What Are My Rights If I Am Made Redundant?
Redundancy is a specific legal reason for dismissal. Employees with at least two years' service have the right to statutory redundancy pay and a fair selection and consultation process.
Quick Answer
If you are made redundant after at least two years' continuous employment, you are entitled to statutory redundancy pay, a minimum notice period (or pay in lieu), and a fair selection process. Your employer must also carry out meaningful consultation before making you redundant. If they fail to follow a fair process, you may have an unfair dismissal claim.
Full Explanation
Redundancy arises where an employer closes a business, closes a particular workplace, or requires fewer employees to do work of a particular kind. It is one of the five potentially fair reasons for dismissal under the Employment Rights Act 1996. However, a redundancy dismissal can still be unfair if the employer fails to follow a fair procedure.
The key legal requirements for a fair redundancy are: genuine redundancy (the reason for dismissal must genuinely be a reduced need for employees of that kind, not a cover for some other reason); fair selection (the pool of employees at risk must be reasonably defined, and selection criteria must be objectively applied — seniority alone is not sufficient); meaningful consultation with each affected employee (individual consultation is required regardless of the number of redundancies; collective consultation with trade unions or elected representatives is additionally required where 20 or more are made redundant within 90 days); and consideration of suitable alternative employment within the organisation.
Statutory redundancy pay is calculated using the same formula as the basic award for unfair dismissal: half a week's pay per year of service under the age of 22; one week's pay per year between 22 and 41; one and a half weeks' pay per year over 41. Weekly pay is subject to a statutory cap (currently £643 per week). Service is capped at 20 years. The payment is free of income tax.
If you are offered suitable alternative employment and unreasonably refuse it, you lose your right to statutory redundancy pay. If you accept the alternative role, you have the right to a four-week trial period; if you decide the role is unsuitable during the trial period, you can leave and still claim redundancy pay.
Note that in addition to statutory redundancy pay, you are also entitled to your full notice period (or PILON) and accrued holiday pay. Many employers offer enhanced redundancy terms above the statutory minimum — check your contract.
Legal Basis
- §Employment Rights Act 1996, sections 135–181 (redundancy payments)
- §Trade Union and Labour Relations (Consolidation) Act 1992, section 188 (collective consultation)
- §Employment Rights Act 1996, sections 94–98 (unfair dismissal by reason of redundancy)
What To Do
Request Written Confirmation and Reasons
Ask for a written redundancy notice stating the reason for selection, the notice period, and the amount of statutory redundancy pay you will receive. Also ask for details of the selection criteria used.
Attend Consultation Meetings
Engage meaningfully in the consultation process. Put forward any reasons why you should not be selected (e.g., your skills compared with others in the pool) and ask about any alternative roles in the organisation.
Check for Suitable Alternative Employment
Ask your employer to provide a list of all available vacancies within the organisation. You must be given the opportunity to apply and be seriously considered for any suitable roles before being made redundant.
Calculate Your Redundancy Entitlement
Use the government's online Redundancy Pay Calculator to check you are receiving the correct statutory amount. Include in your calculation all accrued holiday pay and your full notice entitlement.
Appeal and Consider Tribunal Claim
If the selection was unfair, consultation was inadequate, or the reason for redundancy is questionable, appeal internally and consider an unfair dismissal claim in the employment tribunal. The deadline is three months less one day from the date of dismissal.
Important Deadlines
Important Warnings
If you resign before being formally made redundant, you may lose your entitlement to statutory redundancy pay — wait for the formal process.
Accepting voluntary redundancy does not automatically bar a tribunal claim if the process was unfair — take advice before signing a settlement agreement.
Statutory redundancy pay is paid by the employer, not HMRC — if the employer is insolvent, you can claim directly from the Redundancy Payments Service.