Statutory redundancy pay and a fair process.

Who qualifies

An employee generally qualifies for statutory redundancy pay if they have at least two years' continuous service and their role is genuinely redundant — the work has stopped, reduced, or the workplace is closing. Agency workers and the genuinely self-employed do not qualify. Employees who unreasonably refuse a suitable alternative role can lose the entitlement.

How the calculation works

• Half a week's pay for each full year of service while under 22.
• One week's pay for each full year of service while aged 22 to 40.
• One and a half weeks' pay for each full year of service while 41 or over.
• Service is capped at 20 years, and weekly pay is capped at the statutory limit in force on the date of dismissal.

Notice and pay in addition

Redundancy pay is separate from notice. Employees are entitled to at least one week's notice for each full year of service, up to 12 weeks, or their contractual notice if longer. They must also be paid for any accrued untaken holiday. Statutory redundancy pay itself is normally tax-free up to £30,000 when combined with other qualifying termination payments.

Consultation duties

• For any redundancy, consult meaningfully with the individual before a decision is made.
• If 20 or more redundancies are proposed at one establishment within 90 days, collective consultation rules apply and there are minimum consultation periods.
• If 100 or more are proposed, the minimum consultation period is longer again.
• Failing to consult properly is one of the most common reasons redundancies are found unfair.

A defensible process

1. Confirm there is a genuine redundancy situation and record the business reason.
2. Define the selection pool fairly and use objective, evidenced criteria.
3. Write to affected employees setting out the proposal and invite them to consult.
4. Hold consultation meetings, consider alternatives and suggestions properly.
5. Search for suitable alternative employment throughout.
6. Confirm the outcome in writing with the calculation, notice and right of appeal.

Common mistakes

• Deciding first and consulting afterwards.
• Selection criteria that are vague or applied inconsistently.
• Forgetting to consider alternative roles elsewhere in the organisation.
• Using redundancy to remove a performance problem — that is a different process.

Want a hand with this?

Redundancy is one of the easiest processes to get wrong. We can run it with you end to end — pool, criteria, consultation script, letters and calculations.

Important: This guide is general information only and does not replace legal advice on your specific situation. Rules and official guidance change, so always check the latest guidance before making employment decisions.