I am about to give an employee notice for their compulsory redundancy. They have worked for the company for 23 years, and earned £700 per week. The employee will be 43 years old when the notice is given. What amount will I need to pay the employee for redundancy?

Employees get:

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

if you agree with the employee to change their employment contract to allow them to be laid off or put on short-time working (this will not automatically give you the power to do this without their consent in the future)

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

The maximum payment is £30 a day for 5 days (£150) in any 3 months. If employees usually earn less than £30 a day, they’ll get their usual daily rate. For part-time workers, the rate is worked out proportionally.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

You can select employees based on their length of service (‘last in, first out’) but only if you can justify it. It could be indirect discrimination if it affects one group of people more than another.

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

There are no set rules to follow if there are fewer than 20 redundancies planned, but it’s good practice to fully consult employees and their representatives. An employment tribunal could decide that you’ve dismissed your staff unfairly if you do not.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

If your employee earned less than usual because you used the Coronavirus Job Retention Scheme to put them ‘on furlough’, you must work out their notice payments based on what they would have earned normally.

Pay in lieu of notice

If you have included a payment in lieu of notice clause in the employment contract, you can end your staff’s employment with no notice. This lets you make a payment to cover the notice period they would have worked.

These payments must have tax and National Insurance deducted.

When you make payments in lieu of notice, you still have to pay staff the basic pay they would have got during the notice period. You also have to pay pension, private health care insurance or other contributions if it’s in the employee’s contract.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

If your employee earned less than usual because you used the Coronavirus Job Retention Scheme to put them ‘on furlough’, you must work out their redundancy payments based on what they would have earned normally.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If you fail to pay redundancy pay or if an employee disagrees with the amount, they have 3 months from the date their employment ended to make a claim for payment to an employment tribunal.

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

1.5 weeks’ pay for each full year of employment after their 41st birthday

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

a week’s pay for each full year of employment after their 22nd birthday

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

half a week’s pay for each full year of employment up to their 22nd birthday

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

Length of service is capped at 20 years.

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies