Redundancy Rights in the UK: What You Actually Need to Know

I am not a solicitor. I need to say that upfront because if i don't, someone will sue me, which would be ironic given the subject matter.

What i am is someone who's been through redundancy, who now consults with companies going through restructurings, and who has spent a lot of time reading employment law that was clearly written by people who are paid by the word. I'm going to translate it into English.

This is about UK law specifically. If you're in the US, you'll want our US layoff rights guide instead, because it's a completely different system. In the UK, you actually have rights. Quite a lot of them, in fact.

What redundancy actually is (legally)

Redundancy has a specific legal meaning. It means your job has ceased to exist or is expected to. The company is closing, or the workplace is closing, or there's a reduced need for employees doing your type of work.

This matters because if they're making you "redundant" but then immediately hiring someone else to do the same job... that's not redundancy. That might be unfair dismissal dressed up in a redundancy costume, and that changes everything.

Statutory redundancy pay

If you've worked for your employer for at least two continuous years, you're entitled to statutory redundancy pay. Here's how it's calculated:

• Half a week's pay for each full year you were under 22
• One week's pay for each full year you were between 22 and 40
• One and a half weeks' pay for each full year you were 41 or older

Weekly pay is capped (currently at £700, but check the latest figure as it goes up each year). Maximum service counted is 20 years.

So if you're 45, earning well above the cap, and you've been there 10 years, your statutory redundancy pay would be: 5 years at one week's pay plus 5 years at one and a half weeks' pay = 12.5 weeks at £700 = £8,750.

Not exactly life-changing money. Which is why enhanced redundancy pay exists and why negotiating your package matters so much.

Notice periods

You're entitled to a statutory minimum notice period based on length of service:

• One week if you've been employed between one month and two years
• One week for each year of service if you've been employed between two and twelve years
• Twelve weeks if you've been employed for twelve years or more

Your contract might give you a longer notice period than this. If so, the contractual period applies. If your contract says three months' notice, you get three months even if statutory would only give you four weeks.

Notice can be worked, or the employer can pay you in lieu of notice (PILON). There are tax differences. Garden leave is another option. These things are all negotiable.

The process they're supposed to follow

This is where companies frequently get it wrong, and where your protection lives.

Consultation. If 20 or more employees are being made redundant at one establishment within 90 days, there must be collective consultation. For 20-99 redundancies, consultation must begin at least 30 days before the first dismissal. For 100 or more, it's 45 days. This consultation must be with appropriate representatives (trade union reps or elected employee reps).

Even if it's fewer than 20 people, there should be individual consultation. Your employer should:

• Warn you that your role is at risk
• Explain why redundancies are necessary
• Consult with you about alternatives
• Apply fair selection criteria if choosing between people
• Consider suitable alternative employment within the company

Selection criteria. If they're choosing who goes and who stays, the criteria must be objective and fair. Things like length of service, skills, qualifications, performance records, and attendance can be used. Things like "we just don't like Karen" cannot.

Suitable alternative employment. Your employer must consider whether there are other roles in the organisation you could do. If they offer you a suitable alternative and you unreasonably refuse it, you could lose your redundancy pay. "Suitable" is doing a lot of work in that sentence though. A role with significantly lower pay, a different location requiring a two-hour commute, or fundamentally different duties might not be "suitable" at all.

When redundancy might be unfair

Redundancy is a potentially fair reason for dismissal under UK employment law. But the redundancy can still be unfair if:

• The selection process was biased or arbitrary
• There was no real consultation
• They didn't look for alternative roles for you
• The real reason for your dismissal isn't redundancy at all
• You were selected because of a protected characteristic (age, sex, race, disability, pregnancy, etc.)
• You were selected for whistleblowing or asserting statutory rights

If you think your redundancy might be unfair, you need to act reasonably quickly. There's a three-month time limit (less one day) from the date of dismissal to bring a claim to an employment tribunal. Before you can do that, you usually need to go through ACAS early conciliation first.

Tax on redundancy payments

The first £30,000 of a genuine redundancy payment is tax-free. This includes statutory redundancy pay and most enhanced redundancy payments.

However, payments in lieu of notice (PILON) are usually taxable. So is any contractual redundancy pay that exceeds £30,000. Holiday pay, bonus payments, and other contractual entitlements are all taxable as normal earnings.

How the payment is structured can significantly affect how much you actually receive. This is one of the main reasons to get proper advice before signing anything.

The settlement agreement

Many employers will ask you to sign a settlement agreement (formerly called a compromise agreement). This is a legally binding contract where you agree not to bring any claims against the employer in exchange for a payment, usually above what you'd get through statutory redundancy alone.

For a settlement agreement to be valid, you must receive independent legal advice. The employer usually contributes towards this cost (typically £350-500 plus VAT).

Settlement agreements are a negotiation tool. The first version is rarely the final version. Read our severance negotiation guide before you sign one.

Where to get help

ACAS (Advisory, Conciliation and Arbitration Service) has a free helpline and loads of guidance. They're genuinely helpful and free.

Citizens Advice can help with understanding your rights and next steps.

An employment solicitor is worth the money if you think something isn't right. Many offer free initial consultations.

Your trade union, if you're a member, should be your first call. If you're not a member and you've never thought about joining one... well, hindsight is a wonderful thing.

The one thing to do today

Get a copy of your employment contract. The actual document, not what you remember it saying. Read it. Look at the notice period, any enhanced redundancy provisions, restrictive covenants, and anything about change of terms. If you can't find it, ask HR for a copy. You're entitled to one.

If redundancy is already happening, save that contract to your personal device. You might need it and you might not have access to company systems for much longer.