Helping employers deal with Redundancy: Employment law guidance for employers in England & Wales
- 10 hours ago
- 7 min read
Redundancy as a business reality, not a legal failure
Most employment issues do not begin as disputes. They begin as business decisions.
A contract ends. Costs need to be reduced. A role no longer fits the organisation. Market conditions change. Growth stalls or reverses. For many employers, particularly owner managed businesses and growing enterprises, these moments arrive quickly and often without warning.
Redundancy is one of the most common and emotionally charged outcomes of those pressures. Handled well, it allows a business to adapt and remain viable while preserving dignity and professional relationships. Handled badly, it can expose the business to legal claims, reputational damage, and prolonged internal disruption.
At Eddison Cogan Lawyers, we support employers through redundancy and restructuring in a way that reflects commercial reality, legal risk, and the importance of maintaining workable relationships. Our focus is not simply compliance, but helping employers reach defensible outcomes without unnecessary escalation.
Understanding 'Redundancy' in legal terms
In law, redundancy has a specific meaning. A dismissal will only be a redundancy if it falls within one of the recognised categories under employment legislation.
Broadly, a redundancy situation arises where:
The business closes altogether
A particular workplace closes
The business no longer needs employees to carry out work of a particular kind
There is a reduced need for employees to perform certain roles
Whether a genuine redundancy exists is often the first question employers need to answer. This is not always straightforward. Changes in working practices, automation, reallocation of duties, or restructuring of roles can blur the line between redundancy and performance or capability issues.
Early legal advice can help employers clarify whether redundancy is the appropriate route, or whether another employment process would be more suitable and less risky.
Why redundancy often leads to legal claims
In our experience, most redundancy claims do not arise because the business decision was wrong. They arise because the process was poorly handled.
Common risk points include:
Unclear or inconsistent explanation of the redundancy rationale
Inadequate or rushed consultation
Selection criteria that appear subjective or unfair
Failure to consider alternatives to redundancy
Poor communication at key stages
Inconsistent treatment between employees
Employment tribunals focus heavily on process. Even where a redundancy situation is genuine, a flawed procedure can render a dismissal unfair.
For employers, the challenge is finding the right balance between running an efficient business process and meeting legal expectations of fairness.
Proportionate processes for different business sizes
One of the most frequent questions we are asked is how 'formal' a redundancy process needs to be.
The answer depends on the size of the business, the number of redundancies proposed, and the specific circumstances. A small employer making a single role redundant does not need the same level of complexity as a large scale restructuring exercise. However, even the smallest redundancy requires a process that is rational, fair, and capable of explanation.
We help employers design redundancy processes that are proportionate, focusing on:
What the law actually requires in the specific situation
Where flexibility is permissible
Where shortcuts create unacceptable risk
How to document processes and decisions without overcomplicating matters
This approach is particularly valuable for small businesses and employers without dedicated HR teams, where the absence of process can be damaging, but overly technical processes can do more harm than good.
Identifying redundancy pools and selection criteria
Where more than one employee is potentially affected, employers must consider whether a selection pool is required.
Determining the correct pool is often a source of dispute. Employers may instinctively identify a single individual whose role they believe is redundant, but the law may require consideration of a wider group of employees performing similar work.
Selection criteria must be fair, objective where possible, and applied consistently. Common criteria include skills, qualifications, performance records, and disciplinary history. Criteria that are vague or unsupported by evidence increase the risk of challenge.
We advise employers on:
Whether a pool is required at all
How to define pools defensibly
Selecting criteria that reflect business needs
Avoiding discrimination risks
Applying scores in a way that can be justified if challenged
Consultation: The heart of a fair redundancy process
Consultation is not a formality. It is a genuine opportunity for dialogue.
Even where the outcome feels inevitable from a business perspective, employers are expected to consult meaningfully with affected employees. This includes explaining the situation, inviting feedback, and considering alternatives. Effective consultation reduces legal risk and often improves outcomes. Employees who feel heard are less likely to challenge the process, even where they disagree with the decision.
We support employers by:
Advising on the structure and timing of consultation meetings
Preparing scripts and guidance for managers
Drafting written communications
Helping employers respond to employee suggestions
Ensuring consultation is documented appropriately
Alternatives to Redundancy
Employers are expected to consider alternatives to redundancy, even if those alternatives are ultimately rejected.
Potential alternatives may include:
Redeployment to other roles
Reduced hours or temporary lay off
Changes to duties or working patterns
Voluntary redundancy
Salary reductions, where appropriate
Not all alternatives will be viable, particularly in smaller businesses. However, failure to consider them at all can undermine the fairness of the process. We help employers assess which alternatives must be explored and how to record those considerations in a way that protects the business.
Managing Communication With Care
How redundancy is communicated can be as important as the legal mechanics.
Poor communication creates confusion, resentment, and mistrust. Clear, calm communication helps employees understand the business rationale and reduces the likelihood of escalation.
We regularly assist employers with:
Redundancy announcement letters
Individual meeting invitations
Outcome letters
Internal communications to remaining staff
Our emphasis is on clarity, consistency, and professionalism, avoiding language that is inflammatory or misleading.
Redundancy pay, notice, and entitlements
Employers must ensure that financial entitlements are handled correctly.
This includes:
Statutory redundancy pay, where applicable
Contractual redundancy terms
Notice pay
Accrued but untaken holiday
Pension considerations
Errors in calculation or payment frequently trigger disputes, even where the process itself was otherwise sound. We help employers ensure that entitlements are correctly identified and paid, reducing the scope for later challenge.
Settlement agreements and managed exits
In some situations, redundancy overlaps with settlement discussions.
This may arise where:
Legal risk is unclear
Relationships have deteriorated
Senior employees are involved
Both parties want certainty and closure
Settlement agreements can provide a clean, professional conclusion if used appropriately. They should not be treated as a default option, nor as a way to bypass fair process.
We advise employers on:
Whether a settlement agreement is appropriate
When and how to raise the possibility of settlement
Using without prejudice conversations correctly
Structuring settlements that reflect real legal exposure
Drafting settlement agreements that withstand scrutiny
The aim is not to secure an advantage at any cost, but to manage risk sensibly and preserve reputational integrity.
Maintaining relationships after redundancy
Many employers underestimate the long term impact of how redundancies are handled.
Former employees may become clients, suppliers, or business contacts in the future. Remaining staff observe how colleagues are treated and draw conclusions about the organisation’s values.
By handling redundancy with care, employers can protect morale, reputation, and future working relationships.
Our advice consistently reflects this broader perspective.
Ongoing employment law support for employers
Redundancy rarely exists in isolation. It often sits alongside wider employment issues.
We advise employers on:
Employment contracts and variations
Performance management and capability issues
Disciplinary processes
Long term sickness absence
Senior employee and director exits
In many cases, we act as an ongoing adviser, helping employers sense check decisions before they escalate into disputes.
Frequently asked questions
Do employers always need a redundancy consultation process?
Yes. A fair consultation process is required in every redundancy situation, even where only one role is affected. Employers must engage meaningfully with employees, explain the business rationale, consider alternatives, and allow time for responses before making a final decision.
What is collective consultation and when does it apply?
Collective consultation is required where an employer proposes to dismiss 20 or more employees at one establishment within a 90-day period. Minimum consultation periods apply (30 or 45 days depending on numbers), and employers must notify the Secretary of State using Form HR1.
Can an employer select employees for redundancy based on performance?
Potentially, but only where the criteria are objective, measurable and applied consistently. Employers should avoid subjective or discriminatory criteria and ensure scoring can be clearly justified if challenged.
What makes a redundancy dismissal unfair?
A redundancy dismissal may be unfair where the process is flawed, consultation is inadequate, the selection pool is inappropriate, scoring is unreasonable, or alternatives to redundancy are not properly explored.
Do employers have to offer suitable alternative employment?
Yes, where suitable roles exist. Employers must actively consider alternative positions and discuss them with affected employees. Failure to do so may render a dismissal unfair.
What redundancy payments are employees entitled to?
Eligible employees are entitled to statutory redundancy pay based on age, length of service and weekly pay (subject to the statutory cap). Many employers also offer enhanced contractual redundancy packages.
Can employees challenge redundancy decisions?
Yes. Employees may raise internal appeals or bring claims in the Employment Tribunal for unfair dismissal, discrimination or protective awards in collective redundancy cases.
How can employers reduce legal risk during a redundancy process?
Risk is reduced through careful planning, clear documentation, consistent communication, properly structured consultation, and early legal advice at key decision points.
Is settlement agreement use appropriate in redundancy situations?
In some cases, yes. Settlement agreements can provide certainty and reduce litigation risk, but they must be handled carefully and supported by a fair underlying process.
Do small businesses have to follow redundancy procedures?
Yes. There is no exemption for small employers. The same principles of fairness and consultation apply regardless of business size.
How long does a redundancy process usually take?
Timelines vary depending on complexity and numbers involved, but employers should allow sufficient time for meaningful consultation and careful decision-making rather than rushing the process.
Why employers choose Eddison Cogan Lawyers
Employment law advice should be clear, calm, and commercially grounded. We do not offer alarmist guidance or unnecessary complexity. Our approach is practical, proportionate, and focused on helping employers make defensible decisions that align with how businesses actually operate.
For employers navigating redundancy, restructuring, or other employment challenges, this balance is critical.
Discussing your situation
If you are considering a redundancy process or responding to workplace restructuring, careful planning and early advice can make a significant difference. Eddison Cogan Lawyers advises employers across England and Wales on redundancy planning, consultation processes, settlement strategy and risk management within a measured and commercially realistic framework.
The following note is included for clarity and completeness: This article is provided for general information only and does not constitute legal advice. The law relating to redundancy and employment practices in England and Wales may change over time and depends on the specific facts of each situation. You should not rely on this article as a substitute for obtaining professional advice tailored to your circumstances. Reading this article does not create a solicitor-client relationship between you and Eddison Cogan Lawyers.
