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Learn how to make a position redundant through restructuring fairly and legally. Our practical guide covers the ACAS redundancy process, consultation requirements, selection criteria, and how to avoid unfair dismissal claims.
Written by:Â Rachel Ford-Evans, Employment Law Partner, Darwin Gray | Last updated: 21/04/2026 | Reviewed by: Rachel Ford-Evans
Restructuring is a reality of business life. Markets shift, technology evolves, costs need cutting, or the organisation simply needs to work differently. Sometimes that means roles disappear, and redundancies follow.
Getting redundancy right matters. For employees, losing their job is one of the most significant events they’ll face. For employers, a poorly handled process creates legal risk, damages morale among remaining staff, and can harm your reputation as a fair employer.
The good news is that the law doesn’t prevent restructuring. It simply requires employers to follow a fair process when making positions redundant. Do it properly, and you can reshape your workforce while treating people with dignity and protecting your business from claims.
This guide explains how to make positions redundant through restructuring in a way that’s fair, legal, and as straightforward as possible. We’ll cover when redundancy applies, the steps you need to follow, and the pitfalls to avoid.
Redundancy is a form of dismissal that occurs when an employer’s need for employees to carry out work of a particular kind has ceased or diminished. Under the Employment Rights Act 1996, a redundancy situation exists when:
The critical point: redundancy is about the role, not the person. If you’re considering dismissing someone because of their conduct or performance, that’s not redundancy, it’s a disciplinary matter requiring a different process.
Restructuring can create genuine redundancy situations in several ways:
Whatever the reason, the underlying principle remains the same: the job itself must genuinely be disappearing or reducing, not just being repackaged to remove a particular employee.
Be careful. Tribunals will scrutinise whether a redundancy is genuine. Red flags include:
If a tribunal finds the redundancy wasn’t genuine, you’ll likely face an unfair dismissal claim.
For a redundancy to be fair, you need more than a genuine business reason. You also need a fair process. The key elements are:
Miss any of these steps, and an otherwise fair redundancy can become an unfair dismissal.
Before you speak to anyone, plan your approach carefully.
Why is the restructure necessary? What are you trying to achieve? Document your reasoning clearly. This helps in two ways: it forces you to think through whether redundancy is genuinely needed, and it provides evidence if decisions are later challenged.
The law expects you to consider whether redundancies can be avoided or minimised. Options might include:
You don’t have to implement every alternative, but you should genuinely consider them and document why they’re not viable if you reject them.
Which positions are affected by the restructure? Be clear about what’s changing and why. If you’re reducing the number of people doing a particular job, you’ll need to select between them fairly.
If you’re proposing to dismiss 20 or more employees as redundant within any 90-day period, special rules apply. This is called collective redundancy, and the requirements are more demanding.
Collective consultation applies when:
“Redundancy” here includes any dismissal not related to the individual employee, so it covers restructures where employees are dismissed and re-engaged on new terms (“fire and rehire”).
You must consult with employee representatives: either a recognised trade union or elected employee representatives. The consultation must cover:
Consultation must begin “in good time” and at least:
You must also notify the Redundancy Payments Service (using form HR1) within these timescales. Failing to notify is a criminal offence.
The Employment Rights Act 2025 makes significant changes to collective redundancy rules:
From 6 April 2026:
From 2027:
These changes significantly increase the stakes for getting collective consultation wrong.
Whether or not collective consultation applies, you should consult individually with each employee at risk of redundancy.
You should normally hold at least two consultation meetings with each affected employee:
First meeting:
Second meeting:
Consultation must be genuine. You should genuinely consider employee suggestions and be prepared to change your plans if a better alternative emerges. A process where the outcome is predetermined isn’t consultation, it’s notification.
Employees don’t have an automatic statutory right to be accompanied at redundancy consultation meetings (unlike disciplinary hearings). However, it’s good practice to allow it, and many employers do.
Where multiple employees do the same or similar work and you need to reduce numbers, you’ll need to select between them. The first step is defining the “selection pool”: the group of employees from which selections will be made.
The pool should include all employees doing the same or similar work. This might mean including:
Don’t define the pool too narrowly to target a particular employee. If someone else could do the work, they should probably be in the pool.
If you’re eliminating a unique role (the only person doing that job), there’s no selection required: that person is redundant. But be careful. If others could do the work, or the work is being redistributed, you may still need a selection process.
Once you’ve defined the pool, you need objective criteria to select who will be made redundant.
Selection criteria should be:
Fair selection criteria typically include:
Some criteria are risky or unlawful:
Last in, first out (LIFO) used to be common but is now risky. It can amount to indirect age discrimination against younger workers. If you use it at all, it should be one factor among many, not the sole criterion.
A scoring matrix helps apply criteria consistently. Each employee in the pool is scored against each criterion, with a total determining selection. Tips for using a matrix:
Before confirming redundancy, you must consider whether there are suitable alternative roles the employee could take.
A role is suitable if:
You don’t need to create a role that doesn’t exist. But if there is a vacancy the employee could fill, you should offer it.
Employees who are pregnant, on (or recently returned from) maternity leave, adoption leave, or shared parental leave have priority for suitable alternative vacancies. These protections are also strengthening under the Employment Rights Act 2025. You must offer these employees any suitable role ahead of other employees, without requiring them to apply or compete.
Employees are entitled to a four-week trial period in an alternative role. If the role turns out to be unsuitable, they can leave and still receive their redundancy payment. Longer trial periods can be agreed in writing if training is needed.
If an employee unreasonably refuses a suitable alternative role, they may lose their right to redundancy pay. But “unreasonably” is key. A longer commute, significant pay cut, or genuine unsuitability are valid reasons to refuse.
Once selection is confirmed and no alternatives are available, you can proceed to termination.
Employees are entitled to:
You can ask employees to work their notice, place them on garden leave, or make a payment in lieu of notice (PILON) if the contract allows.
Employees with two or more years’ continuous service are entitled to statutory redundancy pay, calculated as:
Maximum service counted: 20 years. Maximum weekly pay (from April 2026): £751.
Many employers offer enhanced redundancy pay above the statutory minimum. Check contracts and policies for any enhanced terms.
Employees may also be entitled to:
Employees with two or more years’ service are entitled to a written statement of the reasons for their dismissal if they request one. Good practice is to provide this automatically.
If you’re restructuring following a business transfer (TUPE), additional rules apply.
When a business or service transfers to a new employer, employees transfer automatically with their existing terms and conditions. You cannot dismiss employees simply because of the transfer.
Redundancy after TUPE is only permitted where there’s an “economic, technical, or organisational reason entailing changes in the workforce” (an ETO reason). This might include:
Without an ETO reason, dismissal will be automatically unfair.
Consultation obligations apply to both the old employer (transferor) and new employer (transferee). Consultation can begin before the transfer and continue afterwards.
Redundancy takes time. Rushing leads to inadequate consultation, poor decisions, and legal risk. Build in realistic timescales from the start.
If you’ve decided who’s going before consultation starts, the process isn’t fair. Consultation must be genuine, with real opportunity for alternatives.
Applying criteria differently to different employees undermines the entire process. Be consistent, document everything, and be prepared to justify your decisions.
Employees on maternity leave, with disabilities, or who’ve raised whistleblowing concerns need particular care. Selecting them for redundancy isn’t automatically unlawful, but you’ll face closer scrutiny.
Jumping straight to redundancy without considering alternatives suggests the process isn’t genuine. Document the alternatives you considered and why they weren’t viable.
Employees facing redundancy deserve clear, honest communication. Speculation and uncertainty make a difficult situation worse. Keep people informed throughout.
Restructuring is the business change; redundancy is one possible consequence. Restructuring might involve changing roles, merging teams, or reorganising work. If the restructure means fewer employees are needed, redundancy may follow.
If the role is unique (only one person does that specific job), no selection is needed. But if others do similar work or could do the role, you should include them in a selection pool.
There’s no minimum for individual consultation, but it must be meaningful. For collective consultation (20+ redundancies), minimum periods are 30 days (20-99 redundancies) or 45 days (100+ redundancies).
Yes, but with extra care. You cannot select someone because of their maternity leave, and you must offer them any suitable alternative vacancies as a priority over other employees.
You should still deal with the grievance, but it doesn’t automatically stop the redundancy process. If the grievance is about the redundancy itself, you might address it through the consultation or appeal process.
You should offer an appeal process. While there’s no statutory right to appeal redundancy, it’s good practice and demonstrates fairness.
Employees can bring claims for unfair dismissal (if they have two years’ service) or discrimination (regardless of service). You may also face protective award claims if collective consultation wasn’t followed properly.
Beyond statutory redundancy pay, consider notice pay, holiday pay, any enhanced terms, and the administrative cost of the process. Getting it wrong can cost significantly more in tribunal claims and legal fees.
Statutory Redundancy Calculator
| Term | Definition |
|---|---|
| Bumping | Making a different employee redundant to create a vacancy for someone whose role has been eliminated. |
| Collective consultation | The consultation process required when proposing 20+ redundancies within 90 days, involving employee representatives. |
| ETO reason | An economic, technical, or organisational reason entailing changes in the workforce, which can justify dismissals after a TUPE transfer. |
| Protective award | Compensation awarded by a tribunal when an employer fails to collectively consult properly. Maximum 180 days’ pay per employee from April 2026. |
| Selection criteria | The objective measures used to decide which employees from a pool will be selected for redundancy. |
| Selection pool | The group of employees considered together for redundancy selection. |
| Suitable alternative employment | A comparable role offered to an employee facing redundancy instead of dismissing them. |
| TUPE | Transfer of Undertakings (Protection of Employment) Regulations, protecting employees when a business transfers to a new owner. |
Restructuring and redundancy are among the most complex areas of employment law. The financial and reputational consequences of getting it wrong are significant. We help employers navigate these challenges with confidence.
We’re direct, responsive, and focused on practical solutions. You’ll work with the solicitor handling your matter from the start. And as Wales’ leading Welsh language law firm, we can provide all our services in Welsh or English.
Planning a restructure or facing a redundancy situation? Contact us for a free, no-obligation chat about how we can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
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