Redundancy is on the rise: 9 essentials for employers

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

What do employers need to know?

1. 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.
2. What is a legal redundancy situation?
   A redundancy situation arises when a business closes, relocates, or needs fewer employees to carry out certain work.
3. 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.
4. No legal right to be accompanied
   As redundancy dismissals are not concerned with capability or conduct, there is no legal right to be accompanied by a work colleague or trade union representative at consultation. However, it is often good practice to allow employees to bring someone with them (and internal redundancy policies often offer this).
5. 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).
   
   Beware — Liability for failure to collectively consult can be up to 90 days’ pay (uncapped).
6. Selection process
   If a selection process is required, employers must use fair and objective selection criteria – e.g. skills, qualifications, and performance. Discrimination must be avoided.
7. Offer 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.
8. 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.
9. 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.

Further reading

• Redundancy — Your rights – Gov.uk
• Labour Market Outlook — CIPD
• EAT stresses the need for proper consultation in redundancy cases – Hunter Law
• 10 things you should know about notice periods and notice pay – Hunter Law
• Unfair dismissal: Employee conduct shouldn’t always impact compensation – Hunter Law
• Employment Rights Bill – Top 8 significant changes – Hunter Law