Redundancy Process: Employer Step-by-Step Guide

TL;DR: Redundancy is a legally defined process, not simply a decision to let someone go. Getting the procedure right — genuine reason, fair selection, meaningful consultation, correct pay — is essential to avoiding unfair dismissal claims.

What You Need to Know

Making roles redundant is one of the most significant decisions an employer can make. It affects people's livelihoods, and the law in every jurisdiction covered by this guide imposes procedural requirements designed to ensure it is done fairly, genuinely, and with proper financial compensation.

A redundancy is only a genuine redundancy if it results from a business need — not from performance issues or personal dislike. Using redundancy as a pretext for dismissal is a form of unfair dismissal and discrimination that courts and tribunals investigate closely. Even where the reason is genuine, following a flawed process can make the dismissal unfair.

This guide walks through the key stages of a lawful redundancy process and the documentation employers need to prepare at each step.

How It Works: A Practical Overview

Stage 1: Establishing a Genuine Business Reason

The first question is whether there is a genuine redundancy situation. In the UK, redundancy is defined under the Employment Rights Act 1996 as: the employer has ceased or intends to cease to carry on the business; or the requirements of the business for work of a particular kind have ceased or diminished (or are expected to).

In other jurisdictions, similar concepts apply — "retrenchment" in Australia, "licenciement économique" in France, "layoff" in Canada and the US. The common thread is that the decision is business-driven, not person-driven.

If the true reason is the employee's performance or conduct, redundancy is the wrong process. Use a capability or disciplinary procedure instead.

Stage 2: Fair Selection

Where multiple employees could be at risk, the employer must define a "pool" of employees from which the selection will be made, and apply objective, non-discriminatory selection criteria.

Commonly used criteria include:

• Skills and qualifications required going forward
• Performance record (based on documented appraisals)
• Attendance record (excluding disability-related absences)
• Flexibility and adaptability
• Length of service (with caution — over-reliance may indirectly discriminate against younger workers)

Selection criteria must be documented and applied consistently. "Last in, first out" as the sole criterion is increasingly problematic due to age discrimination concerns.

Stage 3: Collective Consultation

When a certain number of redundancies are proposed, collective consultation obligations are triggered:

• UK: 30 days' minimum consultation if 20–99 redundancies proposed; 45 days if 100+. Must consult employee representatives.
• France: Works council (comité social et économique) must be consulted. Process is strictly regulated and can take months.
• Australia: "Genuine redundancy" requires compliance with any applicable Modern Award or enterprise agreement consultation requirements.
• Canada: "Group termination" notice rules vary by province.

Failure to collectively consult is a serious breach — in the UK, each affected employee can receive a "protective award" of up to 90 days' uncapped pay.

Stage 4: Individual Consultation

Even where collective consultation is not required, individual consultation is essential:

• Inform the employee they are at risk of redundancy
• Allow them to have a companion at meetings
• Genuinely consider any representations they make
• Explore whether there are any suitable alternative roles

The consultation must be meaningful — not a rubber-stamping exercise. Courts and tribunals examine whether the employer genuinely considered alternatives to redundancy and whether individuals were genuinely able to influence the outcome.

Stage 5: Notice and Redundancy Pay

Employees selected for redundancy are entitled to:

1. Statutory notice (or payment in lieu)
2. Statutory redundancy pay (where qualifying criteria met)
3. A written statement confirming the redundancy

Statutory redundancy pay in the UK is calculated based on age, length of service, and weekly pay (subject to a cap). In Australia, the National Employment Standards set out a sliding scale of redundancy pay by years of service. In France, the statutory indemnité de licenciement is similarly calculated by length of service.

Country-by-Country Comparison

Common Mistakes to Avoid

1. Pre-determining the outcome. The most common finding in unfair dismissal cases involving redundancy is that the employer had already decided to make a specific person redundant before the process began. Keep genuine records of the pool, criteria, and scores. Never communicate a foregone conclusion.
2. Failing to consider redeployment. Before confirming a redundancy, you must genuinely look for suitable alternative roles within the organisation. In Australia, this is a requirement for the redundancy to be considered "genuine." In the UK, failure to do so can make an otherwise fair redundancy unfair.
3. Selecting on the basis of protected characteristics. If your selection pool or criteria have a disparate impact on employees in a particular age group, gender, or ethnicity, you may face discrimination claims in addition to unfair dismissal. Review selection outcomes against protected characteristics before confirming.
4. Getting the redundancy pay calculation wrong. In the UK, the weekly pay cap changes annually. In Australia, the NES table has specific rules for partial years of service. Underpaying statutory redundancy pay creates a debt and risks enforcement action.
5. Not allowing a right of appeal. Best practice — and in some jurisdictions a legal requirement — is to offer the employee a right of appeal against the redundancy decision. Not offering appeal is a procedural failing that tribunals take into account when assessing fairness.

Next Steps: Get Started Today

Prepare redundancy documentation and track your legal obligations:

• Employment Checker — verify redundancy consultation and pay requirements by jurisdiction
• Filing Deadlines — track notice periods and consultation timelines
• Cost Calculator — estimate total redundancy costs including statutory pay and notice

MmowW Scrib🐮 is a document preparation service, not a law firm. We do not provide legal advice. For advice specific to your situation, consult a qualified employment solicitor or attorney.

Frequently Asked Questions

Q: Can I make someone redundant while they are on maternity leave?

A: An employee on maternity leave can be made redundant if there is a genuine redundancy situation, but additional protections apply. In the UK, they have the right of first refusal for any suitable alternative vacancy, and their selection cannot be because of their maternity leave. Extreme care is required, and legal advice should always be obtained before making a pregnant employee or new parent redundant.

Q: Do I have to pay redundancy to someone still in their probationary period?

A: In the UK, statutory redundancy pay requires two years of continuous employment — so probationary employees are generally not entitled to statutory redundancy pay. However, notice pay (or PILON) is still required from day one. In Australia and NZ, minimum service periods also apply for redundancy pay entitlement.

Q: What is "bumping" in redundancy, and do I have to consider it?

A: "Bumping" refers to making a long-serving employee in a non-redundant role redundant in order to redeploy another employee whose role is genuinely redundant. UK employment tribunals have found that failure to consider bumping can make a redundancy unfair, though employers are not required to bump in every case. Document your consideration of this option even if you decide against it.

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