Making staff redundant in the UK is one of the most legally exposed decisions an employer can make. Get the process right and you navigate a difficult situation cleanly. Get it wrong and you are facing an unfair dismissal claim, a discrimination tribunal, or a compensation award that runs into six figures. Employment tribunals are not looking for a perfect process, but they do expect one that is genuine, fair, and documented, and that distinction matters enormously.

This UK guide to making staff redundant covers every stage of the process: from establishing a genuine business need through to issuing the correct notice and calculating final pay. There are defined legal steps that must be followed in a specific order, and skipping any one of them is where most claims begin. If you are starting this process without specialist support, this guide will tell you what to expect at each stage.

What makes a redundancy legally valid in the UK

The three qualifying situations under the Employment Rights Act

A redundancy is only legally valid if it falls into one of three situations defined by the Employment Rights Act 1996: the whole business is closing; the specific workplace where the employee works is closing; or the need for employees to carry out a particular kind of work has diminished or ceased. That last category covers most restructuring scenarios, such as a company automating a function, losing a major contract, or reorganising its service delivery.

What redundancy is not is a convenient mechanism for removing a difficult employee. If the genuine reason is poor performance or conduct, using redundancy as a shortcut strips you of the legal protections the redundancy process provides and converts a manageable situation into an unfair dismissal. Tribunals examine this closely, and they are good at spotting it.

Employees need two years’ continuous service to qualify for statutory redundancy pay. However, your consultation obligations apply regardless of service length. Every affected employee deserves a fair process, even if they are not entitled to a statutory payment at the end of it.

Why documenting the business case matters from day one

The business rationale for making roles redundant must be genuine, documented, and defensible. A tribunal will examine this before it looks at anything else. Write a clear internal document explaining why the role or roles are no longer needed, what changed in the business, restructuring, reduced workload, financial pressure, and when that change was identified.

A written business case is not a legal requirement, but in practice it is the single most useful piece of evidence you can have in a tribunal defence. It shows the decision was business-driven, not personal, and it anchors every subsequent step of the process to a legitimate commercial reason.

Making staff redundant in the UK: setting up the selection pool and scoring fairly

Choosing objective, measurable selection criteria

Fair selection criteria are job-related, objective, and applied consistently to everyone in the pool. Widely accepted criteria include skills and qualifications relevant to the remaining work, recent performance backed by appraisals, attendance records, and disciplinary record. Length of service can be included, but using it as the sole criterion creates age discrimination risk and should be avoided.

One critical point on attendance scoring: you must exclude protected absences. Absences related to pregnancy, maternity, disability, adoption, shared parental leave, or time off for dependants cannot be counted against an employee. Including them will layer a discrimination claim on top of the redundancy claim, and discrimination compensation is uncapped.

Using a scoring matrix and keeping the evidence trail

A straightforward scoring matrix is your best protection in a tribunal. List the criteria, assign points on a defined scale, 1 to 10 works well, and define what each score means in advance so that scoring is consistent across managers. Where possible, have more than one manager carry out the scoring independently. Wherever there is a score, there must be a document to support it: an appraisal for performance, an attendance record for absence, a training certificate for skills.

The matrix demonstrates that the decision was process-driven and not based on personal preference. At ShrewdHR, our consultants work with employers to build selection criteria that are both fair and defensible, so that if the scoring is ever challenged, the evidence trail holds up to scrutiny.

Running consultations: what the law actually requires

Individual consultation: what must happen before any notice is issued

For fewer than 20 redundancies, there is no fixed statutory minimum consultation period. However, that does not mean a single meeting is sufficient. Genuine consultation means explaining the reason for redundancy, sharing the selection outcome, discussing alternatives, and giving the employee a real opportunity to respond before any final decision is made. Consultation must happen before the decision is final, not as a formality afterwards, and the word “genuine” carries real legal weight here.

The employee has the right to be accompanied to consultation meetings by a colleague or trade union representative. Keep notes of every meeting, including what was said on both sides. These notes become part of your documentary evidence if the process is later challenged.

When collective consultation obligations apply

If you propose 20 or more redundancies at one establishment within a 90-day period, collective consultation rules are triggered. The minimum periods before any dismissal can take effect are 30 days for 20 to 99 redundancies, and 45 days for 100 or more. You must also notify the Insolvency Service by submitting form HR1 online before the consultation period begins. Failure to notify is a separate criminal offence under the Trade Union and Labour Relations (Consolidation) Act 1992 and is treated as distinct from the consultation obligation itself.

Collective consultation runs alongside individual consultation; it does not replace it. Both must happen. Collective consultation must address ways to avoid redundancies altogether, reduce the numbers affected, and mitigate the consequences through measures such as redeployment or retraining. Employee representatives must be meaningfully involved throughout.

Calculating statutory redundancy pay and notice correctly

The 2026 statutory redundancy pay formula

For redundancies with an effective date on or after 6 April 2026, the weekly pay cap is £751 and the maximum statutory redundancy payment is £22,530. Weekly pay is calculated as the gross average over the 12 weeks before notice was given. The multiplier then depends on the employee’s age during each year of service: under 22 attracts half a week’s pay per year; 22 to 40 attracts one week per year; 41 and over attracts one and a half weeks per year. Only the last 20 years of service count.

To make the formula concrete: take an employee aged 45 with eight years’ service and a weekly pay of £600. If the employee turned 41 four years into that eight-year service period, four years fall into the 41-and-over band (at 1.5 weeks each) and four years fall into the 22, 40 band (at one week each). That gives six weeks plus four weeks, totalling 10 qualifying weeks, multiplied by £600, a statutory payment of £6,000. Where contractual redundancy pay exceeds the statutory amount, you must honour the higher figure.

Redundancy notice periods and how service length determines them

Statutory notice periods run as follows: one week for service of one month to two years; one week per full year of service for two to 12 years; and a maximum of 12 weeks for 12 years or more. If the contract of employment provides a longer notice period, that contractual period applies. An employee can work their notice, be placed on garden leave, or receive payment in lieu of notice where the contract permits it. Whatever route you choose, document it clearly in writing.

Alternatives to redundancy you must consider and document

What alternatives to explore before issuing any notice

UK employment law expects employers to genuinely consider alternatives before making roles redundant. Failure to do so can render a dismissal unfair even when the underlying business need is entirely real. The alternatives to examine include:

• a recruitment freeze
• redeployment into suitable vacancies
• retraining for a different role
• reducing or stopping overtime
• temporary lay-offs or short-time working
• flexible or reduced hours
• job shares
• voluntary redundancy
• unpaid career breaks
• secondments

Not every option will be viable for every business, and you are not required to implement every alternative you consider. The key question tribunals ask is whether the employer properly considered alternatives, not whether those alternatives were ultimately adopted.

Documenting your decision trail to protect the business

For each alternative considered, keep a written note of what the option was, why it was accepted or rejected, and any employee responses during consultation. This record does not need to be lengthy. A clear, factual summary of what was discussed and decided is enough. What it must not be is absent. This document trail is what separates a process that holds up at tribunal from one that falls apart at the first question.

Why the process falls apart, and when to bring in expert support

The mistakes that most commonly lead to tribunal claims

The errors that generate claims follow a familiar pattern. Each one is straightforward to avoid with the right preparation, yet each is also common enough to appear regularly in tribunal decisions:

• Using redundancy to remove a difficult employee rather than addressing a genuine business need.
• Running consultation after the decision has already been made, rather than before.
• Applying selection criteria that inadvertently discriminate on the basis of age, disability, or pregnancy.
• Getting the redundancy pay calculation wrong.
• Issuing the wrong notice period.

Any one of these errors can turn a straightforward redundancy into a costly dispute. An employment tribunal for unfair dismissal can award a compensatory payment capped at the lower of £123,543 or 52 weeks’ gross pay, on top of the basic award. Discrimination claims carry no statutory cap. A process that costs a few hours of HR support to run correctly can avoid substantial tribunal awards and legal costs that would otherwise follow.

When specialist HR support changes the outcome

A straightforward, single-employee redundancy is manageable with careful preparation and the right documentation. When multiple employees are involved, service histories are complex, or there is any doubt about whether selection criteria are defensible, the risk increases substantially. That is where the difference between generic advice and specialist support becomes most visible.

Businesses that work with ShrewdHR are assigned a named consultant who understands their business and can guide every stage of the process with consistency. If you are approaching a redundancy and want to be certain you are doing it correctly, speaking to a specialist HR consultant before you start is likely to be one of the most cost-effective decisions you make. Get in touch with the ShrewdHR team to talk through your situation before you take the first step.

Making redundancy in the UK: the process in brief

This UK guide to making staff redundant follows a clear sequence: establish the genuine business need and document it; define the selection pool and apply objective scoring criteria; run a meaningful consultation before any decision is finalised; calculate pay and notice accurately using the correct formula; consider and record alternatives; and keep a documented trail throughout. That is the framework the law expects.

Employment tribunals are not looking for a perfect process. They are looking for one that was fair, genuine, and treated affected employees with honesty and respect. The documentation you build at every stage is your evidence that it happened that way. Without it, a tribunal will draw its own conclusions.

For employers who want consistent, hands-on support from a named consultant, Shrewd HR provides expert guidance through every step of the redundancy process. The earlier you bring that support in, the easier every stage becomes.