Advice hub. Understanding redundancy.

Redundancy can take place when an employer needs to reduce its workforce, resulting in the dismissal of one or more members of staff. There needs to be a valid and lawful reason for redundancies to take place, such a downturn in business levels or the closure (or partial closure) of the company, sale of the company or the relocation of the company.

Whatever the reason for the redundancy, the employer must ensure that it follows a fair and lawful process. Employees, for instance, cannot be selected for redundancy on the basis of their sex, sexual orientation, race, disability, religion, pregnancy or for being a member of a trade union. Failure to observe the necessary requirements could lead to a claim for unfair dismissal.

Anyone who is at risk of redundancy is entitled to statutory redundancy pay if they have worked for their employer for two years or more. This amounts to half a week’s pay for each full year worked under the age of 22, one week’s pay for each full year worked between the ages of 22 and 40, and one and a half week’s pay for each full year worked at the age of 41 or older. Length of service is capped at 21 years. From 6 April 2022, the maximum statutory pay for a week is £571, with the maximum total statutory redundancy pay standing at £17,130. To calculate statutory redundancy payments, visit: Bear in mind that some contracts of employment will entitle staff to more enhanced redundancy payments.

A fair and lawful redundancy process should ensure: