Your Complete Guide to Redundancy Rights in the UK

1. What is Redundancy?

Redundancy occurs when your employer needs to reduce their workforce or when your particular job role is no longer needed. Under UK employment law, redundancy is only genuine if:

Genuine Redundancy Situations

• Business closure: The business or workplace is closing down entirely
• Workplace closure: The specific location where you work is closing
• Reduced workforce: The business needs fewer employees to carry out the same work
• Work cessation: The particular kind of work you do is no longer needed

What Isn't Redundancy

Your employer cannot make you redundant simply because they're unhappy with your performance or want to replace you with someone else. If your job still exists and they're just changing who does it, that's likely unfair dismissal, not redundancy.

Who Qualifies for Redundancy Rights?

You qualify for statutory redundancy pay and full redundancy rights if:

• You've been continuously employed for at least 2 years
• You're an employee (not self-employed or a contractor)
• Your dismissal is due to genuine redundancy

Even if you've worked for less than 2 years, you're still entitled to proper notice and protection against discrimination.

2. Statutory Redundancy Pay Explained

Statutory redundancy pay is the legal minimum your employer must pay you if you're made redundant after 2 years of service. Many employers offer enhanced redundancy packages that exceed statutory minimums.

How Statutory Redundancy Pay is Calculated

The calculation is based on three factors:

• Your age: Affects the multiplier used in the calculation
• Your length of service: Each complete year of employment counts (up to 20 years maximum)
• Your weekly pay: Capped at £700 per week (as of 2026)

The Statutory Formula

For each complete year of service, you receive:

• 0.5 weeks' pay for years worked aged under 22
• 1 week's pay for years worked aged 22 to 40
• 1.5 weeks' pay for years worked aged 41 or older

Maximum Statutory Redundancy Pay

The maximum statutory redundancy payment is currently £21,000 (20 years × 1.5 weeks × £700 weekly cap). However, your employer may offer a more generous enhanced redundancy package with no legal maximum.

When You'll Receive Payment

Your redundancy pay should be paid on your last day of employment or during your notice period. It's usually paid as a lump sum and is typically tax-free up to £30,000.

3. Consultation Process and Your Rights

Your employer must follow a fair consultation process before making you redundant. The requirements depend on how many employees are being made redundant at the same time.

Individual Consultation (Fewer than 20 Redundancies)

If fewer than 20 people are being made redundant, your employer must:

• Inform you as early as possible that redundancy is being considered
• Explain why redundancies are necessary
• Provide information about how many people are affected
• Consult with you individually about ways to avoid redundancy
• Consider any proposals you make to avoid redundancy
• Offer you suitable alternative roles if available

Collective Consultation (20+ Redundancies)

If 20 or more employees are being made redundant at one establishment within 90 days, your employer must:

• Notify the government: Inform the Redundancy Payments Service before starting consultation
• Consult with representatives: Either trade union representatives or elected employee representatives
• Minimum consultation periods:
  • At least 30 days for 20-99 redundancies
  • At least 45 days for 100+ redundancies

What Should Happen During Consultation

Genuine consultation means your employer must:

• Listen to your ideas and concerns
• Respond to suggestions you make
• Consider alternatives to redundancy
• Discuss the selection criteria used
• Explain how redundancy pay will be calculated

Selection Criteria

If your employer is choosing which employees to make redundant (rather than closing an entire department), they must use fair, objective selection criteria such as:

• Skills and qualifications
• Experience and performance records
• Disciplinary records
• Attendance records

Selection criteria must not discriminate based on age, gender, disability, race, religion, sexual orientation, or pregnancy.

4. Notice Periods During Redundancy

When you're made redundant, you're entitled to a notice period before your employment ends. This is separate from redundancy pay.

Statutory Minimum Notice

By law, your employer must give you at least:

• 1 week's notice if you've worked for 1 month to 2 years
• 1 week per year of service if you've worked for 2+ years (up to 12 weeks maximum)

Contractual Notice

Your employment contract may specify a longer notice period. Your employer must honor whichever is longer—statutory or contractual notice. For example, if your contract states 3 months' notice and you've worked for 8 years, you get 3 months (not the statutory 8 weeks).

Pay in Lieu of Notice (PILON)

Your employer may pay you for your notice period instead of requiring you to work it. This is called "pay in lieu of notice." This payment is taxable and separate from your redundancy pay.

Working During Your Notice Period

During your notice period, you have the right to:

• Reasonable time off to look for work: You can take time off during working hours to search for a new job or attend interviews
• Time off for training: You may take time off to arrange or participate in training for future employment
• Continue receiving full pay: Your employer must pay you normally during your notice period

5. Unfair Dismissal and Discrimination

Even during redundancy, you're protected from unfair dismissal and discrimination. Your redundancy may be unfair if the real reason isn't genuine redundancy or if the process wasn't conducted fairly.

Signs of Unfair Redundancy

Your dismissal may be unfair if:

• The redundancy wasn't genuine (your job still exists or is filled by someone else)
• You weren't properly consulted
• The selection process was unfair or discriminatory
• You were selected due to an automatically unfair reason (see below)
• You weren't offered suitable alternative employment that was available

Automatically Unfair Reasons for Redundancy

It's automatically unfair to select someone for redundancy because of:

• Pregnancy, maternity, or adoption leave
• Taking or requesting parental leave
• Trade union membership or activities
• Being a health and safety representative
• Requesting flexible working
• Refusing to work Sundays (for shop and betting workers)
• Whistleblowing (reporting wrongdoing at work)

Discrimination During Redundancy

Your redundancy is discriminatory if you were selected because of a protected characteristic:

• Age
• Disability
• Gender or gender reassignment
• Marriage or civil partnership
• Pregnancy or maternity
• Race
• Religion or belief
• Sexual orientation

Challenging Unfair Redundancy

If you believe your redundancy was unfair, you can:

1. Raise a formal grievance with your employer
2. Seek ACAS early conciliation (free mediation service)
3. Submit a claim to an employment tribunal within 3 months (less 1 day) of your dismissal

If successful, you may receive compensation including loss of earnings, injury to feelings (for discrimination), and potentially reinstatement.

6. Settlement Agreements

Your employer may offer you a settlement agreement (previously called a compromise agreement) to resolve your redundancy without going to tribunal.

What is a Settlement Agreement?

A settlement agreement is a legally binding contract where:

• Your employer offers you a financial settlement (often more than statutory redundancy pay)
• You agree not to bring claims against them (e.g., for unfair dismissal)
• You waive most of your employment rights in exchange for the payment

Key Features of Settlement Agreements

• Legal advice required: You must receive independent legal advice from a qualified solicitor or advisor before signing
• Employer pays legal fees: Your employer typically pays £300-£500 toward your legal advice
• Tax treatment: Settlement payments are tax-free up to £30,000
• Confidentiality: Usually includes a confidentiality clause preventing you from discussing the agreement

Should You Sign?

Consider these factors before signing:

• Is the offer significantly better than your statutory entitlement?
• Do you have grounds to claim unfair dismissal or discrimination?
• Would going to tribunal potentially result in higher compensation?
• Do you want to avoid the stress and uncertainty of a tribunal claim?

Protected Conversations

Your employer may initiate a "protected conversation" (also called "without prejudice") to discuss settlement. These conversations cannot usually be referred to in tribunal unless you can prove improper behavior (discrimination, harassment, or undue pressure).

7. What to Do When Facing Redundancy

Follow this action plan to protect your rights and maximize your entitlement:

1. Get Everything in Writing

   Request written confirmation of the redundancy, the reasons, the consultation process, and how redundancy pay is calculated. Keep all emails, letters, and meeting notes.

2. Check Your Employment Contract

   Review your contract for notice period, redundancy terms, and any enhanced redundancy provisions. Check if your employer offers more than statutory minimums.

3. Calculate Your Entitlement

   Use our redundancy pay calculator to work out exactly what you should receive. Don't rely solely on your employer's calculations—verify them independently.

4. Engage Actively in Consultation

   Attend all consultation meetings, ask questions, suggest alternatives, and take detailed notes. Make sure consultation is genuine, not just a formality.

5. Ask About Alternative Roles

   Your employer must consider you for any suitable alternative vacancies. Ask about opportunities in other departments, locations, or at different grades.

6. Understand the Selection Criteria

   Request clarification on how employees were selected for redundancy. Check if the criteria are objective, fair, and non-discriminatory.

7. Seek Legal Advice if Needed

   If you suspect unfair dismissal, discrimination, or if offered a settlement agreement, consult an employment solicitor. Many offer free initial consultations.

8. Register for Benefits

   As soon as you know your leaving date, register for Universal Credit or Jobseeker's Allowance. There's often a waiting period, so apply early.

9. Update Your CV and LinkedIn

   Use your notice period to prepare job applications, update your CV, and network. Your employer must allow reasonable time off for job hunting.

10. Know Your Tribunal Deadline

    If you believe your redundancy is unfair, you have 3 months (less 1 day) from your termination date to submit a tribunal claim. Don't miss this deadline.