Strongly RecommendedTermination

Redundancy Policy Template for UK Businesses

A redundancy policy sets out the fair and lawful process your organisation will follow when reducing the workforce because the business needs fewer employees to do work of a particular kind. Redundancy is one of the five potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996, but the process must be genuine, the selection criteria must be objective, and the employer must consult properly. For 20 or more redundancies within 90 days, collective consultation under the Trade Union and Labour Relations (Consolidation) Act 1992 is required.

Who Needs This Policy?

Every UK employer should have a redundancy policy, even if redundancies are not currently planned. Having a documented process ensures consistency and fairness when the need arises. Employers with 20+ employees should pay particular attention to the collective consultation obligations under section 188 of TULRCA 1992. Employees with 2+ years' service are entitled to a statutory redundancy payment and can claim unfair dismissal if the process is flawed.

What's Covered

This redundancy policy template covers 15 key sections:

Purpose

[your details] recognises that redundancy is one of the most significant and difficult decisions a business may face. Th...

Scope

This policy applies to all employees of [your details] who are at risk of redundancy. It covers both individual redundan...

What Is Redundancy

Under section 139 of the Employment Rights Act 1996, redundancy arises in three situations: 1. [your details] has cease...

Avoiding Redundancies

Before initiating a redundancy process, [your details] will first consider whether redundancies can be avoided or reduce...

Collective Consultation (20 or More Redundancies)

Where [your details] proposes to dismiss 20 or more employees as redundant at one establishment within a period of 90 da...

Identifying the Selection Pool

[your details] will identify the pool of employees from whom those to be made redundant will be selected. The pool shoul...

Selection Criteria

[your details] will use objective, measurable, and non-discriminatory selection criteria to identify who within the pool...

Individual Consultation

Individual consultation is required in every redundancy situation, regardless of how many employees are affected. [your ...

Suitable Alternative Employment

[your details] has a duty to consider whether there is any suitable alternative employment within the business before co...

Notice Periods

Employees selected for redundancy are entitled to receive their contractual notice period, or the statutory minimum, whi...

Statutory Redundancy Pay

Employees with two or more years' continuous employment who are dismissed for redundancy are entitled to statutory redun...

Right of Appeal

All employees who receive notice of redundancy have the right to appeal against the decision. To appeal, the employee mu...

Roles and Responsibilities

are responsible for: - Attending consultation meetings and engaging constructively with the process - Raising any conce...

Related Policies

This policy should be read alongside: - Disciplinary Procedure - Flexible Working Policy - Equality and Diversity Polic...

Review

This policy will be reviewed annually, or sooner if there are changes to relevant legislation. The next scheduled review...

Legal Framework

This policy template is grounded in the following UK legislation and guidance:

How Complaiance Helps

Our redundancy policy goes beyond a generic template:

  • Step-by-step process covering business case, consultation, selection, notice, and appeals
  • Objective selection criteria matrix covering attendance, skills, performance, and disciplinary record
  • Collective consultation triggers and timeline for 20+ redundancies (30-day and 45-day rules)
  • Statutory redundancy pay calculator with current weekly pay cap (£700 for 2025/26)

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Frequently Asked Questions

What is the statutory redundancy pay calculation?

Employees with 2+ years' continuous service are entitled to statutory redundancy pay calculated as: half a week's pay for each full year of service under age 22, one week's pay for each full year aged 22-40, and one and a half weeks' pay for each full year aged 41+. Weekly pay is capped at £700 (2025/26 rate) and service is capped at 20 years. The maximum statutory redundancy payment is therefore £21,000.

When is collective consultation required?

Under section 188 of TULRCA 1992, if an employer proposes to dismiss as redundant 20 or more employees at one establishment within 90 days, collective consultation must begin at least 30 days before the first dismissal. For 100+ redundancies, the minimum consultation period is 45 days. Failure to collectively consult can result in a protective award of up to 90 days' pay per affected employee.

Can an employee challenge their redundancy selection?

Yes. An employee can claim unfair dismissal if the redundancy is not genuine (a sham to dismiss them), the selection criteria were unfair or applied unfairly, the employer failed to consult individually, or the employer failed to consider suitable alternative employment. Selection on discriminatory grounds (e.g., pregnancy, disability, part-time status) is both unfair and discriminatory.