Redundancy - 
the law

Basic legal rules


A redundancy situation exists where an employer closes or intends to close the workplace or reduce the number of employees doing a particular kind of work. In particular, the employer must: 


• adopt redundancy selection criteria which are not discriminatory;


• allow employees selected for redundancy time off to look for other work, provided they have at least two years’ service;


• give redundancy pay to all employees with at least two years’ service calculated using a statutory formula linked to age and length of service. A week’s gross pay is subject to a statutory maximum cap which is reviewed annually (£475 from 6 April 2015); and


• offer any suitable available vacancies. 


If at least 20 redundancies are proposed, the employer must notify the Department for Business, Innovation and Skills. It must also consult employee reps with a view to reducing the number of redundancies. There are detailed rules which must be followed. If an employer fails to consult, a union can apply for a protective award.


Key developments 


• Resignations may count towards total number of dismissals for the purposes of collective redundancy consultation (case 8).