Redundancy Protection for UK Employers: Running a Fair Process

Restructuring is sometimes unavoidable. Whether you’re consolidating roles, automating tasks or closing a location, you may need to make certain roles redundant. When that happens, “redundancy protection” isn’t just about employees’ rights - it’s also about protecting your business by following a fair, compliant process that reduces legal and reputational risk.

In this guide, we’ll break down what redundancy protection means under UK law from an employer’s perspective, when the rules apply, and the practical steps to run a lawful process. We’ll cover consultations, selection criteria, priority protections (e.g. during pregnancy and family leave), suitable alternative employment, pay and paperwork - so you’re protected from day one.

What Does Redundancy Protection Mean For Employers?

At its core, redundancy protection is the framework of UK laws that govern when a role can be made redundant and the fair process you must follow. It exists to prevent unfair dismissals and discrimination, but it also protects your business if you follow it carefully.

Key legislation includes:

• Employment Rights Act 1996 (ERA 1996) - defines a genuine redundancy, sets out redundancy pay and unfair dismissal rules.
• Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) - collective consultation duties where 20+ redundancies are proposed within 90 days at one establishment.
• Equality Act 2010 - prohibits discrimination in selection, consultation and outcomes (e.g. disability, pregnancy, age).
• Protection from Redundancy (Pregnancy and Family Leave) Act 2023 - extends priority for suitable alternative vacancies to certain groups (more below).

Your goal is two-fold: (1) ensure there’s a genuine business reason and (2) run a fair, well-documented process. Done right, you’ll reduce the risk of unfair dismissal, discrimination and protective award claims. If you want guidance tailored to your business and timeline, it’s smart to get Redundancy Advice before you start.

When Do Redundancy Laws Apply?

Redundancy happens when you stop or reduce the need for work of a particular kind. Common scenarios include:

• Business closure (entirely or at a specific site).
• Reduced demand leading to fewer roles of a particular kind.
• Restructuring that removes or consolidates roles.
• Relocation where employees cannot reasonably move.

Under the ERA 1996, a redundancy dismissal is potentially fair if there’s a genuine redundancy and you follow a fair procedure. That usually involves identifying an appropriate “pool” of employees doing similar work, applying fair selection criteria, consulting meaningfully, and considering suitable alternative employment.

Two important thresholds to keep in mind:

• Individual consultation - applies in all redundancy cases (even one role).
• Collective consultation - if you propose 20 or more redundancies at one establishment within 90 days, you must collectively consult with elected reps or a recognised union. Minimum consultation periods apply (at least 30 days for 20–99 redundancies, at least 45 days for 100+). Failure can lead to a protective award of up to 90 days’ gross pay per affected employee.

If your initial objective is cost-saving but the business still needs the same work done, consider alternatives such as a contractual variation (with consent) to hours or duties rather than redundancy. Changing terms needs a fair process too, so take care and consider advice on changing employment contracts before you consult.

How To Run A Lawful Redundancy Process

A fair, well-documented process is your strongest redundancy protection as an employer. Here’s a practical, step-by-step approach that aligns with UK requirements and best practice.

1) Establish The Business Case

Be clear about why redundancies are proposed (e.g. loss of a contract, tech change, cost pressures). Document the commercial rationale and alternatives you’ve considered (hiring freeze, natural attrition, redeployment, reduced overtime). This forms the backbone of your consultation.

2) Define The Pool And Provisional Selection

Identify the group of employees who do the same or similar work. “Ringfencing” a role for a single person is risky unless only they perform that unique function. A thoughtful pool helps demonstrate fairness at tribunal. For provisional selection, develop objective criteria in advance and apply consistently.

3) Prepare Objective Selection Criteria

Criteria should be measurable and backed by evidence. Examples include:

• Skills, qualifications and experience relevant to future needs.
• Performance records (using documented appraisals, not subjective opinion).
• Attendance - avoid penalising disability-related or family leave-related absences.
• Disciplinary record - consider only live warnings.

A scoring matrix helps. Train managers on how to score fairly and keep records. Avoid criteria that could indirectly discriminate (e.g. “last in, first out” may disadvantage younger staff; attendance metrics can disadvantage disabled staff or those taking maternity/paternity leave).

4) Consult Meaningfully

Consultation must be genuine, not a rubber stamp. It should start while proposals are still at a formative stage and include:

• Clear explanation of the business case and selection criteria.
• Opportunity for employees (or reps) to comment and suggest alternatives.
• Consideration of redeployment and suitable alternative employment.

Where collective consultation applies, follow the statutory information requirements and timelines (and notify the Secretary of State using HR1).

5) Consider Suitable Alternative Employment

You must actively identify suitable alternative roles across your business (and group, where appropriate) and offer them to at-risk employees. Offers should be made in writing with enough detail for an informed decision. If the role is potentially suitable, a four-week statutory trial period may apply.

6) Confirm Outcomes And Provide Paperwork

If redundancies proceed after consultation:

• Invite the employee to a final meeting, confirm your decision, and offer the right of appeal.
• Issue a written outcome letter setting out the redundancy reason, selection, notice, redundancy pay, payment in lieu (if any), and the appeal process.
• Pay statutory or contractual redundancy and notice entitlements on time.

Using a clear process template and having consistent policies in your Staff Handbook will help demonstrate fairness and consistency.

Who Has Priority Or Special Protection In Redundancy?

Certain employees have enhanced protections you must factor in when consulting and offering alternative roles.

Pregnancy And Family Leave

Under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 and existing maternity/adoption/shared parental leave rules, employees who are pregnant or on relevant family leave have priority for suitable alternative vacancies. In practice, if a suitable role exists, you must offer it to them before others. From 2024, protection extends from the point the employee notifies you of pregnancy to 18 months after birth or placement (adoption) in many cases.

Disability And Reasonable Adjustments

Under the Equality Act 2010, avoid selection criteria that disadvantage disabled employees and consider reasonable adjustments in your process (e.g. how you assess attendance or performance, or how you present alternative roles).

Part-Time And Fixed-Term Workers

Part-time workers and fixed-term employees are protected against less favourable treatment. Apply your criteria consistently and avoid assumptions about availability or commitment based on working patterns.

Trade Union Representatives

Union reps and employee reps should not be selected for redundancy because of their representative duties. Make sure your scoring focuses on legitimate, job-related factors.

Selection Criteria, Scoring And Suitable Alternative Employment

Selection is where many employers face challenge. Your redundancy protection hinges on a fair scoring exercise and proactive redeployment.

Building A Robust Scoring Matrix

Keep it simple and evidence-based. Typical categories include:

• Skills/Qualifications - weight these toward the future structure you’re moving to.
• Performance - use recent, documented appraisals, KPIs, or objective outputs.
• Flexibility/Mobility - only where genuinely required for the future business model.
• Attendance - carefully exclude pregnancy-related, disability-related and family leave absences.

Document how each score was reached and keep the underlying evidence. During consultation, be prepared to explain and consider feedback on scores.

Offering Suitable Alternative Employment

“Suitability” considers the role’s status, pay, location, hours, and the individual’s skills. If it’s suitable and the employee unreasonably refuses, they could lose statutory redundancy pay. Conversely, if you fail to offer a suitable vacancy to someone with priority protection (e.g. during maternity protection), the dismissal can be unfair.

Practical tips:

• Search across the whole business (and group), not just the local team.
• Share role descriptions early and in writing; keep a log of what you offered and why.
• Use a four-week trial period where appropriate to test fit without losing rights.

Redundancy Pay, Notice And Documentation

Getting the numbers and paperwork right is a key part of redundancy protection for your business.

Notice And Effective Date

Provide statutory or contractual notice, whichever is higher. You can ask employees to work their notice or make a payment in lieu (if allowed under the contract). The effective date of termination (EDT) affects time limits for claims and pay calculations, so make it clear in writing.

Redundancy Pay

Eligible employees with at least two years’ continuous service are entitled to statutory redundancy pay based on age, length of service and weekly pay (subject to the statutory cap). Some businesses offer contractual or enhanced redundancy pay - if so, apply it consistently and document the terms.

Holiday, Bonuses And Deductions

Calculate and pay accrued but untaken holiday. Consider bonuses or commissions according to the scheme rules. Avoid unilateral deductions from pay unless you have clear written authority and a lawful basis.

Letters, Templates And Settlement

Issue clear at-risk letters, consultation invitations, outcome letters and appeal responses. Where appropriate, you may resolve claims or exit terms using a Deed of Settlement (often used with a legal adviser for the employee so the settlement is binding). For a broader process checklist, see ending an employment contract fairly.

Having robust contracts and policies in place from the start also helps. Ensure your Employment Contract and Staff Handbook cover key terms (notice, PILON, mobility, lay-off/short-time where appropriate, and redundancy procedure).

Common Pitfalls That Put Employers At Risk

Even with good intentions, certain missteps can undermine your redundancy protection and lead to costly claims. Watch out for:

• Pre-determination - announcing decisions before consultation or ignoring employee feedback.
• Poor pooling - selecting only one person when others do similar work; not considering “bumping” (placing a more senior employee at risk and retaining a junior) where appropriate.
• Subjective scoring - relying on gut feel instead of evidence; not training scorers.
• Ignoring priority protections - failing to offer suitable vacancies to employees with pregnancy or family leave protections.
• Attendance pitfalls - counting disability-related or family leave-related absence against someone’s score.
• Collective consultation breaches - missing the 20+ threshold, failing to consult reps, or not filing HR1 (risking a protective award).
• Inconsistent terms and payments - miscalculating redundancy or holiday pay, or missing contractual entitlements when the business is closing. If you’re winding down completely, check employee entitlements in the context of employee rights when a company closes down.

If things become complex - for example, overlapping TUPE issues, a group-wide redeployment search, or union engagement - getting early Redundancy Advice can save time and reduce risk.

Key Takeaways

• Redundancy protection is as much about protecting your business as it is about employees’ rights - have a genuine business reason and follow a fair, well-documented process.
• Consultation is critical. Start early, share your rationale and criteria, listen to feedback, and actively look for suitable alternative employment.
• Use objective, evidence-based selection criteria and avoid discriminatory impacts, especially around disability, pregnancy and family leave.
• Understand priority protections: employees who are pregnant or within the extended family-leave protection window often have first call on suitable alternative roles.
• Get the numbers and documents right - notice, redundancy pay, holiday pay and clear letters. Consider a Deed of Settlement where appropriate to conclude matters cleanly.
• If you are changing roles or hours instead of removing them, run a proper process and secure consent to variations - see guidance on changing employment contracts.
• Set yourself up for success by maintaining a strong Employment Contract and Staff Handbook so your procedures are clear and consistent before issues arise.

If you’d like tailored help to plan or run a compliant redundancy process, you can reach our team on 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.