Notice Pay And Holiday

• Notice: Provide statutory minimum notice (or contractual if higher). You can require employees to work their notice, place them on garden leave if your Employment Contract allows, or pay in lieu (PILON) if permitted.
• Holiday: Pay for accrued but untaken holiday up to the termination date.
• Deductions: Any deductions (for example, recovery of training costs or unreturned equipment) must be allowed by contract and be reasonable - check the rules on wage deductions before you act.

Tax And Timing

Pay in lieu of notice is usually taxable as earnings. Redundancy pay within the £30,000 exemption is typically tax-free, but other elements (holiday pay, bonuses) are not. Make sure payments are made promptly - delays around final pay can trigger avoidable disputes and breach of contract allegations.

If you’re weighing an ex gratia “severance” top-up to facilitate an agreed exit, ensure you’re clear on the difference between severance vs redundancy and structure the payment correctly.

Tricky Scenarios: Collective Consultation, Maternity, TUPE And Alternatives

Some redundancy situations carry extra duties or risks. Here are the big ones to watch.

Collective Consultation

If you propose to dismiss as redundant 20 or more employees at one establishment within a 90-day period, you must collectively consult with employee representatives (or a recognised union) under the Trade Union and Labour Relations (Consolidation) Act 1992. Key points:

• Minimum consultation periods apply (at least 30 days for 20–99 redundancies; at least 45 days for 100+).
• You must notify the Secretary of State (via form HR1) within set timescales.
• Failing to collectively consult can lead to a protective award of up to 90 days’ gross pay per affected employee.

Maternity, Parental Leave And Other Protected Situations

Extra care is needed where employees are pregnant, on maternity/shared parental/adoption leave, or have recently returned. The Equality Act 2010 prohibits discrimination, and special protections apply - for instance, those on maternity leave have priority for suitable alternative vacancies. Never use absence related to pregnancy or disability as a negative selection factor.

TUPE Transfers

If you’re buying or selling part of a business, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) may apply. Dismissals connected to the transfer are automatically unfair unless for an economic, technical or organisational (ETO) reason entailing changes in the workforce - and even then, a fair process is required. Get advice early if redundancies and TUPE are on the cards.

Alternatives To Redundancy

As part of meaningful consultation, explore options such as:

• Voluntary redundancy or early retirement
• Redeployment into suitable alternative vacancies
• Reducing overtime, job shares or part-time arrangements
• Temporary lay-off or short-time working (only if your contracts allow)

Showing that you genuinely considered alternatives strengthens the fairness of your process.

Documents You’ll Need (And Why They Matter)

Getting your paperwork right is just as important as the meetings you hold. The right documents create a clear audit trail and reduce the risk of disputes.

• Clear Contracts: Your Employment Contract should set out notice, garden leave, PILON, redundancy terms (if any), and deductions clauses (for company property, training costs, etc.).
• Policies And Procedures: A well-drafted Staff Handbook should include redundancy and consultation guidance, selection criteria principles, and equality/anti-discrimination policies.
• Letters And Forms: “At risk” letters, consultation invites, selection matrix and scoring record, redundancy dismissal letter, and an appeal template.
• Settlement Agreements: If you agree terms with an employee (e.g. enhanced payment in return for waiving claims), use a formal settlement agreement. We can prepare a robust Deed of Settlement tailored to your deal.
• Manager Guidance: A short playbook for managers covering what to say at each stage can help ensure consistency and fairness.

It can be overwhelming to draft all of this from scratch - getting a lawyer to tailor your pack to your risk profile and timelines is a smart move, especially where multiple redundancies are involved.

Key Takeaways

• Redundancy is about the role disappearing, not the person. Build a clear business case and define a fair selection pool before you start.
• Use objective, evidence-based criteria for selection and consult meaningfully - it’s not a tick-box exercise. Document every step.
• Search for suitable alternative employment and offer a trial where appropriate. This is a key part of a fair process.
• Pay the right entitlements on time: statutory (and any enhanced) redundancy pay, notice (worked, garden leave or PILON), and accrued holiday.
• Watch special rules for collective consultation, maternity/parental leave and TUPE. Extra duties and risks apply in these scenarios.
• Have the right documents in place - strong contracts, policies, letters and (where used) a settlement agreement - to protect your business.
• If you need a sanity check or hands-on support, our team can guide you through a compliant, practical process from start to finish.

If you’d like help planning or running a fair redundancy process, you can reach us for a free, no-obligations chat on 08081347754 or team@sprintlaw.co.uk. We can also support with broader workforce changes and exits beyond redundancy, including severance vs redundancy options and end-to-end ending employment fairly where redundancy isn’t the right route.