Redundancy policy

A redundancy is a dismissal, and it is fair only if there is a genuine redundancy situation, a fair pool and selection, consultation that is real, a search for alternative employment, and the statutory and contractual payments made in full. The policy sets that process out before a manager has to run it under pressure, including the collective consultation that applies when twenty or more posts go, the protection for employees on family leave, and the trial periods and time off the law gives. I draft the policy for the employer as part of the handbook and core policies for a fixed fee of £995, delivered in five working days.

Who this is for

Employers in England and Wales who want a redundancy process written down before they need one, and employers whose last redundancy was done without a policy.

What matters in a redundancy policy

What redundancy is and what it is not

Redundancy under section 139 of the Employment Rights Act 1996 arises where the business or the workplace closes or the requirement for employees to do work of a particular kind ceases or diminishes, and the policy should state that definition, say that redundancy is about the role and not the person, and distinguish it from performance, conduct and the reorganisation of duties, because a dismissal labelled redundancy that is really about an individual is an unfair dismissal with a redundancy payment on top; it should also say that the employer will consider alternatives (natural wastage, recruitment freezes, reduced hours, voluntary redundancy) before compulsory redundancies.

The process for a fair individual redundancy

The policy should set the stages: the business case and the proposal, the identification of the pool, the warning to affected employees, the consultation meetings (at least two, with the proposal, the selection criteria, the scores and the alternatives discussed, and the right to be accompanied as good practice), the provisional selection, the search for alternative employment, the decision in writing with notice, and the appeal; the stages are what a tribunal checks, and a policy that sets them lets a manager follow them in the right order.

Pools, selection criteria and the protected groups

The policy should say how the pool is defined (the employees doing the work that has diminished, and those who do interchangeable work), that selection criteria are objective and measurable so far as possible (skills, qualifications, performance records, disciplinary records, attendance adjusted for disability and family leave), applied by more than one manager and recorded, and that criteria which disadvantage a protected group are avoided; employees on maternity, adoption or shared parental leave and those in the protected period after returning have the right under the Maternity and Parental Leave etc. Regulations 1999 as extended to be offered a suitable alternative vacancy ahead of others, and the policy should state it.

Collective consultation and the thresholds

Where the employer proposes to dismiss twenty or more employees at one establishment within ninety days, section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 requires consultation with recognised trade union or elected employee representatives starting at least thirty days before the first dismissal (forty-five days for a hundred or more), with the information the section lists disclosed and a notification to the Secretary of State on the prescribed form, and a protective award of up to ninety days' pay per employee for failure; the Employment Rights Act 2025 changes the counting of the threshold on a timetable the regulations set, and the policy should set the collective process and the election of representatives so that they exist when the numbers require them.

Alternative employment, trial periods and time off

The policy should state that the employer will look for alternative employment across the business and any group, offer suitable vacancies, allow a statutory trial period of four weeks in a new role under section 138 of the Employment Rights Act 1996 (longer by agreement for retraining) without losing the redundancy payment if the role is unsuitable, and give employees under notice of redundancy with two years' service reasonable paid time off to look for work or arrange training under section 52 of the Act; an employee who unreasonably refuses suitable alternative employment loses the redundancy payment, and the policy should explain both sides.

Pay, notice, appeals and settlement

The policy should set out the statutory redundancy payment under section 135 of the Employment Rights Act 1996 for employees with two years' service, calculated by age, service and a week's pay up to the statutory limit, any enhanced scheme the employer operates and its conditions (which can become contractual by custom), notice under section 86 or pay in lieu, accrued holiday, the appeal process, the reference the employer will give, and the use of settlement agreements where enhanced terms are offered in return for a waiver of claims; the tax-free treatment of the statutory payment and of genuine redundancy payments up to thirty thousand pounds under the Income Tax (Earnings and Pensions) Act 2003 is confirmed by the accountants.

What it costs

Staff handbook and core policies, £995. Five working days.

Employment contract, £595. One template you can reuse for a grade of staff. Five working days.

Buying online forms the engagement on payment. The scope is what the employment contracts and handbooks page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how you employ people
• Restrictive covenants drafted at a scope a court will uphold
• Confidentiality and intellectual property provisions that put ownership where it belongs
• The statutory particulars, so the document does the job section 1 of the Employment Rights Act 1996 requires it to do
• Flexibility clauses where you genuinely need them, drafted to survive challenge
• Core policies: disciplinary, grievance, sickness absence, equal opportunities, data protection and, increasingly, AI use
• One round of amendments

What is not included

• Acting for employees
• Employment tribunal representation
• Payroll, pensions auto-enrolment and tax
• Immigration and sponsor licence work
• Day to day HR handling, disciplinaries, grievances and redundancy processes

Questions I am often asked

Can we make one person redundant and recruit someone else for the same job?

Not as a redundancy: if the requirement for the work has not diminished, the role is not redundant and the dismissal is unfair. The policy defines redundancy so that managers do not use the label for something else.

Do we have to consult if we are only making three people redundant?

Individually, yes, in real consultation with meetings and alternatives considered. Collective consultation applies at twenty or more proposed dismissals at one establishment within ninety days.

Does an employee on maternity leave have priority for alternative roles?

She does, by statute, during leave and the protected period after returning: a suitable alternative vacancy must be offered to her ahead of other employees. The policy states the right.

Related guidance and services

• Employment contracts and handbooks, £995, the service this page describes
• Consultancy and contractor agreements, £595
• Settlement agreement on redundancy
• Staff handbook for a business with twenty employees

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.