UK Redundancy Guide: Your Rights When Made Redundant in the United Kingdom

If you've been made redundant in the United Kingdom, you have significant legal protections. UK employment law provides stronger worker protections than many countries, including statutory redundancy pay, minimum notice periods, and the right to challenge unfair dismissal. This guide explains your rights.

Important Note: This guide provides general information about UK redundancy law. It is not legal advice. For specific situations, consult with a UK employment solicitor or contact ACAS.

Understanding Redundancy in the UK

What is Redundancy?

Redundancy occurs when:

• The employer closes the business
• The workplace closes
• The need for employees to do particular work has reduced or ended

Redundancy is not the same as being dismissed for performance or conduct reasons.

Your Rights Overview

Statutory Redundancy Pay

Who Qualifies

You're entitled to statutory redundancy pay if you:

• Have worked for your employer for 2+ years continuously
• Are an employee (not self-employed/contractor)
• Are being made genuinely redundant

How It's Calculated

Statutory redundancy pay is based on:

• Your age
• Length of continuous service (up to 20 years)
• Weekly pay (capped at £700 as of 2024)

The Formula:

• Half a week's pay for each full year under age 22
• One week's pay for each full year aged 22-40
• One and a half week's pay for each full year aged 41+

Maximum: 20 years of service counts

Example Calculation

Employee aged 45, 10 years service, earning £800/week:

• 5 years (age 35-40): 5 × £700 = £3,500
• 5 years (age 40-45): 5 × £700 × 1.5 = £5,250
• Total Statutory Pay: £8,750

(Note: Weekly pay capped at £700)

Use the Gov.uk Calculator

The government provides an official calculator at gov.uk to calculate your exact entitlement.

Notice Periods

Statutory Minimum Notice

Your employer must give you at least:

Contractual Notice

Your contract may provide longer notice than the statutory minimum. You're entitled to whichever is longer.

Pay in Lieu of Notice (PILON)

Employers can pay you instead of having you work your notice. Check your contract for PILON clauses.

Consultation Requirements

Individual Consultation

For any redundancy, employers must:

• Consult with you individually
• Explain why redundancy is necessary
• Consider alternatives (redeployment, reduced hours)
• Apply fair selection criteria
• Give you opportunity to respond

Collective Consultation

For 20+ redundancies at one establishment within 90 days:

Employers must:

• Consult with trade union or employee representatives
• Notify the Redundancy Payments Service
• Provide specific information in writing

Selection Criteria

Fair Selection

Employers must use fair, objective criteria such as:

• Skills and qualifications
• Performance records
• Attendance (excluding protected absences)
• Length of service
• Disciplinary record

Unfair Selection

It's automatically unfair to select based on:

• Pregnancy or maternity leave
• Trade union membership/activities
• Part-time or fixed-term status
• Whistleblowing
• Asserting statutory rights
• Health and safety activities

Unfair Dismissal

What Makes Redundancy Unfair

Your redundancy may be unfair if:

• There was no genuine redundancy situation
• Selection was discriminatory or unfair
• Consultation was inadequate
• No consideration of alternative employment
• Selection criteria were unreasonable

Bringing a Claim

To claim unfair dismissal:

• Must have 2+ years continuous service (usually)
• File with Employment Tribunal within 3 months (less one day)
• Must use ACAS Early Conciliation first

Remedies

If successful, you may receive:

• Basic award (similar to redundancy pay)
• Compensatory award (loss of earnings, capped)
• Reinstatement or re-engagement (rare)

Alternative Employment

Employer's Duty

Employers should offer suitable alternative employment if available. Consider:

• Different location
• Different role
• Reduced hours

Trial Periods

If offered alternative role:

• You have 4-week trial period
• Can reject if genuinely unsuitable
• May still receive redundancy pay if rejected reasonably

Benefits and Support

Jobseeker's Allowance (JSA)

If looking for work:

• Contribution-based JSA: Based on NI contributions
• Income-based JSA: Means-tested
• Apply at gov.uk or Jobcentre Plus

Universal Credit

May apply depending on circumstances:

• Replaces several benefits
• Apply at gov.uk
• May need to attend appointments

Other Support

• National Careers Service: Free careers advice
• Jobcentre Plus: Employment support
• Skills bootcamps: Retraining opportunities

Tax and Redundancy Pay

Tax-Free Amount

Redundancy payments up to £30,000 are tax-free. This includes:

• Statutory redundancy pay
• Enhanced redundancy pay
• Other compensation for loss of employment

Payments above £30,000 are taxed as income.

What's NOT Tax-Free

These are taxed normally:

• Pay in lieu of notice (usually)
• Outstanding wages
• Holiday pay
• Bonus payments

If Your Employer Can't Pay

Insolvency

If your employer becomes insolvent:

• Claim from National Insurance Fund
• Covers statutory redundancy, wages, holiday pay, notice
• Apply to Redundancy Payments Service
• Limits apply to claims

Making a Claim

Contact the Redundancy Payments Service:

• They handle claims from insolvent employers
• Process can take several weeks
• Keep all documentation

Settlement Agreements

What They Are

Employers often offer enhanced packages in exchange for:

• Waiving right to bring tribunal claims
• Confidentiality
• Other terms

Getting Advice

Settlement agreements are only valid if you receive independent legal advice. Employer typically pays for this.

Negotiating

Consider negotiating:

• Higher payment
• Extended garden leave
• Reference agreement
• Outplacement support
• Benefits continuation

Action Checklist

When Made Redundant

• [ ] Request written reasons for redundancy
• [ ] Verify redundancy pay calculation
• [ ] Check your notice period entitlement
• [ ] Ask about alternative roles
• [ ] Request time off for job hunting
• [ ] Get any settlement agreement reviewed
• [ ] Apply for benefits promptly
• [ ] Keep all documentation

If You Think It's Unfair

• [ ] Contact ACAS for advice
• [ ] Consider ACAS Early Conciliation
• [ ] Note the 3-month tribunal deadline
• [ ] Gather evidence of unfairness
• [ ] Consult employment solicitor

Useful Resources

Official Resources

• ACAS: Free workplace advice (acas.org.uk)
• Gov.uk: Official redundancy information
• Citizens Advice: Free legal guidance
• Employment Tribunal: For claims

Professional Help

• Employment solicitors
• Trade unions (if member)
• Law centres (free legal advice)

Key Takeaways

1. 2+ years service required for statutory redundancy pay
2. Statutory pay is capped—£700/week maximum
3. Notice periods depend on length of service
4. Consultation is required—individual and collective
5. Selection must be fair—objective criteria only
6. £30,000 tax-free threshold on redundancy payments
7. 3-month deadline for tribunal claims (less one day)
8. ACAS conciliation required before tribunal
9. Settlement agreements need independent legal advice
10. Keep documentation—you may need it for claims

Remember: This guide provides general information about UK redundancy law. For advice specific to your situation, contact ACAS or consult an employment solicitor.