The latest Labour Market Outlook, in which the CIPD polled more than 2,000 employers, found that a third (32%) of businesses planned to reduce their headcount through redundancies or by recruiting fewer staff. Redundancies are going to be a reality for many businesses as we travel through 2025. We have outlined the basics of redundancy as a legal concept below:

  • Fair reason for dismissal: Redundancy is a potentially fair reason for dismissal under UK employment law, but it must be handled correctly to avoid unfair dismissal claims.
  • Genuine redundancy situations: A redundancy situation arises when a business closes, relocates, or needs fewer employees to carry out certain work.
  • Consultation requirements: Employers must engage in meaningful consultation with affected employees. Failure to do so may result in claims for unfair dismissal. Several meetings are generally required.
  • No legal right to be accompanied: As redundancy dismissals are not concerned with capability or conduct, the legal right to be accompanied by a work colleague or trade union representative at consultation meetings does not arise. However, it is often good practice to allow employees to bring someone with them (and internal redundancy policies often offer this).
  • Collective consultation obligations: If 20 or more redundancies are proposed within a 90-day period, employers must consult with employee or trade union representatives and notify the government (by submitting an HR1 form). Liability for failure to collectively consult can be up to 90 days’ pay (uncapped).
  • Selection process: If a selection process is required, employers must use fair selection criteria, such as skills, qualifications, and performance. Discrimination must be avoided.
  • Alternative employment: As part of efforts to avoid redundancies where possible, employers must make employees aware of any vacancies available within the business. Employees who are pregnant, on family leave or who have recently returned to work following family leave, have a right of first refusal of any suitable alternative employment available.
  • Statutory redundancy pay: Employees with at least two years of service may be entitled to redundancy pay, calculated based on age, length of service, and weekly pay (subject to a cap). Some employers offer more generous contractual terms.
  • Notice Periods: Employers should give notice in line with contractual and statutory requirements.

Managing redundancies correctly ensures legal compliance and minimises risks while maintaining employee trust and morale.sions. The Claimant succeeded in an unfair dismissal claim as a result. 

Speak to Jon Dunkley

Jon is a Partner at Wollens and can advise you. Contact Jon via email jon.dunkley@wollens.co.uk or call 01271 341021.

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.