Your Redundancy Rights: A Complete UK Guide 2026

What counts as redundancy?

Not every job loss is a redundancy in the legal sense. Under the Employment Rights Act 1996, a genuine redundancy occurs in one of three situations:

• Business closure — The employer closes the business entirely, or closes the particular site where you work.
• Workplace closure — The employer closes or moves the specific location where you are employed.
• Reduced requirement for work of a particular kind — The employer needs fewer employees to do the type of work you do — whether because of lower demand, automation, restructuring, or a change in how the work is performed.

If none of these three conditions apply, the dismissal is not a genuine redundancy. An employer cannot disguise a dismissal for performance reasons, disciplinary reasons, or personal dislike as a redundancy. Where the "redundancy" is in fact targeted at a specific individual rather than a genuine reduction in the need for that role, it may be unfair dismissal — or, in some circumstances, discrimination.

Redundancy also requires that you are dismissed, not that you simply agree to leave. If you are offered a new contract on substantially different terms and refuse it, you may be treated as dismissed by reason of redundancy. If you are offered a suitable alternative role and refuse it unreasonably, you may lose your right to a statutory redundancy payment.

Statutory redundancy pay calculation

If you have been continuously employed for at least two years, you are entitled to a statutory redundancy payment. The amount is calculated using a formula based on your age, weekly pay, and length of service:

• For each complete year of service under age 22: half a week's pay
• For each complete year of service aged 22–40: one week's pay
• For each complete year of service aged 41 and over: one and a half week's pay

Service is capped at 20 years, and weekly pay is capped at £643 per week (the current 2026 rate — reviewed annually in April). This means the maximum statutory redundancy payment is currently £19,290 (20 years × 1.5 × £643).

Statutory redundancy pay is tax-free (it falls within the £30,000 tax-free termination payment pool).

Use our Redundancy Calculator to calculate your specific statutory entitlement.

Collective consultation: 20 or more redundancies

When an employer proposes to make 20 or more employees redundant within a 90-day period at a single establishment, the rules change significantly. The employer must comply with the Trade Union and Labour Relations (Consolidation) Act 1992 collective consultation obligations:

• 20–99 redundancies: Minimum consultation period of 30 days before the first dismissal takes effect
• 100 or more redundancies: Minimum consultation period of 45 days before the first dismissal takes effect

The employer must also notify the Secretary of State (via the HR1 form submitted to the Insolvency Service) before the consultation begins. Failure to do so is a criminal offence.

Consultation must be with elected employee representatives (or a recognised trade union) and must be genuine — not merely informing employees of a decision already made. Employers must disclose specific information in writing, including the reasons for redundancy, the numbers and categories of employees affected, the proposed selection method, and the procedure and timing.

Where an employer fails to comply with collective consultation obligations, employees can apply to an employment tribunal for a protective award — up to 90 days' gross pay per affected employee, with no cap. This is a significant financial exposure and one that many employers overlook, particularly in fast-moving restructuring situations.

Individual consultation rights

Even where fewer than 20 redundancies are proposed, every employee at risk of redundancy has the right to individual consultation. This is not just good practice — it is a legal requirement for a fair redundancy process.

Individual consultation means:

• Being told you are at risk of redundancy at an early stage — before any final decision is made
• Being given genuine consideration for any suitable alternative employment within the organisation
• Being informed of the selection criteria if a pool of employees is being used
• Being given a chance to respond to your selection score and to raise any concerns
• Having the right to be accompanied by a trade union representative or work colleague at formal meetings
• Having an appeal process available after the final redundancy decision

A redundancy that bypasses individual consultation — for example, where an employee is simply told one day that their role is being made redundant with no prior warning or opportunity to make representations — is almost certainly procedurally unfair.

Suitable alternative employment — what you must consider

Before making you redundant, your employer must consider whether there are any suitable alternative roles available within the organisation (including associated employers or group companies). This is a positive obligation on the employer — they must actively consider and offer suitable alternatives, not simply wait for you to apply.

What counts as "suitable" depends on the circumstances: the salary, status, skills required, location, and terms must be reasonably comparable to your existing role. A significantly junior role, or one in a different location requiring you to move home, may not be suitable — though this depends on the specific facts.

If you are offered a suitable alternative role and you unreasonably refuse it, you lose your entitlement to statutory redundancy pay. Whether a refusal is "unreasonable" is assessed objectively — personal preference is not enough. But if there is a legitimate reason (the new role would require a significant pay cut, or a major change in working hours that conflicts with childcare responsibilities), refusal may well be reasonable.

You are entitled to a four-week trial period in any alternative role offered to you without losing your right to redundancy pay, allowing you to assess the role properly before making a final decision.

Challenging a redundancy

A redundancy may be legally challengeable on several grounds:

Unfair selection criteria. Selection for redundancy must use fair and objective criteria — typically scored against factors like skills, performance, attendance, and experience. Criteria that are arbitrary, subjective, or discriminatory (e.g. selecting employees based on age, part-time status, or pregnancy) are unlawful. If you have been scored in a way that you consider unfair, ask to see your scores and your comparators' scores.

No genuine redundancy situation. If your employer says your role is redundant but then immediately recruits someone else to do the same work — or if the "restructured" role is identical to your old role — this may be a sham redundancy. Employment tribunals look at whether the need for work of a particular kind genuinely diminished.

Failure to consult. If the employer failed to follow the consultation process properly — rushing the process, not genuinely considering your representations, or failing to consider suitable alternatives — the redundancy may be unfair even if there was a genuine business need.

Automatically unfair dismissal. Certain reasons for selection are automatically unfair regardless of procedure: selection because of pregnancy or maternity, because you made a protected disclosure (whistleblowing), because you exercised a statutory right, or because of trade union activities. These give rise to automatically unfair dismissal claims — where the employer cannot rely on the reasonableness defence.

Enhanced redundancy pay — when employers must pay more

Many employers operate enhanced redundancy schemes that pay more than the statutory minimum. These may be contained in your employment contract, a collective agreement, or a company redundancy policy.

If an enhanced scheme is contractual (i.e. explicitly included in your employment contract or incorporated from a collective agreement), your employer must pay it. Refusing to pay contractual enhanced redundancy pay is a breach of contract.

If the policy is discretionary, the employer has more flexibility — but must still exercise that discretion in a non-discriminatory and non-arbitrary way. If the policy has always been applied consistently in the past, there may be a contractual argument for it having become a term of employment by custom and practice.

Enhanced schemes often calculate pay differently from the statutory formula — for example, using actual weekly pay rather than the capped figure, or applying a flat multiplier of two or three weeks' pay per year of service. Read your employment contract and any applicable HR policies carefully before accepting a redundancy payment.

Redundancy vs. settlement agreement

Sometimes an employer offers a settlement agreement instead of, or alongside, a formal redundancy process. Understanding the differences is important:

A settlement agreement will often include redundancy pay alongside additional compensation. The key distinction is that by signing, you give up your right to challenge the redundancy or bring any related employment claims. Always take independent legal advice before deciding which route to take — and remember, your employer must pay for that advice.

Your rights during the notice period

During your notice period — whether you are working it or on garden leave — you remain an employee with all associated rights:

• You continue to accrue annual leave and have the right to take it or be paid for unused entitlement on termination
• You are entitled to reasonable paid time off to look for a new job or arrange retraining — under the Employment Rights Act 1996, employees with two or more years' service being made redundant are entitled to up to two days' paid time off per week for this purpose
• Company benefits (pension, health insurance, car) generally continue unless the agreement specifies otherwise
• Contractual obligations on both sides remain in force until the last day of employment