Redundancy

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

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

• One week’s pay per year of service
• Capped at £1,040 per week (from 30 September 2025)
• This is in addition to notice pay, not instead of it

Use the guidance to:

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

Statutory minimum notice periods apply based on service:

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

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

Define redundancy payment entitlements

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

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

• 1 week’s pay per year of service
• Subject to a cap: £1,040 per week (from 30 Sept 2025)
• Paid in addition to statutory or contractual notice

Redundancy payments over £50,000 may be taxable.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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