Redundancy

Key takeaways

• You usually qualify for statutory redundancy pay if you have at least two years’ continuous service as an employee.
• Statutory redundancy pay is based on your age, length of service (capped at 20 years) and weekly pay, which is capped at £751 from 6 April 2026, giving a current maximum of £22,530.
• Your employer must use a fair, objective selection process and consult you properly; selection based on a protected characteristic such as age, sex, disability, race, religion or pregnancy is unlawful.
• Statutory notice is at least one week for one month to two years’ service, then one week for each full year up to a maximum of 12 weeks.
• Where 20 or more redundancies are proposed at one site within 90 days, collective consultation rules apply, with a minimum of 30 days (20 to 99 redundancies) or 45 days (100 or more).
• A claim for unfair dismissal or unfair selection must usually reach the employment tribunal within three months less one day of the dismissal, so deadlines are tight.
• Employers must be able to show a genuine reason, objective selection, proper consultation and correct notice and pay, or they risk unfair dismissal and protective award claims.

Redundancy is one of the most sensitive areas of employment law, and it is not always handled correctly.

Sterling Law’s redundancy solicitors in London advise both employees and employers across England on redundancy, settlement agreements, consultation and dismissal disputes. Whether you want to understand where you stand before signing anything, or you are planning a fair and compliant redundancy process, it is worth taking advice early, while there is still time to get it right.

Table of contents

• What are your legal rights if you are made redundant?
• How does an employer select employees for redundancy?
• What is voluntary redundancy?
• What notice period are you entitled to?
• How is redundancy pay calculated?
• When is a redundancy unfair?
• Collective redundancies and consultation
• Redundancy advice for employers
• How can we help?
• FAQ

What are your legal rights if you are made redundant?

If you are made redundant, you have the right to be told in advance, to be consulted, to reasonable notice or pay in lieu of notice, and, in most cases, to statutory redundancy pay. Redundancy is a form of dismissal, so it must be genuine and handled fairly.

A redundancy is only genuine where the employer’s need for employees to do work of a particular kind has ceased or diminished, or is expected to. Your employer must choose who is made redundant in a fair and transparent way, which normally involves a meaningful consultation and an objective look at how many roles are actually needed. You keep your other employment rights throughout the process, including protection from discrimination.

How does an employer select employees for redundancy?

An employer must apply fair, objective and consistently measured selection criteria, and must be able to justify why you were chosen rather than someone else. Selection cannot be a pretext for removing a particular individual.

Criteria an employer may lawfully consider include:

• length of service;
• standard of work, skills, qualifications and experience;
• attendance and disciplinary records, provided they are accurate and applied consistently;
• who has volunteered for redundancy.

Selection is unlawful if it is based on a protected characteristic, on pregnancy or family leave, on trade union involvement, on part-time or fixed-term status, or on your having asserted a legal right. A selection process that uses vague, subjective or unevenly applied criteria can make the resulting dismissal an unfair dismissal, even where a real redundancy situation exists.

What is voluntary redundancy?

Voluntary redundancy is where an employer invites staff to apply to leave, usually in return for an enhanced payment above the statutory minimum. It is optional for you, and your employer does not have to accept your application.

Because a voluntary redundancy package and its terms are almost always recorded in a settlement agreement, sometimes called a redundancy agreement, you should understand exactly what rights you are giving up before you sign. It is sensible to compare the offer against what you would receive as statutory redundancy pay plus notice, and to check whether any potential claims, such as discrimination, are being settled for less than they are worth.

What notice period are you entitled to?

You are entitled to the greater of your statutory minimum notice and any longer notice set out in your contract. Statutory minimum notice is:

• at least one week if you have been employed between one month and two years;
• one week for each complete year if you have been employed between two and 12 years;
• 12 weeks if you have been employed for 12 years or more.

Your employer can ask you to work your notice, place you on garden leave, or pay you in lieu of notice if your contract allows it. Notice pay is separate from, and paid in addition to, statutory redundancy pay.

How is redundancy pay calculated?

If you have employee status and at least two years’ continuous service, you are usually entitled to statutory redundancy pay. It is calculated from your age, your length of service and your weekly pay, using set multipliers for each full year worked:

• half a week’s pay for each full year you were under 22;
• one week’s pay for each full year you were aged 22 to 40;
• one and a half weeks’ pay for each full year you were aged 41 or over.

Length of service is capped at 20 years, and a week’s pay is capped at £751 from 6 April 2026. This makes the maximum statutory redundancy payment £22,530. As an example, an employee aged 45 with eight complete years of service, all worked after age 41 and paid above the cap, would receive 8 × 1.5 × £751 = £9,012. Your own figure will depend on your exact age and service, and the government’s redundancy pay calculator gives a precise result.

Statutory redundancy pay up to £30,000 is currently tax-free. Many employers pay a more generous contractual or enhanced amount, which is where a settlement agreement is often used.

Statutory redundancy pay figures (from 6 April 2026)

When is a redundancy unfair?

A redundancy is unfair where there is no genuine redundancy situation, where the selection is unfair or discriminatory, where there has been no proper consultation, or where the employer failed to consider suitable alternative employment. In those situations you may have a claim for unfair dismissal, separate from your redundancy pay, and an unfair redundancy of this kind can be challenged at an employment tribunal.

If your resignation was forced by your employer’s conduct during the process, that may instead be a constructive dismissal. Where the reason for your selection connects to a protected characteristic, you may also have a claim for discrimination at work. A claim for unfair dismissal or unfair selection must usually be started at the employment tribunal within three months less one day of the dismissal, although a claim for an unpaid statutory redundancy payment has a longer six-month limit. Early conciliation through Acas is a required first step.

Collective redundancies and consultation

Where an employer proposes to make 20 or more employees redundant at one establishment within any 90-day period, collective consultation rules apply in addition to individual consultation. The minimum consultation period is 30 days before the first dismissal where 20 to 99 redundancies are proposed, and 45 days where 100 or more are proposed.

The employer must consult appropriate representatives and notify the Redundancy Payments Service within the same timescales. If an employer fails to consult properly, affected employees can bring a claim for a protective award; from 6 April 2026 the maximum protective award doubled to 180 days’ gross pay per affected employee.

Redundancy advice for employers

Employers must be able to show that a redundancy is genuine and that they followed a fair procedure, because a flawed process is the most common cause of a successful unfair dismissal claim. A defensible redundancy needs a proper business reason, meaningful consultation, objective and consistently applied selection criteria, a search for suitable alternative roles, and correct notice and redundancy pay.

To run a fair redundancy process, an employer should:

• confirm and document the genuine business reason for the redundancies;
• identify an appropriate selection pool and objective, measurable selection criteria;
• consult individually, and collectively where 20 or more roles are at risk at one establishment within a 90-day period;
• score employees fairly and consistently, avoiding any protected characteristic;
• consider and offer suitable alternative employment where it exists;
• give the correct statutory or contractual notice and calculate redundancy pay correctly.

Sterling Law advises employers on designing and running compliant redundancy programmes, drafting settlement agreements, meeting individual and collective consultation duties, and defending unfair dismissal and discrimination claims at the employment tribunal.

How can we help?

Sterling Law’s redundancy solicitors act for both employees and employers, from the first consultation meeting through to negotiating an exit or resolving a tribunal claim. Acting on both sides means we understand exactly how the other side thinks, which helps whether we are protecting an employee or defending an employer’s process.

For employees, our work can include:

• reviewing your consultation process and selection criteria;
• checking your redundancy pay and notice entitlement is correct;
• advising on and negotiating settlement agreements;
• assessing whether your selection was unfair or discriminatory;
• advising on suitable alternative employment and trial periods;
• pursuing unfair dismissal and discrimination claims at the employment tribunal;
• guiding you through Acas early conciliation and tribunal deadlines.

For employers, our work can include:

• planning and running a fair, defensible redundancy procedure;
• defining selection pools and objective selection criteria;
• meeting individual and collective consultation duties;
• drafting settlement agreements and exit documentation;
• calculating notice and statutory redundancy pay correctly;
• defending unfair dismissal, discrimination and protective award claims.

Why choose Sterling Law?

Sterling Law is a law firm authorised and regulated by the Solicitors Regulation Authority, with a dedicated employment law team that acts for both employees and employers in redundancy, dismissal and discrimination matters.

If you are facing redundancy, have been given a settlement agreement, or are an employer planning a redundancy process, contact us before you sign, dismiss, or let a tribunal deadline pass.

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Frequently asked questions

Do I qualify for statutory redundancy pay?

You usually qualify if you are an employee with at least two years’ continuous service and you are dismissed because of redundancy. Agency workers and the genuinely self-employed do not qualify.

How much is statutory redundancy pay in 2026?

It is based on your age, length of service and weekly pay. A week’s pay is capped at £751 from 6 April 2026, service is capped at 20 years, and the maximum statutory payment is £22,530.

Is redundancy pay taxed?

Statutory redundancy pay is tax-free, and redundancy payments are generally tax-free up to £30,000. Amounts above that, and certain contractual payments, may be taxable.

What notice am I entitled to when made redundant?

At least one week for one month to two years’ service, one week for each full year between two and 12 years, and a maximum of 12 weeks after 12 years, unless your contract gives you more.

Can I be made redundant while on maternity or sick leave?

You can be included in a genuine redundancy, but you cannot be selected because of maternity, pregnancy, sickness or any other protected reason, and employees on maternity leave have priority for suitable alternative roles.

What is the difference between redundancy and unfair dismissal?

Redundancy is a potentially fair reason for dismissal, but if the situation is not genuine, the selection is unfair or discriminatory, or you were not properly consulted, the dismissal can be unfair and challengeable.

How long do I have to bring a claim?

A claim for unfair dismissal or unfair selection must usually reach the tribunal within three months less one day of your dismissal; a claim for unpaid statutory redundancy pay has a six-month limit. You must start Acas early conciliation first.

Should I sign a settlement agreement offered during redundancy?

Not before taking independent legal advice, which the law requires for the agreement to be binding and which the employer usually contributes towards. Advice ensures you understand what you are giving up and whether the offer is fair.

How can an employer run a fair redundancy process?

An employer needs a genuine business reason, an objective selection pool and criteria, meaningful individual consultation (and collective consultation for 20 or more redundancies), consideration of suitable alternative roles, and correct notice and redundancy pay. Documenting each step is what makes the process defensible.

When must an employer carry out collective consultation?

Collective consultation is required where 20 or more redundancies are proposed at one establishment within 90 days, with a minimum of 30 days before the first dismissal for 20 to 99 redundancies and 45 days for 100 or more, plus notification to the Redundancy Payments Service.

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