The redundancy process: step-by-step guide for UK employers

Making redundancies is never easy for you or your employees. But following a fair and lawful redundancy process protects your business, your people, and your reputation.
This guide explains how the redundancy process works in the UK, step-by-step, with practical advice to help employers stay compliant and compassionate.

What is redundancy?

Redundancy is a form of dismissal that happens when a role is no longer required.
Under the Employment Rights Act 1996, redundancy applies when:

• Your business, or part of it, closes.

• Work of a particular type ceases or diminishes.

• A workplace relocates or restructures, leaving fewer roles available.

It’s not the same as performance-related dismissal, and mishandling the process can expose your company to unfair dismissal claims, failure to consult, failure to pay statutory redundancy pay amongst others. That’s why it’s vital to follow the correct legal and procedural steps.

When does redundancy apply?

A redundancy situation exists when there’s genuinely less work of a particular kind, or a workplace is closing. Examples include:

• Business closure: the company or department is shutting down.

• Workplace relocation: the site moves and employees cannot reasonably commute.

• Restructuring: fewer people are needed to perform the same work.

• Technological change: automation replaces certain tasks.

Redundancy does not apply when an employee is dismissed for conduct, capability, or attendance These are dismissal reasons and are not treated as redundancy situations.

The redundancy process step-by-step

The law doesn’t prescribe one single method, but ACAS and CIPD outline best practice that every employer should follow. Here’s how to manage it fairly.

Step 1 — Identify the business case

Define clearly why redundancies are necessary.
Record the commercial or operational reasons such as a drop in demand or business closure, and document the alternatives you considered (retraining, redeployment, natural attrition).

Good record-keeping shows transparency.  Our document management system makes it easy to store consultation notes, letters, and selection data securely.

Step 2 — Begin consultation

Consultation means discussing the proposed redundancies with affected staff or their representatives before decisions are made.

• Individual consultation applies when fewer than 20 employees are affected.

• Collective consultation is required when 20 or more are at risk within 90 days at the same site. Employers must consult for a minimum of 30 days (45 days if 100 or more staff) and notify the government using an HR1 form.

The aim is to explore ways to avoid or reduce redundancies, and to support employees through change.

Step 3 — Develop fair selection criteria

If all roles are not redundant, you’ll need fair, objective selection criteria.
Typical examples include:

• Skills, qualifications, and experience.

• Performance or disciplinary record.

• Attendance history (excluding protected absences, such as maternity or disability-related leave).

Use a consistent scoring system and keep written evidence. This protects against discrimination claims and shows that the redundancy selection process was fair.

Step 4 — Provide notice & calculate pay

Once selections are final, employees must receive proper notice of redundancy and written confirmation.

Statutory notice periods depend on service length:

• Less than 1 month’s service – no statutory notice

• 1 month to under 2 years’ service – 1 week’s statutory notice

• 2 years or more – 1 week’s statutory notice for each full year of service, up to a maximum of 12 weeks

Statutory redundancy pay applies to employees with at least two years’ continuous service. It’s based on age, weekly pay (capped by government limits), and years of service.
Employers should also issue a redundancy letter outlining payment details and the leaving date.

If 20 or more redundancies are planned, you must inform the Insolvency Service (Redundancy Payments Service) using the HR1 form before giving notice.

Step 5 — Support employees leaving

Even after notice is served, you have duties of care. Offer:

• Suitable alternative roles where possible.

• Paid time off to look for work or attend interviews.

• Clear guidance on pay, benefits, and references.

Handle communication with empathy because how you treat leavers affects morale and your employer brand.

Legal obligations & compliance

Following a fair redundancy procedure isn’t just good practice, it’s a legal requirement under:

• Employment Rights Act 1996 (individual redundancies)

• Trade Union and Labour Relations (Consolidation) Act 1992 (collective consultation)

• ACAS Code of Practice (consultation and communication)

Employers must:

• Provide accurate redundancy notices.

• Keep consultation records.

• Ensure selection methods are objective and non-discriminatory.

For complex cases such as collective redundancies or restructures involving TUPE — seek professional legal or HR advice.

Simplify the redundancy process with BrightHR

Managing redundancies involves dozens of documents, letters, and consultations. HR software can reduce errors, speed up workflows, and ensure compliance.

With BrightHR, you can:

• Track consultation meetings and communications in one place.

• Generate legally sound redundancy letters and templates.

• Store employee records securely and access them anytime.

• Use checklists to stay compliant with ACAS timelines.

See how our HR software simplifies redundancy management