Employee Redundancy: A Step-by-Step Guide for UK Employers

Making a single role redundant can feel more daunting than a larger restructure. You're not closing a department or running a big consultation exercise (it's one person, one job), and it's easy to assume the formal rules don't really apply. They do. The same legal process governs a redundancy of one as a redundancy of fifty, and getting it right is exactly what keeps a genuine business decision from turning into an unfair dismissal claim.

The good news is that the process is manageable once you understand what "fair" actually means in practice. Getting it right has always mattered, and with employment law tightening through 2026 and into 2027, it matters more than it used to (more on that below). At Precision HR we support employers across Cumbria and UK-wide through exactly these situations, so here's the process, start to finish.

What counts as a genuine redundancy?

A genuine redundancy exists when the role is no longer needed, not when a particular person is no longer wanted. Under section 139 of the Employment Rights Act 1996, a redundancy arises in one of three situations: the business is closing down, the employee's workplace is closing, or the need for that particular kind of work has reduced or stopped. If none of those applies, you're probably not dealing with a redundancy at all.

Redundancy is about the role, not the person. If the job still needs doing by someone, it almost certainly isn't a genuine redundancy, and dressing up a performance or personality problem as one is exactly where employers come unstuck.

That distinction answers a question a lot of owners ask: can you make someone redundant if the job still exists? In short, no. If you'd need to hire or reassign someone to cover the same work, the role hasn't disappeared, and a tribunal will see through it. A genuine employee redundancy has a real, evidenced business reason behind it, and that reason is the foundation everything else rests on as this guide will explain.

Can you make just one person redundant?

Yes, you can make a single employee redundant, and it's entirely lawful. The collective consultation rules that involve employee representatives and formal notification only apply once you're proposing 20 or more redundancies at one site (we cover that boundary below). Below that threshold, a redundancy of one is perfectly legitimate, provided you follow a fair process. There's no fixed statutory consultation period for an individual redundancy as there is for collective ones; the requirement is simply that consultation is genuine and takes a reasonable amount of time.

The one thing to be alert to is the "pool of one." When only a single role is in scope, you're effectively saying there's no one else the redundancy could reasonably apply to. That can be entirely correct, but it invites scrutiny, so the rationale needs to be documented clearly. Why this role? Why this person as the only one in the pool? If you can answer those with an objective business reason rather than anything to do with the individual, you're on solid ground.

Employee redundancy: the step by step guide

There's no single statutory "five stages of redundancy," despite how often that phrase gets searched. What the law does require is a fair process, and in practice that breaks down into five clear stages. Work through each one and you'll have a defensible, well-documented redundancy.

1. Confirm it's a genuine redundancy. Evidence the business reason under section 139: reduced workload, a closure, a restructure that genuinely removes the role. Write down what's changed and why the role is no longer needed. This is your starting point and your protection if the decision is ever challenged.

2. Define the pool and selection criteria. Decide which roles are at risk and, where more than one person does similar work, how you'll select fairly between them. Criteria must be objective and non-discriminatory: things like skills, qualifications and performance records, never anything tied to a protected characteristic, or to absence linked to disability, pregnancy or maternity. Even where the pool is genuinely one person, note down why.

3. Consult meaningfully. Hold individual consultation with the employee at a stage when the decision is still genuinely open, not after you've made your mind up. Explain the situation, share the reasoning, and give them a real chance to respond and suggest alternatives. Consultation that's a formality is one of the fastest routes to an unfair dismissal finding.

4. Look for suitable alternative employment. Before confirming redundancy, make a genuine effort to find the employee another role in the business. If you do offer an alternative role, the employee has a statutory right to a four-week trial period in it without losing their redundancy entitlement. Even if there's nothing suitable, being able to show you looked is an important part of a fair process.

5. Confirm in writing, with notice and pay. Once the decision is made, confirm it in a redundancy letter setting out the reason, the last day of employment, the notice period, redundancy pay and the right to appeal. Notice is the statutory minimum or the contractual period, whichever is longer.

On the payments themselves, keep this simple and employer-focused. An employee with two or more years' continuous service is entitled to statutory redundancy pay, calculated on age, length of service and a weekly pay figure capped at £751 for 2026/27, up to a maximum of £22,530. The first £30,000 of a redundancy payment is generally tax-free; pay in lieu of notice is taxable in full. These figures are reviewed every April, so it's worth confirming the current rates when you come to calculate.

Where employers get it wrong: unfair redundancy traps

In our experience, the redundancies that go wrong rarely involve a dishonest employer. Far more often it's a well-meaning owner who makes their mind up before they've had a single honest conversation. Most claims come from how a redundancy was handled, not the decision itself, and a few traps account for the majority of them.

Sham redundancy. Using redundancy to remove a specific person you'd rather see the back of. If the role is really still there, this is the single most common way employers end up in a tribunal.

A predetermined outcome. Deciding the result before consultation, then going through the motions. Consultation has to be capable of changing the outcome, or it isn't consultation.

Confusing redundancy with performance. This is the big one. If the real issue is that someone isn't performing, redundancy is the wrong tool; that belongs in a capability process, not a redundancy. Handling it the wrong way turns a manageable performance issue into a costly dismissal claim. We've seen this play out first-hand, specifically an employer who made a role redundant to move on an underperformer, only for the same duties to reappear in a new job advert weeks later, exactly the pattern a tribunal looks for. Our guide on what to do when an employee isn't following instructions walks through the right approach.

Discriminatory selection. Selection criteria that, directly or indirectly, disadvantage someone because of a protected characteristic: age, disability, pregnancy and so on. Even unintentionally, this exposes you to a discrimination claim on top of unfair dismissal.

Between them, these are what turn a genuine business decision into an unfair redundancy. And yes, an unfairly handled redundancy can be unlawful, even when the underlying business reason was sound.

When the collective rules apply

If you're proposing 20 or more redundancies at one establishment within a 90-day period, a different and more demanding process kicks in. Collective consultation requires you to consult elected employee representatives and to notify the Secretary of State using an HR1 form, with minimum consultation periods of 30 days (20–99 redundancies) or 45 days (100 or more) before the first dismissal takes effect.

The stakes here have risen sharply. From 6 April 2026, the maximum protective award for failing to consult properly doubled from 90 to 180 days' pay per affected employee, so the cost of getting collective consultation wrong is now considerably higher. A further reform is on the way too: the Employment Rights Act 2025 is set to add a wider, organisation-wide threshold that could aggregate redundancies across multiple sites, expected to take effect during 2027 once the detail is confirmed.

If your situation is heading towards larger-scale change, that's exactly where our [redundancy and restructuring support - add the link] comes in, guiding you through the full collective process from consultation to completion.

What's changing in 2026–27

The wider direction of travel makes a clean redundancy process more important than it has been for years. From 1 January 2027, the qualifying period for ordinary unfair dismissal drops from two years to six months, and the cap on the compensatory award is removed entirely.

Two things follow from that, and both matter for redundancy. First, because the change applies to existing service, anyone employed on or before 1 July 2026 will already have the required six months by the time it takes effect, so a far larger share of your workforce will be able to bring a claim than can today. Second, with no cap on compensation, the potential cost of a dismissal a tribunal finds unfair is higher. A redundancy that would once have been low-risk simply because the employee lacked two years' service won't be, from 2027 onwards.

The practical takeaway: the informal, "they've not been here long enough to claim" approach is on its way out. Documenting a fair process becomes the default for every dismissal, redundancy included. For the wider picture, see our guide to the 2026–27 employment law changes.

How Precision HR can help

Redundancy is one of those areas where a small procedural slip carries a disproportionate cost, and where a bit of expert support pays for itself many times over. We'll run the process with you or for you: defining the pool and selection criteria, scripting and conducting consultation, drafting the letters and handling any appeal, so the whole thing is fair, properly documented and defensible if it's ever challenged.

If you're facing a redundancy and want to get it right, wherever you are in Cumbria or beyond, book a free, no-obligation chat and we'll talk it through. For one-off or project support, our HR Flex Support service is ideal; if you'd like ongoing HR expertise on tap, the HR Partnership Plan gives you a trusted partner for exactly these decisions.

FAQs

What are the 5 stages of redundancy?

There's no single statutory list, but a fair redundancy process runs to five stages: confirm it's a genuine redundancy, define the pool and selection criteria, consult meaningfully, look for suitable alternative employment, then confirm in writing with notice and pay. Rushing or skipping any one of them is what exposes an employer to a claim.

Can you make someone redundant for poor performance?

No, not as a redundancy. Redundancy is about the role no longer being needed, not the person underperforming. Using it to remove a poor performer is a "sham" redundancy and a common route to a tribunal claim. Performance concerns should go through a capability process instead.

How do I write a redundancy letter?

A redundancy letter should confirm the business reason, the consultation that took place, the decision, the last day of employment, the notice period, redundancy pay and the right to appeal. Getting the wording and timing right matters; a defective letter can undermine an otherwise fair process. We provide tested templates to get it right.

When can a company make someone redundant?

When there's a genuine business reason recognised in law: the business or workplace is closing, or the need for that kind of work has reduced or stopped. If the job still needs doing by someone, it's unlikely to be a genuine redundancy.

What are the 5 fair reasons for redundancy?

Strictly, redundancy is itself one of the five potentially fair reasons for dismissal, alongside capability, conduct, statutory illegality and "some other substantial reason." Within a redundancy, fairness turns on a genuine situation, objective selection, proper consultation and considering alternatives.

Is redundancy the same as being dismissed or fired?

Redundancy is a form of dismissal, but a specific one: the role is removed, rather than the employee being dismissed for conduct or performance. That distinction changes the process you must follow and the payments owed, which is why it's important to be clear which one you're actually dealing with.