More than two years’ service
Losing a job is never easy, but you don’t have to navigate it alone. This is a practical guide on where you stand and what to expect. Remember it's the role that's redundant, not you.
What is redundancy?
Redundancy happens when your employer decides that your role is no longer needed. It’s not about you—it’s about the role itself. This can happen for a range of business reasons, like cutting costs, restructuring, or closing a site. Redundancy is always a last resort, used when other options (like reassigning roles or reducing costs elsewhere) aren’t enough.
A fair redundancy process starts with identifying which roles are at risk. Then, if more than one person holds that role, employers should use clear and objective criteria to decide who is made redundant. It’s not about picking individuals—it’s about business needs.
Why might redundancy happen?
Some common reasons include:
- Your role or service is no longer needed
- Your employer needs to cut costs
- The business is closing or relocating
- The workforce is being reduced
What is the redundancy process?
A fair redundancy process includes:
- Consultation – a discussion between you and your employer about the potential redundancy
- The consultation period – how long the process lasts, depending on how many people are affected
- Employee representatives – who might speak on behalf of employees
- Pooling and scoring – how employers decide who is made redundant when multiple people share the same role
The consultation – what is it?
The consultation is a chance for you and your employer to talk through what’s happening. They’ll explain the reasons for redundancy and look at alternatives—like offering other roles. If redundancy can’t be avoided, you’ll be given notice at the end of the process.
Consultations can happen one-on-one, with a trade union representative, or with an employee representative (if more than 20 people are affected). If your employer doesn’t consult with you properly, your redundancy could be considered unfair.
How long does consultation last?
- Fewer than 20 redundancies: No legal minimum, but usually 1-2 weeks
- 20-99 redundancies: At least 30 days
- 100+ redundancies: At least 45 days
During this time, you stay on the payroll and keep all your benefits.
How are redundancies decided?
If your role is at risk but others in the same role are staying, your employer must use fair criteria to decide who goes. This could include:
- Skills, qualifications, and ability
- Work performance
- Attendance (excluding factors like disability or parental leave)
Your employer should explain their criteria and your score, but not other employees’ scores. If the process isn’t fair or transparent, you can challenge it.
What will I be paid?
If you’ve been with your employer for two years or more, you’re entitled to redundancy pay. This includes:
- Statutory redundancy pay (or contractual redundancy pay, if your employer offers more)
- Notice pay – either worked or paid in a lump sum
- Unused holiday pay
Some employers offer extra payments (“ex gratia” payments). These are tax-free up to £30,000 but might require signing a Settlement Agreement.
How is statutory redundancy pay calculated?
- Under 22: 0.5 week’s pay per full year worked
- 22-41: 1 week’s pay per full year worked
- Over 41: 1.5 week’s pay per full year worked
The maximum statutory redundancy pay is £21,570, based on up to 20 years of service. Weekly pay is capped at £719.
Notice period options:
- Pay in Lieu of Notice (PILON): A lump sum, meaning you leave immediately
- Work your notice: Stay on the payroll and continue working
- Garden leave: Stay on the payroll but don’t work, often to protect company interests
Tax:
- Redundancy pay is tax-free up to £30,000
- Notice pay and holiday pay are taxed as normal income
What if the process isn’t fair?
Your employer must have a valid business reason for redundancy—such as a drop in demand, restructuring, or closure. If they don’t, the redundancy could be considered unfair.
What counts as unfair redundancy?
You cannot be made redundant for reasons like:
- Pregnancy or maternity leave
- Trade union membership
- Whistleblowing
- Raising health and safety concerns
Your employer must also follow a fair process, which includes explaining why your role is at risk, considering alternatives, and using fair selection criteria. If you feel the process hasn’t been fair, you can challenge it.
Discrimination
You’re protected under the Equality Act 2010, which means redundancy decisions cannot be based on any of these nine protected characteristics:
- Age
- Disability
- Gender reassignment
- Marriage or civil partnership
- Pregnancy or maternity leave
- Race, ethnicity, or country of birth
- Religion or belief
- Sex
- Sexual orientation
For example, if your employer selects you for redundancy because you have a flexible working agreement due to a disability, this could be considered discrimination. While having a protected characteristic doesn’t make redundancy impossible, it cannot be the reason for it.
Victimisation
If you’ve previously raised concerns about discrimination—such as reporting sexual harassment—your employer cannot select you for redundancy because of that. However, raising a concern doesn’t make redundancy impossible; it just can’t be the reason for it.
Settlement Agreements
Your employer might offer you a settlement agreement, which is a legally binding contract that prevents you from taking legal action against them—often in exchange for a financial package or other conditions. Before signing, a solicitor independent of your employer must review it. While your employer may cover the cost of this legal review, they are not required to pay for additional negotiation time.
If the redundancy process feels unfair, you can ask about the decision-making process and appeal options. Our NABS Advice Line is available to help you navigate conversations with your employer, and we can also provide a list of independent solicitors if needed.
Exploring Other Roles Within Your Company
What is a suitable alternative role?
To avoid redundancy, your employer might offer you a different role within the company. A role is considered ‘suitable’ if:
- The responsibilities are similar to your current role.
- Pay, benefits, and terms remain the same or comparable.
- You have the required skills and experience.
- Working hours and location don’t significantly change.
To assess suitability, ask your employer about these points and request job descriptions for both roles to compare. If a suitable alternative role exists and isn’t offered, the redundancy process may be deemed unfair.
Can I trial a suitable alternative role?
Yes, you’re entitled to a four-week trial in the new role to determine if it’s a good fit. This period can be extended if you need training, but only if agreed in writing. Keep open communication with your employer throughout this time.
How do I accept a suitable alternative role?
If you’re happy with the role at the end of the trial, confirm your acceptance in writing and request an updated contract.
What if I refuse an alternative role?
- Reasonable refusal: If the role isn’t a good fit (e.g., lower pay or status), you remain entitled to redundancy pay. To protect your rights, document your refusal before your current role ends or before the trial period finishes.
- Unreasonable refusal: If you reject a suitable role without a valid reason, you may lose your redundancy pay.
If the offered role has different terms (e.g., lower salary, different location), you may apply, but those new terms will apply if you’re later made redundant.
Voluntary Redundancy
Considering voluntary redundancy
Sometimes, employers offer voluntary redundancy, often with financial incentives. If you volunteer, the company will still follow its redundancy process to ensure fairness. However, volunteering does not guarantee selection.
What is the impact of voluntary redundancy?
Before making a decision, gather key information, such as:
- The financial package being offered.
- Your full redundancy entitlement (request a breakdown if unclear).
- Potential state benefits you may be eligible for.
- Whether your income protection or mortgage protection policies cover voluntary redundancy.
If you’re unsure, our Support Team can talk through your options with you.
Redundancy While Pregnant or on Maternity Leave
Your rights during redundancy
If you’re pregnant or on maternity leave, your employer must consult with you about potential redundancies, explaining:
- Why redundancies are happening and which roles are affected.
- Possible alternatives, like reduced hours or voluntary redundancy.
- How they are deciding who will be made redundant (selection criteria).
Pregnancy or maternity leave doesn’t exempt you from redundancy, but if you believe these factors influenced your selection, you may have grounds for an unfair dismissal or discrimination claim.
Priority for suitable alternative roles
If a suitable alternative role exists, your employer must offer it to you before others at risk of redundancy. You don’t need to apply—it must be offered automatically. The role must:
- Match your experience and skillset.
- Keep similar terms, conditions, and status.
- Be in a reasonable location.
This protection applies from when you notify your employer of your pregnancy and continues for 18 months after the expected or actual birth date (or adoption placement). If you refuse a suitable role, you lose your right to redundancy pay.
Maternity pay and redundancy
- If you qualify for Statutory Maternity Pay (SMP), you will still receive it, even if you’re made redundant.
- You qualify if you:
- Earn at least £125 a week.
- Have worked for your employer for at least 26 weeks up to the 15th week before your due date.
- Have provided proof of pregnancy and given at least 28 days’ notice.
- If you’re made redundant before your qualifying week, you may need to claim Maternity Allowance instead.
If you’re on maternity leave when redundancy happens, you’ll continue receiving SMP for the full 39 weeks. If you were receiving enhanced maternity pay, it usually stops when you’re made redundant.
