What is Redundancy? | HR Glossary

Many employers offer enhanced redundancy pay above the statutory minimum; this is contractual and must be applied consistently to avoid discrimination claims.

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Redundancy is the termination of employment because a role is no longer needed — not because of the employee’s performance or conduct. Under UK law (Employment Rights Act 1996), redundancy is a distinct dismissal category with statutory pay and collective consultation rights. The equivalent US term is reduction in force or layoff.

What redundancy means in practice

Three business situations qualify as genuine redundancy under ERA 1996:

Cessation of business — the employer stops trading entirely.
Cessation at a location — the employer closes or relocates a specific site.
Reduction in workforce requirements — the employer needs fewer people to do work of a particular kind, whether through automation, reorganisation, or declining demand.

The third situation covers most enterprise redundancy programmes: restructuring that reduces headcount in a function without closing the business. Courts look at whether the requirement for the work itself has diminished, not simply whether the employer has repackaged job titles. An employer who dismisses 20 employees and rehires 20 contractors for identical work faces challenge on genuine redundancy grounds.

Redundancy vs layoff: UK, US and EU comparison

Terminology differs by jurisdiction. US employers use “layoff” where UK employers say “redundancy.” The legal frameworks behind these terms vary substantially.

Dimension	UK (ERA 1996 / TULRCA 1992)	US (WARN Act / at-will)	EU (Collective Redundancy Directive 98/59)
Term	Redundancy	Layoff / reduction in force (RIF)	Collective dismissal / retrenchment
Trigger for collective process	20+ redundancies at one establishment in 90 days	100+ employees; 50+ affected at one site in 30 days	Varies by member state (typically 10-30+)
Minimum notice to government	HR1 form to BEIS; 30 or 45 days before first dismissal	WARN notice 60 days before	Competent authority notification required
Consultation period (collective)	30 days (20-99); 45 days (100+)	No mandatory consultation; notice only	Defined by national law; typically 15-30 days
Statutory severance	Yes — formula based on age, service, weekly pay	No federal requirement (contractual or voluntary)	Varies by member state
Individual consultation required	Yes — even for 1 employee; min 1-2 meetings	No federal requirement	Information and consultation rights apply
Failure penalty (collective)	Protective award up to 180 days’ gross pay (from April 2026)	60 days’ pay + benefits per employee	National penalties apply

The UK framework is substantially more prescriptive than US federal law on individual consultation and statutory pay. Enterprise HR teams operating across both jurisdictions must maintain separate redundancy protocols and avoid applying US at-will assumptions to UK employees.

UK legal framework

Employment rights act 1996

ERA 1996 establishes the right not to be unfairly dismissed for redundancy, minimum notice entitlements (one week per year of service, up to 12 weeks), and the statutory redundancy pay formula. Employees qualify after two years of continuous service. Dismissal before two years still requires a fair process to avoid wrongful dismissal, but statutory redundancy pay does not apply.

Tulrca 1992 — collective redundancy

The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), Part IV, Chapter II, governs collective redundancy consultation. The trigger is 20 or more redundancies at one establishment within 90 days. Obligations:

Notify the Secretary of State via HR1 form before consultation begins.
Consult with elected employee representatives or recognised trade union representatives.
Consultation must begin 30 days before the first dismissal for 20-99 redundancies; 45 days for 100 or more.
Consultation must cover ways to avoid redundancies, reduce numbers, and mitigate consequences.

From 6 April 2026, the Employment Rights Act 2025 increases the maximum protective award for failure to collectively consult from 90 to 180 days’ full pay per affected employee. For a workforce earning GBP 50,000 annually, that is up to GBP 24,657 per employee. The same legislation introduces a Fair Work Agency to strengthen enforcement.

US: WARN act

The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more employees to give 60 calendar days’ written notice before a plant closing affecting 50 or more workers, or a mass layoff affecting 500 or more workers (or 50-499 workers if they constitute 33% of the workforce at a site). Failure attracts liability for up to 60 days’ back pay and benefits per affected employee. Several US states have “mini-WARN” laws with lower thresholds.

Statutory redundancy pay: how to calculate it

UK employees with two or more years of continuous service are entitled to statutory redundancy pay. The formula uses three variables: age bracket during each year of service, number of complete years of service (capped at 20), and weekly pay (capped at GBP 751 from 6 April 2026).

Age during year of service	Weeks’ pay per year
Under 22	0.5 week
22 to 40	1 week
41 and over	1.5 weeks

Example: An employee aged 45 with 12 years’ service earning GBP 900 per week (weekly pay capped at GBP 751):

Years aged 41-45: 5 years x 1.5 weeks = 7.5 weeks
Years aged 35-40: 6 years x 1 week = 6 weeks
Years aged 33-34: 1 year x 1 week = 1 week
Total: 14.5 weeks x GBP 751 = GBP 10,889.50

The maximum statutory payment is GBP 22,530 (20 years x 1.5 weeks x GBP 751). Many employers offer enhanced redundancy pay above the statutory minimum; this is contractual and must be applied consistently to avoid discrimination claims.

Redundancy selection criteria and scoring matrix

Where more employees are in a redundancy pool than roles to be eliminated, the employer must select who is made redundant. ACAS guidance requires criteria to be objective, measurable, consistently applied, and free from discriminatory effect.

Typical scoring matrix dimensions:

Criterion	Max score	Notes
Skills and qualifications	20	Use verified assessments, not manager opinion
Performance record	15	Appraisal data, not recency bias
Attendance record	10	Exclude disability/pregnancy-related absence
Adaptability and flexibility	10	Avoid criteria that disadvantage part-time workers (sex discrimination risk)
Experience relevant to retained role	15	Tie to role requirements document
Disciplinary record	5	Spent warnings must be excluded

Each score must be applied identically across all employees in the pool and documented with evidence. Subjective criteria such as “attitude” or “team fit” without supporting evidence are high-risk: tribunals treat them as a proxy for discriminatory intent.

Protected characteristics: what to exclude

Under the Equality Act 2010, selection criteria must not produce adverse impact on employees sharing a protected characteristic (age, disability, pregnancy, race, sex, religion, sexual orientation). Specific exclusions required:

Absence related to maternity, pregnancy, or other family leave must not count in attendance scoring.
Disability-related absence must be discounted and reasonable adjustments considered.
Length-of-service criteria can create indirect age discrimination — weight carefully.
Flexibility or full-time availability criteria risk indirect sex discrimination.

In the US, the Age Discrimination in Employment Act (ADEA) requires employers to analyse whether a RIF disproportionately affects employees aged 40 and over. EEOC guidance requires a disparate impact analysis before any reduction in force affecting protected groups.

Skills-based selection: the defensible approach

The skills dimension carries the most weight in forward-looking restructures where the retained organisation needs different capabilities. Verified, role-relevant skills assessments — rather than line-manager ratings — produce a score that is auditable, consistent, and resistant to tribunal challenge. A skills assessment conducted through a standardised platform generates a documented output that maps directly to role requirements, removing the subjectivity that most unfair dismissal claims exploit. Explore Testlify’s skills-based assessment library for role-specific tests you can embed in your redundancy selection process.

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The redundancy process: step by step

Establish genuine redundancy situation. Document the business reason: restructuring plan, financial data, demand analysis, or technology deployment evidence. Absence of genuine reason = unfair dismissal by default.
Define the selection pool. Include all employees doing similar work in the affected area. Excluding employees from the pool without clear justification invites challenge.
Notify government (if collective). File HR1 form with the Department for Business and Trade at least 30 or 45 days before the first dismissal. Failure is a criminal offence.
Consult collectively (if 20+). Begin formal consultation with employee representatives. Consultation must be meaningful: cover alternatives to redundancy, ways to reduce numbers, and mitigation measures.
Apply selection criteria. Score all pool employees using the agreed matrix. Scores must be applied consistently, documented, and reviewed by a second assessor.
Conduct individual consultation. Meet each at-risk employee at least twice: an at-risk notification meeting and a final decision meeting. Provide the right to be accompanied. Consider redeployment alternatives genuinely.
Issue notice. Statutory minimum: one week per year of service, up to 12 weeks. Contractual notice applies if longer.
Pay statutory redundancy pay. Calculate and pay within the final pay period. Provide a written redundancy pay statement.
Offer right of appeal. All dismissed employees should have a right to appeal the decision. The appeal must be heard by a manager not involved in the original decision.
Retain documentation. Keep scoring matrices, consultation records, selection rationale, and HR1 form for a minimum of six years.

Documentation checklist

Enterprise HR teams should maintain the following records for each redundancy programme:

Business case document establishing genuine redundancy situation
Pool definition and rationale
Selection criteria agreed with employee representatives or union
Individual scoring matrices with evidence references
Second-assessor review record
Consultation meeting notes (dates, attendees, points raised)
At-risk letters and final decision letters
Statutory redundancy pay calculations
HR1 form and government acknowledgement
Redeployment search evidence
Appeal hearing notes and outcomes

ACAS recommends retaining all redundancy documentation for at least six years given the time limit for breach of contract claims. Employment tribunal claims must be submitted within three months, but whistleblowing-related claims extend to one year.

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Frequently asked questions

Redundancy is a specific type of dismissal where the role itself is eliminated due to business reasons — not the employee’s conduct or performance. Standard dismissal relates to the individual. This distinction determines statutory entitlements: only genuine redundancy triggers the right to statutory redundancy pay for employees with two or more years’ service.

For collective redundancies involving 20 to 99 employees at one site in 90 days, consultation must begin at least 30 days before the first dismissal. For 100 or more redundancies, the minimum is 45 days. Individual consultation — which applies even for single redundancies — has no statutory minimum duration but must be meaningful, not a formality.

Selection is unfair if it is based on subjective or discriminatory criteria, applied inconsistently, or targets employees exercising a protected right (for example, those on maternity leave, those who have raised a grievance, or trade union representatives). Tribunals also find selection unfair where the employer failed to consult meaningfully or did not genuinely consider redeployment alternatives before dismissal.

Yes, provided performance scores are drawn from documented appraisal records applied consistently across all pool employees. Using only recent performance data or relying on manager opinion without documentary evidence creates unfair dismissal risk. A robust approach ties performance scores to formal appraisal records and applies the same scoring rubric to every employee in the pool.

The formula multiplies each complete year of service (capped at 20) by a week’s pay (capped at GBP 751 from April 2026) and an age-based multiplier: 0.5 for years worked under age 22, 1 for years aged 22-40, and 1.5 for years aged 41 and over. The maximum statutory payment is GBP 22,530. Many employers offer enhanced packages above this floor; any enhancement must be applied consistently.

The WARN Act applies to employers with 100 or more employees and requires 60 days’ advance written notice when a plant closing affects 50 or more workers, or a mass layoff affects 500 or more workers (or 50-499 if they represent at least 33% of the workforce at the site). Employers below the threshold are not covered by federal WARN, though several US states have mini-WARN laws with lower employee thresholds.

TUPE (Transfer of Undertakings — Protection of Employment Regulations 2006) protects employees when a business or service is transferred to a new employer. Employees transfer automatically on their existing terms and conditions. Redundancy immediately following a TUPE transfer is automatically unfair unless the employer can demonstrate an economic, technical, or organisational reason involving a change in the workforce. HR teams must assess TUPE applicability before any post-transfer restructure.

Skills assessments conducted through a standardised platform generate an auditable, role-relevant score that is free from manager bias or recency effects. When the skills dimension of a redundancy matrix is supported by objective assessment data rather than subjective ratings, the selection rationale is significantly harder to challenge at tribunal. Assessments should be chosen to match the retained role requirements and administered identically to every employee in the pool.