Redundancy is one of the most challenging processes an employer can face. It often follows significant organisational change such as business closure, relocation, restructuring, or cost-saving measures, and is typically considered a last resort. Reaching the point of considering redundancy is the beginning of a process that must be handled with care, diligence, and legal compliance.

Starting with Policy and Compliance

Your internal redundancy policy should be your first reference point. It must align with current UK legislation, including the Employment Rights Act 1996 and updates under the Employment Rights Bill. If your policy is outdated or non-existent, seek professional advice to ensure compliance.

Establishing the Rationale and Exploring Alternatives

Before initiating any redundancy procedure, employers must clearly identify the business rationale, such as reduced need for specific roles or operational changes and document it thoroughly. Crucially, employers must also explore and evidence potential alternatives to redundancy.

Top Tip: Always consider and document alternative options.

Unionised Workforces and Collective Agreements

If your workforce is unionised, check for any collective agreements that may influence the redundancy process. Early engagement with union representatives is essential to ensure the process respects agreed terms and avoids disputes.

Selection Pools and Criteria

Identifying the appropriate pool of at-risk employees is critical. For a pool of one, a selection matrix may not be necessary. For larger pools, objective selection criteria such as skills, qualifications, performance, and attendance should be used consistently to select who may be made redundant.

Top Tip: Avoid criteria that could disadvantage employees with protected characteristics, such as disability-related absence. Discrimination in selection can lead to tribunal claims.

Consultation: The Cornerstone of Fair Process

Consultation is not a formality; it is a legal requirement and a vital opportunity to engage with affected employees. Employers must provide clear information about the reasons for redundancy, the selection process, and explore ways to avoid dismissals.

Individual Consultation is required for all redundancies and Collective Consultation is mandatory where 20 or more redundancies are proposed within 90 days at one establishment.

  • For 20 to 99 redundancies – Consultation must begin at least 30 days before any dismissals take effect.
  • For 100 or more redundancies – Consultation must begin at least 45 days before any dismissals take effect.

Top Tip: For collective consultation purposes, voluntary redundancies must be included when calculating the number of redundancy ‘dismissals’. And employers must notify the government via Form HR1 when proposing 20+ redundancies. Failure to do so is a criminal offence.

The Employment Rights Bill – Anticipated Changes

The Labour government has proposed wide-ranging changes to employment law, including to collective redundancies. These proposed changes, if implemented, would affect the law.

The government proposes to:

  • Make changes to the threshold for collective redundancy consultation and the obligation to notify the Secretary of State. These obligations will be triggered when an employer is proposing to make redundancies  within a period of 90 days:
    • 20 or more employees at one establishment; or
    • the threshold number of employees (to be specified in regulations)
  • Double the maximum protective award that can be made by an employment tribunal for failure to comply with collective consultation requirements (from 90 days to 180 days’ pay
  • When an employer is proposing to dismiss 100 or more employees, double the minimum time limit for starting collective consultation  from 45 to 90 days before the first dismissal takes effect.
Suitable Alternative Employment

Employers must actively seek and offer suitable alternative roles within the organisation or associated companies. This obligation is heightened for employees on maternity leave (and those in the protected period), who must be given priority in certain circumstances.

Top Tip: Ensure that employees on maternity leave, long term sickness absence, or similar, are adequately consulted. Also, consider whether reasonable adjustments are required in certain scenarios.

Financial and Legal Risks

Missteps in redundancy procedures such as flawed selection, inadequate consultation, or failure to consider alternatives can lead to employment tribunal claims, protective awards of up to 180 days’ pay, and reputational damage.

It’s crucial to ensure all entitlements are correctly calculated and paid, including notice pay, accrued holiday, and any enhanced redundancy packages. Errors here can compound legal risks and financial exposure.

Top Tip: Litigation can span years and cost significantly more than retaining employees. Investing in legal support early is a strategic decision.

Final Thoughts

Redundancy is never easy, but getting it right is essential. A legally sound, transparent, and empathetic approach protects your business and supports your people through change. If you’re considering a redundancy process and want to mitigate risk, speak to a member of our team today: EmploymentManchester@h-f.co.uk

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