The 9-Step Legal Redundancy Process

Making redundancies is one of the highest-risk decisions a business can make. Get the process right and you’re protected. Get it wrong — skip a step, rush a consultation, or apply scoring inconsistently — and you’re exposed to an unfair dismissal claim that could cost you far more than the redundancy itself.

This guide walks through every step of the legally compliant redundancy process in order. Follow it, document it, and you give your business the strongest possible defence if a claim is ever made against you.

Step 1 — Establish a Genuine Redundancy Reason

Before anything else, you must be clear that the reason for redundancy is a genuine business need — reduced demand, a site closure, a restructure, or a role that no longer exists. Redundancy cannot be used to manage out an underperforming employee or resolve a workplace conflict. Using it for any reason other than a genuine business need is automatically unfair dismissal, regardless of how the rest of the process is handled.

Document the business reason clearly and in writing before you begin. This becomes your first line of defence if the decision is ever challenged.

Step 2 — Identify the Pool for Selection

Define the pool — the group of employees from which redundancy selections will be made — before any individual is assessed. The pool must be drawn fairly and logically. If multiple employees carry out the same or similar roles, all of them should be in the pool. Artificially narrowing the pool to target a specific individual is one of the most common employer mistakes — and one of the easiest for a tribunal to spot.

Step 3 — Set Fair, Objective Selection Criteria

Every employee in the pool must be scored against criteria that are documented, objective, and consistently applied. Skills, qualifications, attendance records, and performance appraisals are acceptable. Personal opinions, informal assessments, or criteria that disproportionately affect protected groups are not. Set the criteria before you begin scoring — not after — and keep a written record of every score.

Failure to apply objective selection criteria is one of the leading causes of successful tribunal claims against employers.

Step 4 — Hold Individual Consultation Meetings

Consultation must be genuine, not procedural. You are required to meet individually with every at-risk employee — at minimum twice — before any final decision is made. In those meetings, you must listen to their responses, consider alternatives they propose, and be genuinely open to changing the outcome. Rushing this process, holding a single brief meeting, or issuing notice without meeting at all exposes your business to an unfair dismissal finding regardless of how sound your underlying business reason was.

Employees have the right to be accompanied to consultation meetings by a trade union representative or a work colleague.

Step 5 — Collective Consultation (20 or More Redundancies)

If your business is proposing 20 or more redundancies within a 90-day period, additional statutory obligations apply. You must:

Notify the Redundancy Payments Service (formerly BERR) using form HR1 before individual notices are issued

Collectively consult with elected employee representatives for a minimum of 30 days (45 days for 100+ redundancies)

Allow representatives meaningful participation — not token involvement

Failing to notify the government or to complete collective consultation can result in a Protective Award of up to 90 days’ gross pay per affected employee — paid by your business, not the state.

Step 6 — Consider and Offer Suitable Alternative Employment

Before you confirm any individual’s redundancy, you must check whether suitable alternative roles exist anywhere within your organisation — including related companies or subsidiaries. If a suitable role exists and you fail to offer it, the redundancy is likely to be unfair. The employee is entitled to a four-week trial period in any alternative role without forfeiting their redundancy pay entitlement if the role proves unsuitable.

Keep a written record of every alternative role considered and why each was or wasn’t offered.

Step 7 — Issue Formal Redundancy Notice

Once consultation is complete and the decision is confirmed, issue the formal notice in writing. The notice must state the termination date, the notice period, and how and when all payments will be made. Ensure the notice period meets both contractual and statutory minimums — whichever is longer applies.

Step 8 — Calculate and Pay All Amounts Owed

Every redundant employee is legally entitled to receive: their statutory or enhanced redundancy pay, any outstanding salary, accrued but untaken holiday pay, and pay in lieu of notice if applicable. Provide a written itemised breakdown of all payments. Underpaying — even by error — is a breach of the employee’s legal rights and adds fuel to any subsequent tribunal claim. The first £30,000 of redundancy pay is tax-free.

Step 9 — Handle the Right of Appeal

Every employee must be offered the right to formally appeal the redundancy decision. This is not optional. Under the ACAS Code of Practice, a failure to offer or honour the right of appeal can result in any tribunal compensation being increased by up to 25%. Hold the appeal meeting promptly, consider the grounds properly, and issue a written outcome. Even when you uphold the original decision, a well-run appeal process demonstrates procedural fairness and significantly strengthens your legal position.

Protecting Your Business Starts Here

Follow every step, document every decision, and your business is protected.