Redundancy

In this video, we highlight some of the most important things that employers and employees should know when it comes to redundancies.

Employees with more than two years' continuous service are entitled to statutory redundancy pay:

• One week’s pay per year of service
• Capped at £1,100 per week from 22 September 2026
• This is in addition to notice pay, not instead of it

Use the guidance to:

• Check who qualifies for redundancy pay
• Calculate the correct amount
• Understand tax rules (payments over £50,000 may be taxable)

Statutory minimum notice periods apply based on service:

• Less than 2 years: 1 week
• 2–3 years: 2 weeks
• Over 3 years: 1 extra week per year, up to 12 weeks maximum

The guidance explains when these apply and how they interact with contractual notice.

Define redundancy payment entitlements

• Allow paid time off to seek work or training
• Require collective consultation in certain cases
• Establish enforcement mechanisms

Employees with more than 2 years’ service are entitled to:

• 1 week’s pay per year of service
• Subject to a cap: £1,040 per week (from 30 Sept 2025), this increases to £1100 effective 22 September 2026.
• Paid in addition to statutory or contractual notice

Redundancy payments over £50,000 may be taxable.

•  Less than 2 years: 1 week
•  Between 2–3 years: 2 weeks
•  More than 3 years: 1 additional week per year, up to 12 weeks max

To qualify for redundancy pay, one of the following must occur within 6 months of termination:

• Payment is made
• Employee claims in writing
• Tribunal claim is submitted

Tribunal may allow a further 6-month extension for late claims if justified.

• Employees with more than 2 years’ service may take up to or 40% of a working week during the notice period if this is worked.
• Can be taken in hours, half days, or full days
• Tribunal may award more than 40% pay if time off is refused or unpaid

Employers must follow fair redundancy procedures (link to process, letters and form)

1. Consult with the employee
2. Warn of redundancy
3. Use fair selection criteria
4. Explore alternatives

• Non-renewal = dismissal
• May qualify as redundancy if the job ends
• More than 2 years’ service required (can be via multiple FTCs with less than 9 weeks between contracts)

For unfair dismissal, the break can be up to 26 weeks, but for redundancy, it must be less than 9 weeks.

Redundancy and the process set out above applies to employees working under zero-hour contracts.

• If re-employed, continuous service resets to zero
• Future redundancy pay will not include prior service

• If the employee refuses a reasonable offer starting within 4 weeks, redundancy pay is forfeited
• If terms differ, a trial period applies; redundancy pay remains due if the role doesn’t work out

• Applies when more than 12 employees are to be made redundant at one establishment within 30 days
• Must consult with elected representatives
• Failure to consult may result in protective awards of up to 9 weeks’ pay per employee

• Collective consultation and time-off rights do not apply to FTCs of less than 1 year, unless:
• Employee had a previous FTC of less than 1 year
• The break between contracts was less than 9 weeks

• Employers must notify the Social Security Minister:
• Before giving notice to employees
• Or at least 30 days before the first dismissal

Insolvency does not fall under employment legislation and whilst JACS will  always assist as much as possible our advice is limited.

Watch our video to learn about a case study involving an employee selected for redundancy, and why accepting or rejecting an alternative role can affect redundancy entitlement.

If you have any concerns about redundancy or need some advice, please feel free to reach out to us.

The Problem

We were contacted by an employee who had been dismissed after being selected for redundancy. They believed they should have received a redundancy payment.

The employee had worked for a medium-sized local business for 9 years and was part of a team of six employees carrying out similar roles with similar levels of responsibility.

Where it went wrong

The company invited everyone in the team to a consultation meeting, where they explained the proposed restructure and the reasons behind it.

At a subsequent meeting, employees were told that selection for redundancy would be based on specific criteria and a scoring matrix.

The employee received the lowest score and was selected for redundancy.

However, rather than simply proceeding with the redundancy, the company offered the employee an alternative role within the business. The role was very similar but was in a different team.

The company also offered the employee the opportunity to take the role on a trial basis, but the employee declined the offer.

Things that were missed

The employee believed that they were entitled to a redundancy payment.

However, where an employee who might otherwise be made redundant refuses a reasonable offer of the same or similar suitable employment starting within 4 weeks of the date of termination, they may not be entitled to a redundancy payment.

Where the alternative role differs in capacity or place, or the terms and conditions differ wholly or in part, the legislation provides for a trial period. If the role does not work out during the trial period, redundancy payments may still be due.

The Result

We reviewed the information provided by the employee and advised them on the legislation relating to redundancy.

Unfortunately, because the employee chose not to accept the alternative role offered, they were not eligible for a redundancy payment.

No further action was taken, as the company had followed the relevant rules.