Managing staff redundancies: step by step

If you do decide redundancies are necessary, you should check if you have:

• a redundancy policy you must follow
• a collective agreement with a trade union with details of what you must do

You must follow a fair redundancy process and this must include:

• consulting staff
• collectively consulting staff if more than 20 are at risk of redundancy

You might not always be able to avoid redundancies, but by working with employees you could find ways to save jobs and better understand how to plan for the future.

2. Make a redundancy plan

You should make a redundancy plan that you’ll share with all staff and put into action. It can help you follow a fair process and avoid the risk of legal claims.

It’s a good idea to work with any trade union or employee representatives when making a plan.

The redundancy plan should include:

• all the options you’ve considered before deciding on redundancies
• the number of redundancies you’re considering
• keeping staff informed and supported throughout the process
• consulting all employees affected, including those off work, for example on maternity or sick leave
• timeframes, for example to leave enough time for consultation
• agreeing on fair selection criteria
• whether redundancy pay and notice periods are statutory or contractual
• an appeals process for if an employee thinks the redundancy process or their selection was unfair

Support and train managers

An organisation with managers will need them to help handle the redundancy situation and keep staff informed.

You should make sure your managers:

• know why redundancies are being made
• understand in detail the redundancy plan
• are comfortable and confident to talk and work together with staff about the redundancy process
• know how to raise issues or ideas with those leading the redundancy process
• have training to be confident in carrying out any duties
• know where to go for further support

By involving managers from the start and keeping them informed and updated throughout, they’ll be able to:

• come up with ideas that help ensure a smooth process and reduce or avoid redundancies
• effectively talk with staff about the redundancy process and plans
• make redundancy dismissals and give notice of when staff selected for redundancy will leave
• help restructure in the best possible way

Find Acas training courses.

As soon as possible, you should tell ('inform') your employees that you're considering making redundancies.

You should hold a meeting with all employees affected, not just those at risk of redundancy, where you explain:

• the risk of redundancy and the reason why it may be necessary
• how many redundancies you're considering
• what happens next, including how everyone will be consulted

You should encourage employees to ask questions. The meeting can be held online if people are working remotely.

For employees who are at risk of redundancy, you should also confirm in writing:

• that they're at risk of redundancy
• whether they have other options, such as voluntary redundancy or redeployment
• the outline of your consultation plans

You should continue to keep employees informed throughout the redundancy process.

You must consult with your employees before finalising any redundancies.

If you do not hold genuine and meaningful consultation before making redundancies, employees could claim to an employment tribunal for unfair dismissal.

Consultation is when you talk and listen to affected employees. In collective consultation you also consult with their representatives.

You should use consultation to try and agree actions wherever possible, for example the selection criteria.

During consultation, you should discuss:

• the changes that are needed, what you plan to do, and why
• ways to avoid or make fewer redundancies
• the skills and experience needed for the future
• the criteria for selecting employees for redundancy
• any concerns employees may have
• how you can support and arrange time off for affected employees, for example to update their CVs and get training

Employees will often have good ideas that may help to avoid redundancies. You do not have to agree to their suggestions, but it's important to seriously consider any ideas that could reduce redundancies, otherwise employees could claim the redundancy process has been unfair.

During the coronavirus (COVID-19) pandemic, you must still consult your employees. You may need to do this remotely. There is no legal requirement to consult face to face.

3. Check if you need to hold collective consultation

If you're planning to make 20 or more redundancies, you should check if you need to hold 'collective consultation'.

You might have a workplace policy or agreement that says you must collectively consult a trade union or employee representatives, no matter how many redundancies you're planning.

It can still be good practice to collectively consult even if you do not have to. It can help:

• you to fully be involved with employees about ways to achieve the change that's needed
• reduce negative effects on employees
• the process be fairer and quicker
• employees feel that any decisions are fair, and so reduce risks of legal claims

Check if you need to hold collective consultation.

How to hold individual consultation meetings

Some parts of consultation could be in small groups or team meetings.

You should meet each affected employee in private, at least once.

Meetings can be on the phone if you both agree to it and there is a clear need, for example if someone works remotely.

You should consider allowing employees to be accompanied at any one-to-one meeting. A companion can be helpful as they can:

• give the employee support
• be a neutral person to observe
• speak for the employee if needed

You should make sure any managers who lead consultation meetings:

• have had training in managing the meeting appropriately
• are fully informed about the redundancy plans and process
• can present the plan for the redundancy process clearly
• can provide everyone with a questions and answers document

Download a template letter inviting an employee to a consultation meeting.

How long consultation lasts

There are no rules for how long individual consultation should last. But you should check if you have a policy or agreement in place that does have rules.

You do not need to reach an agreement for consultation to end. Consultation should be meaningful and you should be able to show you have genuinely considered any suggestions or points made by each employee, even if you do not accept them.

If there has been a TUPE transfer

If there are redundancies after a TUPE transfer, consultation can start before the transfer and continue after. But you should not select employees for redundancy before the transfer takes place.

Find out more about TUPE.

You need to select employees for redundancy in a fair way.

If you’re making a whole team or specific group of staff redundant, you’ll have already identified a clear criteria and list of roles you need to make redundant.

For example, if a farm shop closes its bakery, it will need to make its bakers redundant.

But if you need to reduce the number of employees in the organisation or team, you’ll need to set up selection criteria and make a list of roles to be considered for redundancy (a 'selection pool').

Selection pools

Selection pools help make sure employees are selected for redundancy in a fair way.

Where a number of different roles are at risk of redundancy, you may need to have more than one selection pool.

You should include in each pool all roles that are the same or similar.

You should also consider including roles that have similar skills. For example, all marketing roles are in a selection pool. You could also include roles from the press and communications team if the skills are similar to those needed for marketing.

When setting up a selection pool, you should check and follow any:

• agreements you may have with a recognised trade union
• existing redundancy policy

If there is no existing policy or agreement, you should consider consulting any recognised trade union on how the pool should be set up.

Using selection criteria

You should have included selection criteria in your consultation.

Criteria should be as 'objective' and 'measurable' as possible. This means it should be fair, be based on facts that can be measured and not be affected by personal opinions.

You must use the same way of scoring criteria for all employees in the pool.

Agreed selection criteria scoring is useful as:

• it can be applied to everyone (although you might need to use different scoring for different groups of employees – for example, the engineering team might have a different scoring from the sales team)
• it can be easily explained to everyone 
• employees feel they’re being treated fairly
• it gives a clear, structured and consistent system for managing selection issues
• it can be used at employment tribunals to defend an employer’s decision

Examples of selection criteria could include:

• standard of work or performance
• skills, qualifications or experience  
• attendance record, which must be accurate and not include absences relating to disability, pregnancy or maternity
• disciplinary record

How to score employees

You can have different levels of points according to the importance of each criteria ('weighting') for your organisation’s needs.

For example, if it's agreed that attendance record is less important than performance, you can allow fewer points for this. So you could score attendance out of 5 points and performance out of 10.

You should have written evidence against each of the criteria.

Example scoring criteria and points

Work performance:

• outstanding – consistently exceeds company standard 15
• exceeds objectives of the role 12
• meets all objectives of the role 9
• meets some objectives of the role 6
• fails to meet objectives of the role 3

Skills and competence:

• fully competent, multi-skilled, supports others on regular basis 15
• fully competent in current role 12
• competent in most aspects of current role, requires some supervision 9
• some competence in role, requires regular supervision and guidance 6
• cannot function without close support or supervision 3

Disciplinary record:

• no record of disciplinary action 5
• record of informal disciplinary action 4
• verbal warning current 3
• written warning current 2
• final written warning current 1

Attendance record:

• no recorded absence 5
• some absence but below average for selection pool (or workplace) 4
• attendance in line with workplace (or selection pool) average 3
• absence level above average for selection pool (or workplace) 2
• high and unacceptable level of absence 1

Avoid discrimination

It’s against discrimination law to select employees based on:

• age
• disability
• gender reassignment
• marriage or civil partnership status
• pregnancy or maternity leave – see the Acas guide to redundancy for employees who are pregnant or on maternity leave 
• race
• religion or belief
• sex
• sexual orientation
• family related leave – for example parental, paternity or adoption leave
• their role as an employee or trade union representative
• membership of a trade union
• part-time or fixed-term employee status
• pay and working hours, for example because they’ve refused to give up rest breaks or asked for National Minimum Wage or holiday entitlements
• concerns they've raised about whistleblowing

You must pay at least the legal minimum ('statutory') amount of redundancy pay to your employees who have worked for you for at least 2 full years.

During the coronavirus (COVID-19) pandemic, employees continue to have the same redundancy rights, including redundancy pay. This includes employees who have been on 'furlough' (temporary leave).

You should check your employment contracts as they might say you need to pay more than the statutory amount.

You can choose to pay higher amounts if you want to encourage voluntary redundancies.

Use the redundancy pay calculator on GOV.UK.

Those in the following types of work do not qualify for redundancy pay:

• armed forces
• crown servants
• domestic service, where they're a member of the employer's immediate family
• police
• share fishing
• apprentices who are not employees at the end of their training

5. Statutory pay

The maximum statutory pay for a week is £544. The rate can change each year.

The maximum total statutory redundancy pay is £16,320.

Calculating how many weeks redundancy pay is due

How many weeks statutory redundancy pay someone is entitled to depends on all of the following:

• the employee's age
• how long they've worked for you (up to the last 20 years)

Statutory redundancy pay is capped at the last 20 years that the employee has worked for you.

For example, Toni has worked at your company for 27 years. You only have to calculate their redundancy pay based on the last 20 years.

Working backwards from the day their notice starts, you must add all of the following that apply:

• 1 and a half week's pay for each full year they were aged 41 years or older
• 1 week's pay for each full year they were aged 22 or older, but aged under 41
• half a week's pay for each full year they were aged under 22

If the employee has regular working hours and pay

You base their redundancy pay on their normal weekly pay before tax (gross weekly pay).

If the employee's pay changes from week to week

Calculate the average weekly pay for the previous 12 weeks from the date you made them redundant.

If they did not work for a whole week during that time – for example they were on holiday or off sick – replace it with an earlier week.

You must share in writing with employees how you've calculated redundancy payments.

Overtime, bonuses and commission

Your employee’s weekly pay should also include:

• regular overtime, if the employee's contract says they must get paid for it
• any bonuses or commission

Find out how to work out average pay for bonuses and commission on GOV.UK.

Furlough and redundancy pay

If your staff have been put on furlough, they may have received reduced pay. Their wages must be topped up to 100% when calculating redundancy pay.

For example, if an employee's weekly pay is usually £300 but they received 80% pay while on furlough, their redundancy pay must be their full normal pay of £300 a week.

Example 1 – someone who works variable hours

An employee who is 35 years old has worked for their employer for 6 years and their hours vary each month. They get paid £10 an hour.

They’ve been put on furlough during the 12 weeks and received 80% of their pay (£8 an hour).

The employer already worked out the employee works an average of 30 hours a week when they claimed from HMRC's Coronavirus Job Retention Scheme.

They must receive £300 a week redundancy pay as their wages must be topped up to 100%.

Example 2 – someone on flexible furlough

An employee who is 35 has worked for their employer for 6 years.

They normally work 30 hours a week and have agreed to be furloughed for half this time.

They now work for 15 hours a week on full pay, receiving £10 an hour. They're put on flexible furlough on 80% pay for the remaining 15 hours, receiving £8 an hour.

When calculating redundancy pay, their wage on flexible furlough must be topped up to 100%. This means they must receive £300 a week redundancy pay.

Example 3 – someone who has returned to work and is working more hours than usual

An employee who is 35 has worked for their employer for 6 years.

The employer had already worked out the employee's average hours and full normal pay when they claimed from HMRC's Coronavirus Job Retention Scheme.

The employee normally works 30 hours a week on £10 an hour, receiving £300 a week.

They spent 6 weeks on furlough earning 80% pay. When they returned to work, they worked 40 hours a week for 6 weeks, receiving £400 a week.

To work out their weekly pay, the employer adds up the 6 weeks of pay during furlough, at their full normal pay of £300 a week. Then they add up the 6 weeks the employee worked at £400 a week.

The employer adds up these figures and divides by 12 to work out their average weekly pay of £350 a week. This means the employer must pay the employee £350 redundancy pay a week.

When you must make the payment

You should pay redundancy no later than an employee's final pay day. You can pay later than this if you both agree another date in writing.

You should tell employees when and how you’ll make the payment. For example, if it’ll be included in their monthly pay or as a separate payment.

If you do not pay an employee on time, they might be able to make a claim to an employment tribunal.

If you cannot afford redundancy pay

If making redundancy payments puts your organisation at risk, you can ask the

Redundancy Payments Service (RPS) for financial help.

If you're insolvent you can get RPS to make your redundancy payments and recover the debt from your assets.

Find out how to get financial help from the Redundancy Payments Service.

You can only give an employee notice of redundancy once you've finished consulting everyone and gone through the selection process.

During the coronavirus (COVID-19) pandemic, employees still have the same employment rights, including notice of redundancy.

You should meet with each employee who’s been at risk of redundancy. It’s best to do this face to face, but if this is not possible, you should talk with them on a call.

You should allow them to be accompanied at the meeting.

For those selected for redundancy, you should also put the details of their redundancy in writing. This can be by letter or email.

You should include:

• how they scored in the selection criteria and why they received that score
• their notice period and leaving date
• how much redundancy pay they'll get and how you calculated it
• any other pay due to them, for example holiday pay
• when and how you'll pay them
• how they can appeal the redundancy decision

Employees may want to know how others have been scored. You should not share other employees’ scores. You could show how everyone scored overall, as long as you can keep it anonymous.

Download redundancy letter templates.

6. How much notice you should give

By law, there are minimum amounts of notice you must give (‘statutory notice periods’). Some contracts might have longer notice periods, but you cannot give less than the legal minimum.

The statutory notice period depends on how long the employee has worked for you. If they've worked for you for:

• less than 1 month ⁠–⁠ no statutory notice
• 1 month up to 2 years ⁠–⁠ statutory notice is 1 week
• 2 to 12 years ⁠–⁠ statutory notice is 1 week for each complete year they worked
• 12 years or more ⁠–⁠ statutory notice is 12 weeks

When the notice period starts

The employee’s notice period starts from the next day after you’ve told them.

You should tell employees directly to make sure they understand their notice period. This can be face to face or on a call. You should also put it in writing.

You should try to speak to the employee wherever possible. If it’s only possible to tell them by letter or email, then they must have a reasonable amount of time to read it before the notice period starts. If you send notice by letter, it’s a good idea to send it by recorded delivery.

Payment in lieu of notice (PILON)

The employee’s contract might allow payment instead (‘in lieu’) of working their notice (PILON).

This means the employee would stop working for you straight away.

If it's not in their contract, you can see if the employee agrees to payment in lieu of notice. You cannot force them to agree to it. If they do agree, you must give them full pay and any other contractual benefits for their notice period.

An employee could make a claim to an employment tribunal for breach of contract if they’re dismissed sooner than their notice ends.

If you’re considering payment in lieu of notice and it’s not in the contract, it’s a good idea to get legal advice.

It's good practice to offer employees the chance to appeal if they feel they were selected unfairly for redundancy.

This should be set out in your redundancy plan. It might also be written in contracts or your redundancy policy.

An appeals process can help to:

• give you early warning the redundancy selection process might have been unfair and the chance to correct it
• deal with and resolve an employee’s complaint, avoiding an employment tribunal claim
• show a tribunal that you have followed a fair process

If an employee is successful in an appeal, it’s likely to mean another employee will have to be made redundant in their place. This could be a very difficult situation, especially if the employee was previously told they were safe from redundancy. You should:

• prepare for how to handle the situation sensitively with the employees affected
• keep communication clear and open
• offer support

7. How an employee can appeal

If an employee thinks they’ve been unfairly selected or there was a problem in the redundancy process, you should give them the chance to appeal within a reasonable timescale of receiving their redundancy notice. For example, 5 days could be reasonable.

The employee should tell you in writing the reasons for their appeal.

The appeal meeting

When you receive an appeal, you should send a meeting invitation to the employee as soon as possible.

It’s a good idea to allow them to be accompanied at the meeting by a work colleague or union representative.

Where possible, arrange for a senior staff member who has not been involved in the redundancy decision-making to lead the appeal meeting. In organisations where this is not possible, the person leading the appeal meeting should be as impartial as possible.

You could also consider using an independent consultant to help when making a decision.

Making an appeal decision

You should consider the appeal without unreasonable delay and make a decision to either refuse or agree to ('uphold') the appeal. You should put your decision in writing to the employee.

If you uphold the appeal

If it’s clear the employee was selected unfairly, but you still need to make a role redundant, you will need to handle the situation very carefully. It could mean the end of employment for another employee who had been told their job is safe.

It’s important to:

• communicate clearly and openly with your staff
• correct any issues with the process
• make sure you carry out a fair selection process

If you have found there were serious issues, you may need to go through the whole redundancy process again.

If you uphold an appeal and the employee has not yet ended their redundancy notice period, the employment contract should continue as though the employee had not been selected for redundancy in the first place.

If you uphold an appeal and the employee has already ended their redundancy notice period, you should put them back in a role ('reinstate' them). Their length of service ('period of continuous employment') will apply from when you first employed them. You may need to pay any arrears of wages between the end of the notice period and the time you reinstate them.

If you have made a redundancy payment to your employee and you later uphold an appeal, you should make it clear that upholding the appeal means they’ll need to return the payment.

If you refuse the appeal

If you decide to refuse the appeal, the employee’s redundancy dismissal, pay and notice continues as before.

You must try and move employees selected for redundancy into other jobs within your organisation instead (offer 'suitable alternative employment').

You must identify any available jobs in your organisation and talk to the affected employees to see if they agree they're suitable.

If a role is suitable, you should offer it instead of redundancy. If you do not, the employee could make a claim to an employment tribunal for unfair dismissal.

They should not have to apply for the role. But if more than one employee is interested in the same role, you must offer the role to any employees on maternity leave or Shared Parental Leave first. For all other employees, you must follow a fair process, for example holding interviews for the role.

When you offer an employee another role, it must be:

• put in writing
• offered before their current contract ends
• a different role to the one they're currently doing – you’ll need to explain how it's different
• start within 4 weeks of their current role ending

8. Trial periods

Employees have the right to a 4-week trial period if they accept a new role. If they need more time to train for the role, you can agree to a longer trial period. It must be agreed in writing and have a clear end date.

The trial period should start after they've worked their notice period and their previous contract has ended.

This avoids any confusion or disputes over dates if the trial does not work out. It's a good idea to set out the dates for the trial in writing.

If an employee turns down an alternative role

If an employee refuses your offer for a suitable alternative role, or turns it down after the trial period, they need to have a valid reason why it’s not suitable.

Examples of reasons could include:

• the job is on lower pay
• health issues stop them from doing the job
• they have difficulty getting there, for example because of a longer journey, higher cost or lack of public transport
• it would cause disruption to their family life

If the employee has a valid reason to turn down the job, they'll be entitled to redundancy pay.

But if the employee does not have a valid reason for turning down the job, you could refuse to pay their redundancy pay. You'll need to be able to prove the employee's decision was unreasonable if they make a claim to an employment tribunal.

Redundancy can create difficult situations and conversations in your organisation.

You should think about how to support:

• employees at risk of redundancy
• managers who are breaking the news
• the people leading the consultation
• employee representatives
• those staying on

You can support staff by providing:

• counselling
• additional face-to-face meetings
• help getting financial advice
• clear plans for the future
• time off for those selected for redundancy to look for new jobs or get training

It's often forgotten that those staying on experience stress from seeing colleagues and friends being made redundant. They’ll also be part of a changing workplace and might feel uncertain about what the work and their roles will look like in future.

9. Help staff find another job or training

You must allow employees you’ve made redundant a reasonable amount of time off during their notice period to look for another job or to do training.

This applies if the employee has worked for you for 2 full years or more (including the notice period).

Paid time off for training or to look for another job

You do not have to pay more than 40% of a week's pay, no matter how much time off you allow for these reasons during the notice period.

Organisations that can help

You can support employees with finding another job or training by signposting them to the following organisations.

In England

The Jobcentre Plus Rapid Response Service can:

• help people get back into work and with writing or updating CVs
• give you useful information about finding work to pass on to your staff

Find out more about the Rapid Response Service on GOV.UK.

In Scotland

The Partnership Action for Continuing Employment (PACE) is a Scottish government service that supports those dealing with redundancy. Employers and employees can get free, confidential advice.

Find out more on the PACE website.

In Wales

The Welsh Government runs a programme called ReAct that provides guidance to help people gain new skills and find employment after redundancy.

See ReAct on the Welsh Government website.