Redundancy Explained: What It Is and How It Works

November 12, 2025

Redundancy happens when employers need to reduce their workforce. This is usually because the role is no longer needed, they are closing the business, or they have a reduced need for that kind of work. The underlying reason might be cost-cutting measures, a change in business needs, or a reorganisation of the company.

If you have legal status as an employee, you are protected by the law, and employers must follow a process when making you redundant. In this guide, we’re exploring the role of redundancies in the modern workplace and how this works. We’ll also outline some of your key rights, and simple steps you can take to ensure you are treated fairly.

What is redundancy?

If you have been told you are going to be made redundant, it can be a difficult pill to swallow. Employees often feel afraid when this happens and they may blame themselves, but it’s important to remember that a redundancy is not linked to your performance or your ability to do your job.

Redundancies happen when companies need to restructure, or they are winding down. If you happen to work in a department that is no longer needed, you might find that your role is marked for redundancy. Relocations can also result in redundancies, although you may be given the option to relocate with the company.

You also have the law on your side when it comes to redundancies, and this will ensure you are fairly compensated for the disruption to your career.

Voluntary versus compulsory redundancy

Before making large changes to the structure of an organisation, employers might offer the opportunity to choose voluntary redundancy. This is when you choose to leave the organisation for a specific fee. This is usually followed by a wave of compulsory redundancies, which is when specific roles are identified for termination.

The benefit of this method is that it allows those who might be thinking about making a move to come forward and volunteer. This can save roles for those who would be happier staying put. Of course, it doesn’t always mean that the rest of the employees are saved from redundancy, but it does offer a fairer way to cut costs and then reassess the situation.

What are my legal rights during the redundancy process?

The law is very much on your side throughout the redundancy process, so you should be fairly compensated for the inconvenience. You will be eligible for certain things, such as:

• Redundancy pay
• A notice period
• A consultation with your employer
• The option to move to a different role, where possible
• Time off work to look for a new job

It’s also important that you are selected for redundancy in a fair way. For example, you cannot be singled out because of your age, gender or if you are disabled or pregnant.

You’ll be entitled to statutory redundancy pay if you’ve been with your employer for more than 2 years. You will get:

• Half a week’s pay for every full year you were under 22
• One week’s pay for every full year you were 22 or older, but under 41
• One and a half week’s for or every full year you were 41 or older

This is capped at 20 years. Your weekly pay will be calculated from the average you were paid over the 12 weeks before you received your redundancy notice. At the moment, the maximum redundancy pay possible is £21,570.

Your employer can choose to give you more than the statutory amount, and this will be outlined in your employment contract.

In addition to your redundancy pay, you must also be given sufficient notice. This is as follows:

• At least one week’s notice if you were employed between one month and two years.
• One week’s notice for each year employed between two and 12 years.
• 12 weeks notice if employed for 12 years or more.

You should be paid through your notice period, in addition to your statutory redundancy pay. Your employer can also choose to give you payment in lieu of notice, but only if this is included in your original employment contract. This should be paid in addition to any redundancy pay and should include extras such as pension contributions, as outlined in your contract.

Highlights

• Redundancy = job no longer needed
• Voluntary vs compulsory redundancy options
• Statutory redundancy pay after 2 years’ service
• Notice periods depend on length of employment
• Fair selection and consultation are legal requirements

Frequently Asked Questions

What does this topic mean?

Redundancy refers to a situation where a role is no longer required due to business changes, not employee performance.

Why is this topic important?

Understanding redundancy helps employees protect their rights and ensures employers follow fair and legal processes.

How does this affect job seekers or employers?

Employees can better prepare for transitions, while employers must ensure compliance and fair treatment during workforce changes.