UK · Employment rights

Redundancy rights UK

Redundancy means your job is going, not that you have done something wrong. UK law sets a clear floor of rights for employees in this situation: statutory pay (after two years of service), a notice period, a fair consultation, and accrued holiday paid out. The rest of this page explains how each of those works, with links to the calculators that do the maths.

Last updated Last reviewed

What counts as a redundancy?

Under section 139 of the Employment Rights Act 1996, a dismissal is by reason of redundancy if it is because the employer has ceased the business, ceased the workplace, or no longer needs the work the role does. The key point is that redundancy attaches to the role, not the person. If a role is being filled by someone else under a different name, that is not a genuine redundancy.

You can be made redundant during a downturn, a restructure, a relocation, a merger, or an automation programme. The common thread is that the work itself no longer exists in the form it did before. If you suspect that the redundancy framing is being used to disguise a performance or conduct dismissal, that is grounds for an appeal and, if you have two or more years of service, potentially for an unfair-dismissal claim.

Statutory redundancy pay

Statutory redundancy pay is the minimum amount your employer must pay you, set out in section 162 of the Employment Rights Act 1996. To qualify you need at least two years of continuous service with the same employer. Below that threshold there is no statutory entitlement, although the employer can offer an enhanced or ex-gratia package.

The formula is age-banded:

  • Half a week’s pay for each full year of service during which you were under age 22.
  • One week’s pay for each full year aged 22 to 40 inclusive.
  • One and a half weeks’ pay for each full year aged 41 and over.

Two caps apply: only the most recent 20 years of service count, and weekly pay is capped at £700 (England, Wales and Scotland; uprated each April). So someone with 25 years of service only has 20 years counted; someone earning £1,000 a week has the calculation done at £700.

The first £30,000 of a redundancy package, combined across statutory redundancy and any ex-gratia portion, is tax-free. Anything above £30,000 is taxed as earnings. PILON and holiday pay do not share this allowance and are always taxable. The redundancy pay calculator handles the formula, the redundancy tax estimator handles the tax split, and the settlement agreement calculator combines everything if a settlement is on the table.

Notice periods at redundancy

You are entitled to either statutory notice or contractual notice, whichever is longer. Statutory minimum notice from the employer (section 86 ERA 1996) is one week between one month and two years of service, one week per full year for two to twelve years, and a cap of twelve weeks for twelve years or more. Contractual notice in your employment contract often exceeds the statutory figure, particularly in senior roles.

The employer can choose to have you work the notice, place you on garden leave, or pay you in lieu of notice (PILON). See the notice period rights guide for the detail on each option. The redundancy notice period calculator calculates the statutory minimum from your service length.

Consultation periods

Consultation is a legal requirement before any redundancy dismissal takes effect. Two regimes apply, depending on numbers:

Collective consultation applies when an employer proposes to dismiss 20 or more employees at one establishment within a 90-day period. The minimum periods are set by the Trade Union and Labour Relations (Consolidation) Act 1992, section 188: 30 days for 20 to 99 redundancies, and 45 days for 100 or more. The employer must consult with appropriate representatives (recognised trade union officials or elected employee representatives) and must notify the Department for Business and Trade using the HR1 form. Failing to consult is grounds for a “protective award” of up to 90 days’ pay per affected employee.

Individual consultation applies when collective consultation is not triggered. There is no fixed statutory minimum period, but case law expects a reasonable period that lets the employee consider alternatives and respond. A typical individual consultation involves two or three meetings over one to three weeks, with the employee accompanied by a colleague or trade union representative if they wish.

The content of consultation matters as much as the length. A meaningful consultation covers: the reasons for the redundancies, the selection process and criteria, ways to avoid the redundancies, ways to reduce the numbers, and ways to mitigate the consequences (including suitable alternative employment within the business). A consultation that goes through the motions without engaging with the employee’s responses is not meaningful and can be grounds for an unfair-dismissal claim.

Selection criteria

Where the employer is keeping some roles in your area and removing others, the selection process must be fair and transparent. The employer is expected to identify a “pool” of at-risk employees and apply objective selection criteria.

Common objective criteria include: skills, qualifications and experience; standard of work performance based on documented appraisals; attendance and disciplinary records (with appropriate adjustments for protected absences such as maternity or disability-related leave); length of service. Subjective criteria, or criteria that have discriminatory effect, are grounds for challenge.

You are entitled to know the criteria that have been applied, to see how you were scored, and to challenge the scoring if you believe it is wrong. Selection-criteria disputes are one of the most common grounds for redundancy appeals.

Suitable alternative employment

The employer is required to consider whether there is suitable alternative employment for you elsewhere in the business. “Suitable” is judged against your existing role’s status, pay, location, hours and duties; a markedly different or much lower-paid role is unlikely to be suitable.

If you are offered suitable alternative employment and refuse it without good reason, you can lose your right to statutory redundancy pay. If the new role is not suitable, you can refuse it without losing your redundancy entitlement. There is also a statutory four-week trial period for any alternative role accepted: if it does not work out within that period, redundancy entitlement is preserved.

Appeals

You are entitled to appeal a redundancy decision. Where the employer has a written appeals process, follow it; where they do not, put your appeal in writing addressed to a senior manager or HR director not involved in the original decision. The appeal should set out clearly what you are challenging: the genuineness of the redundancy, the consultation process, the selection criteria, the scoring, the consideration of alternative roles, or any combination.

The appeal hearing is conducted by someone independent of the original decision. You can be accompanied by a colleague or trade union representative. The outcome can be: dismissal upheld, dismissal overturned and reinstated, or revised terms (different selection outcome, alternative role, enhanced package). The appeal outcome is normally provided in writing.

If the appeal is unsuccessful and you believe the redundancy was unfair, you have three months less one day from the date of dismissal to bring an unfair-dismissal claim at an employment tribunal. ACAS early conciliation is mandatory before the claim is issued; the time limit pauses during the early conciliation period.

Holiday pay

Holiday continues to accrue throughout the notice period, whether you are working it, on garden leave, or have been paid PILON. Any accrued but untaken statutory holiday (5.6 weeks per year, pro-rated) must be paid out as cash on termination. The Working Time Regulations 1998 make this a legal floor; the employer cannot refuse and you cannot waive it. Contractual holiday above the statutory minimum may be lost if the contract specifies, so check.

The cash value uses your normal daily rate. The holiday entitlement calculator handles the accrual maths, including part-time and part-year scenarios.

Settlement agreements

For larger or more sensitive redundancies, employers sometimes offer a settlement agreement. A settlement agreement is a legally binding contract under section 203 of the Employment Rights Act 1996 that ends employment and waives the employee’s right to bring most claims, in exchange for an agreed financial package and other terms.

To be binding, the agreement must be in writing, relate to a specific complaint or claim, and the employee must have received independent legal advice from a qualified adviser who is named in the document and carries insurance. The employer typically pays a contribution toward this advice (commonly £350 to £750 plus VAT for routine cases, more for complex ones).

Settlement agreements usually combine: statutory redundancy, PILON, holiday pay, an ex-gratia or enhanced element, sometimes a contribution to outplacement, and agreed reference wording. The ex-gratia is the negotiable piece; statutory and PILON are calculated by formula. The can I negotiate a settlement agreement page covers the typical levers.

What to do if your rights are not respected

The escalation path is usually:

  1. Raise the issue in writing with your manager or HR, citing the specific entitlement or process that has been missed.
  2. Use the employer’s formal grievance procedure if the initial conversation does not resolve the issue.
  3. Contact ACAS for free advice. The helpline is 0300 123 1100. ACAS can explain your rights and help you understand whether you have a claim.
  4. Where there is a viable claim, initiate ACAS early conciliation (mandatory before a tribunal claim). The conciliation period is up to six weeks and pauses the tribunal time limit.
  5. If conciliation does not resolve the issue, lodge an employment tribunal claim. Time limits are tight (three months less one day for most claim types from the date of dismissal or the act complained of).

Related calculators on this site

Related guides and articles

Frequently asked questions

What are my redundancy rights in the UK?
If you have at least two years of continuous service and your role is genuinely being made redundant, you are entitled to: statutory redundancy pay (age and service banded, capped at £700 a week and 20 years of service); your contractual or statutory notice period, whichever is longer; pay for any accrued but untaken holiday; a fair consultation process; and where a settlement agreement is offered, paid independent legal advice. ACAS provides free guidance and early conciliation if anything goes wrong.
How is statutory redundancy pay calculated in the UK?
The formula (Employment Rights Act 1996, section 162) is half a week's pay per year of service under age 22, one week's pay per year aged 22 to 40 inclusive, and one and a half weeks' pay per year aged 41 and over. Service is capped at 20 years. Weekly pay is capped at £700 (England, Wales and Scotland; uprated each April). The first £30,000 of redundancy and any ex-gratia is tax-free; the rest is taxed as earnings.
How long is the consultation period for redundancy?
For collective redundancies (20 to 99 employees in 90 days at one establishment) the minimum is 30 days. For 100 or more, 45 days. For under 20 redundancies there is no statutory minimum, but a reasonable period of individual consultation is still required for a fair dismissal. The consultation period must run before any dismissal takes effect.
Can I appeal a redundancy decision?
Yes. Most employers have a written appeals process; if there is none, you can still appeal in writing. The appeal looks at whether the redundancy itself was genuine, whether the consultation was meaningful, whether the selection criteria were applied fairly, and whether suitable alternative roles were considered. If the appeal is unsuccessful and you have two or more years of service, you can take an unfair-dismissal claim to an employment tribunal within three months less one day of the dismissal date.
What is PILON and how is it taxed?
Payment in lieu of notice is a lump sum your employer pays instead of working out the notice. Since April 2018 all PILON is treated as Post-Employment Notice Pay and is fully taxable as earnings (PAYE plus National Insurance). It does not share the £30,000 termination payment allowance. The PILON calculator on this site gives you the gross figure; the redundancy tax estimator handles the combined package.
Do I get statutory redundancy pay if I have less than two years of service?
No. Statutory redundancy pay requires at least two years of continuous service with the same employer. Below two years, the employer can still offer an ex-gratia (enhanced) redundancy payment, and any such payment shares the £30,000 tax-free allowance. You are still entitled to your contractual notice (or PILON), accrued holiday pay, and any other contractual entitlements regardless of service length.

General information about UK redundancy law, not legal advice. For your specific situation, contact ACAS or an employment-law solicitor.

Sources and further reading