Information on Redundancy

The guidance note outlines:

• Who qualifies for redundancy pay
• How payments are calculated
• Required notice periods
• The right to paid time off during notice
• Collective consultation rules
• Key deadlines and exceptions

Use it to understand your obligations as an employer, or to check your rights as an employee.

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.

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

• The employer makes the payment
• The employee makes a written claim
• A Tribunal claim is submitted

A Tribunal can allow a further 6-month extension for late claims if there’s a valid reason.

Employees with more than 2 years’ service are entitled to take up to 40% of a working week during their notice period to look for work or attend training.

• Time can be taken in hours, half days or full days
• If time off is refused or unpaid, a Tribunal may award additional pay

Employers must follow a fair redundancy process, including:

• Warning the employee about the risk of redundancy
• Consulting with them about the situation
• Using fair and transparent selection criteria
• Exploring possible alternatives to redundancy

Download our templates, letters and process guidance

If a fixed-term contract ends and is not renewed:

• This may be considered a dismissal
• It may qualify as redundancy if the role ends
• The employee must have at least 2 years’ total service, including time across multiple FTCs with less than 9 weeks between contracts

For unfair dismissal claims, a break of up to 26 weeks may be allowed for redundancy; the break must be under 9 weeks.

Employees on zero-hour contracts are entitled to the same redundancy process and protections as other employees, where applicable.

If an employee is re-employed after being made redundant:

• Their continuous service resets to zero
• Any future redundancy pay will be based only on the new period of service

If an employee refuses a reasonable offer of alternative work that starts within 4 weeks of their old role ending, they will lose their right to redundancy pay.

If the new role has different terms, a trial period applies, if the role doesn’t work out, redundancy pay remains due.

If you plan to make more than 12 employees redundant at one establishment within 30 days, you must:

• Consult with elected employee representatives

Failure to follow these rules could result in protective awards of up to 9 weeks’ pay per employee.

Collective consultation and paid time off to seek work don’t apply to FTCs under 1 year unless:

• The employee had a previous FTC under 1 year
• The break between contracts was less than 9 weeks

Employers must notify the Social Security Minister:

• Before issuing notices or at least 30 days before the first dismissal