Redundancy
Redundancy is dismissal because the job no longer exists due to business closure, workplace closure, or reduced need for employees doing that work.
legal-terms
Category
intermediate
Difficulty
6 min read
Read time
2025-01-15
Updated
Definition
Short definition
Redundancy is dismissal because the job no longer exists due to business closure, workplace closure, or reduced need for employees doing that work.
Detailed explanation
Redundancy occurs when an employee is dismissed because the employer has ceased or intends to cease the business, the workplace has closed, or fewer employees are needed to do work of a particular kind.
Employees with 2+ years service are entitled to statutory redundancy pay: 0.5 weeks pay per year under 22, 1 week per year 22-40, 1.5 weeks per year over 41. Weekly pay is capped (£700 in 2024).
Employers must follow fair process: genuine redundancy reason, fair selection criteria, consultation, and consider alternatives. 20+ redundancies within 90 days requires collective consultation.
Practical guidance
How it works
Identify need, consult employees, apply fair selection, calculate pay and notice, provide support. Collective consultation if 20+.
Best practices
Document business case clearly
Use objective selection criteria
Consult meaningfully
Consider alternatives
Support affected employees
Legal context
Legal basis
Employment Rights Act 1996
Jurisdiction: United Kingdom
Key provisions
Statutory pay after 2 years service
0.5/1/1.5 weeks per year by age
Weekly pay capped at £700 (2024)
Maximum 20 years service counts
Collective consultation for 20+
Notice period still applies
Official source
Frequently asked questions
How much is statutory redundancy pay?
0.5 weeks pay per year of service under 22, 1 week per year age 22-40, 1.5 weeks per year over 41. Weekly pay is capped at £700 (2024). Maximum 20 years service counts.
Can I be made redundant while on maternity leave?
Yes, genuine redundancy can apply to employees on maternity leave, but they have enhanced rights including first offer of suitable alternative roles.
Related glossary terms
Notice Period
A notice period is the time between giving notice of termination and the end of employment, with UK statutory minimums of 1 week per year of service (up to 12 weeks).
Unfair Dismissal
Unfair dismissal is when an employee with 2+ years service is dismissed without a fair reason or without a fair procedure under UK employment law.