The CIPD produces a quarterly Labour Market Outlook that polls more than 2,000 employers. Their latest report New labour market data shows that employers need more support to invest in their workforces and boost productivity | CIPD found that a third (32%) of businesses planned to reduce their headcount through redundancies or by recruiting fewer staff.
Unfortunately it seems redundancies and difficult decisions may be a reality for many businesses during 2025 and therefore we have provided a summary of the key legal issues below:
- Fair reason for dismissal: Redundancy is one of the statutory, potentially fair, reasons for dismissal under UK employment law, but a fair procedure is required to avoid unfair dismissal claims.
- Identify a genuine redundancy situation: A redundancy situation arises when a business closes, relocates, or needs fewer employees to carry out a specific type of work.
- Consult: Employers must engage in meaningful consultation with affected employees who have been put at risk. Failure to do so may result in claims for unfair dismissal. Several meetings are generally required.
- No legal right to be accompanied: As redundancy dismissals are not concerned with capability or conduct, the legal right to be accompanied by a work colleague or trade union representative at consultation meetings does not apply. However, it is often good practice to allow employees to bring someone with them (and many internal redundancy policies offer this).
- Collective consultation obligations: If 20 or more redundancies are proposed within a 90-day period, employers must consult with employee or trade union representatives and notify the government (by submitting an HR1 form). Liability for failure to collectively consult can be up to 90 days’ pay (uncapped).
- Selection/scoring: If a selection process is required, employers must use fair, objective, selection criteria, such as skills, qualifications, and performance. Discrimination must be avoided.
- Alternative employment: As part of efforts to avoid redundancies where possible, employers must make employees aware of any vacancies available within the business and consider alternative roles. Employees who are pregnant, on family leave or who have recently returned to work following family leave, have a right of first refusal of any suitable alternative employment available.
- Statutory redundancy pay: Employees with at least two years of service may be entitled to redundancy pay, calculated based on age, length of service, and weekly pay (subject to a cap). Some employers offer more generous contractual terms and the government amounts can be calculated here: Calculate your statutory redundancy pay - GOV.UK
- Notice Periods: Employers should give notice in line with contractual and statutory requirements.
- Appeal: The process should be concluded with the offer to appeal against the decision.
Taking care to manage redundancies correctly ensures legal compliance and minimises risks while supporting employee trust and morale during difficult times – please note that this article is not a substitute for legal advice and we would be happy to work with you to create a bespoke redundancy plan or answer any questions. Contact us if you need advice.
