Redundancy Rights: What Are You Entitled To?

If you are made redundant, you may be entitled to statutory or contractual redundancy pay, notice pay, accrued holiday pay. Your employer should follow a redundancy process that complies with applicable employment law, including appropriate consultation and, where selection is required, a fair selection process. Depending on your circumstances, you may also have rights to suitable alternative employment, time off to look for work and, where the dismissal is unlawful, the ability to bring an Employment Tribunal claim. The rules surrounding redundancy are changing as a result of the Employment Rights Act 2025, with some changes already in force and further reforms taking effect during 2026 and 2027. This guide explains your key redundancy rights, how the redundancy process should work, what happens if your employer becomes insolvent and when you should seek legal advice.

O’Donnell Solicitors advises employees on redundancy and employment law in Oldham, Saddleworth, Greater Manchester and across England and Wales. Need advice about redundancy? Contact O’Donnell Solicitors’ Employment Team on 01457 761 320 or email us to arrange an initial no-obligation discussion.

In This Guide

In this guide, we look at:

• What redundancy means
• What you are entitled to if you are made redundant
• How the redundancy consultation and selection process works
• What to do if you believe your redundancy is unfair
• Redundancy settlement agreements
• Redundancy changes under the Employment Rights Act 2025
• Your rights if your employer becomes insolvent
• Frequently asked questions about redundancy

 

What is redundancy?

Redundancy is a form of dismissal that can arise when an employer no longer requires a particular role or needs fewer employees to carry out work. Being told that your job is “at risk of redundancy” does not necessarily mean that you have already been dismissed. Normally, there should be a process involving consultation before a final decision is made. An employer cannot simply describe a dismissal as redundancy to avoid its other employment law obligations. An employer should be able to establish a genuine redundancy situation and follow a fair process.

 

What are you entitled to when you are made redundant?

1. Statutory Redundancy Pay

If you are an employee with at least two years’ continuous service, you will normally qualify for statutory redundancy pay. Statutory redundancy pay is calculated according to your age, weekly pay and completed years of service. The calculation is capped at 20 years’ service. The statutory calculation is based on your age during each complete year of service:

• Half a week’s pay for each complete year when you were under 22.
• One week’s pay for each complete year when you were aged 22 to 40.
• One and a half weeks’ pay for each complete year when you were aged 41 or over.

For statutory redundancy pay, weekly pay is normally calculated using your average weekly earnings over the 12 weeks before the day you received your redundancy notice.

For redundancies taking effect on or after 6 April 2026, the statutory weekly pay cap is £751, giving a maximum statutory redundancy payment of £22,530. You can use the Government’s statutory redundancy pay calculator to check the basic calculation.

Your employment contract, collective agreement or redundancy policy may provide for an enhanced or contractual redundancy payment above the statutory maximum. It is therefore important to check your employment documents for any additional entitlements.

2. Notice Pay

If you are made redundant, you will normally be entitled to notice. The statutory minimum notice period is:

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

Your contract may provide for a longer notice period.

Depending on the circumstances, your employer may require you to work your notice or make a payment in lieu of notice (PILON). Depending on your contract and the circumstances, notice pay may need to take account of contractual benefits and other elements of remuneration.

3. Holiday Pay, Bonus and Other Final Payments

Your final payment may include more than redundancy pay. Depending on your circumstances, you may be entitled to accrued but untaken holiday, contractual bonus, or commission and other contractual benefits. The tax treatment can vary depending on the type of termination payment. Statutory redundancy pay and other qualifying termination payments can benefit from specific tax treatment, so it is important to consider the composition of any proposed package rather than simply its headline figure.

4. A Fair Redundancy Process

Redundancy Consultation

Consultation is a key part of a fair redundancy process. Consultation should be genuine and meaningful. It should not simply be a meeting in which an employer announces a decision that has already been finally made. The appropriate process will depend on the circumstances, including the number of proposed redundancies and whether collective consultation obligations apply.

Where individual consultation is required, your employer should give you an opportunity to understand why redundancies are proposed, ask questions, raise concerns and suggest alternatives. Consultation may initially cover why redundancies are being proposed, whether redundancies can be avoided or reduced, the proposed selection pool, and the selection criteria. As the consultation process progresses it may include the reasons for your individual selection, options for alternative employment with the employer, the proposed termination date, redundancy and notice payments, and any alternatives you or the employer can identify to avoid the redundancy.

Where collective consultation applies, the employer must normally begin consultation at least 30 days before the first dismissal where 20–99 redundancies are proposed, or 45 days before the first dismissal where 100 or more redundancies are proposed. The employer must consult appropriate employee representatives, such as trade union representatives or elected employee representatives, in accordance with the applicable rules. This is particularly important because the financial consequences of failing to comply with collective consultation requirements have increased. Since 6 April 2026, the maximum protective award for failure to comply with collective redundancy consultation requirements has increased from 90 days’ pay to 180 days’ pay per affected employee. Employees do not need 2 years’ service to be entitled to a protective award.

Fair Selection for Redundancy

Where an employer needs to select some employees for redundancy but retain others in comparable roles, it should generally use a fair and objective selection process. The employer should normally identify an appropriate selection pool and apply the criteria consistently. However, selection must not be discriminatory. An employee should not be selected because of a protected characteristic such as age, disability, sex or pregnancy, or because they have exercised a protected employment right. Some employees also have enhanced protection in particular redundancy situations, including certain employees taking family-related leave. If you believe you have been selected unfairly or that discriminatory factors influenced the decision, take legal advice promptly.

Suitable Alternative Employment

An employer may identify suitable alternative employment within the organisation or, in some circumstances, an associated company. Whether a role is suitable depends on factors such as pay, benefits, location, duties, terms and your skills. If an alternative role is accepted, it normally needs to begin within four weeks of your existing employment ending for the statutory rules to apply. If you accept suitable alternative employment, you will normally have a four-week trial period to establish whether the role is suitable. A longer trial period can be agreed in writing where additional training is needed. If the role is unsuitable and you leave during the trial period, you will normally retain your redundancy entitlement, provided the statutory requirements are met. If you unreasonably refuse suitable alternative employment, you may lose your entitlement to statutory redundancy pay in some circumstances.

Redundancy During Pregnancy and Family-Related Leave

Employees who are pregnant or taking certain types of family-related leave can have enhanced redundancy protection, including priority for suitable alternative vacancies in specified circumstances. If this applies to you, you should obtain specialist advice before accepting or rejecting an alternative role or agreeing to redundancy.

Time Off to Look for Work

Eligible employees may have a right to reasonable time off during their notice period to look for new employment or arrange training. This can allow you to attend interviews, update your CV, search for work or undertake relevant training before your employment ends.

 

What if my redundancy is unfair?

A genuine redundancy can be a potentially fair reason for dismissal. Depending on the circumstances, you may have grounds to challenge the dismissal through an Employment Tribunal, including a claim for unfair dismissal, discrimination or certain other employment law claims. A breach of contract or wrongful dismissal claim may also arise where your contractual or statutory notice or other contractual rights have not been honoured.

Before most Employment Tribunal claims can proceed, you must normally notify Acas and go through the Early Conciliation process.

It is important not to assume that an employee with less than two years’ service has no legal protection. Some employment rights, including protection against discrimination and certain automatically unfair reasons for dismissal, are available from the beginning of employment.

Employment Tribunal claims are subject to strict time limits. For an unfair dismissal claim, the current time limit is normally three months less one day from the effective date of termination. From 1 October 2026, the time limit for most Employment Tribunal claims will increase from three months less one day to six months less one day. The precise deadline can depend on the type of claim and the circumstances, so specialist advice should be obtained as soon as possible.

 

Should I sign a redundancy settlement agreement?

An employer may propose a ‘protected conversation’ and, either separately or as part of the same discussions, offer a settlement agreement as an alternative to proceeding through the normal redundancy process or as part of a negotiated exit. A settlement agreement can provide compensation and other agreed benefits in return for an employee agreeing to waive specified legal claims. The settlement agreement must meet statutory conditions and an employee must receive advice from an appropriate independent adviser on its terms and effect before signing it. O’Donnell Solicitors’ Employment Team regularly advises employees on settlement agreements and can help you understand what you are being offered before you sign.

 

Employment Rights Act 2025: Redundancy Changes in 2026 and 2027

The Employment Rights Act 2025 is introducing significant changes to UK employment law in stages during 2026 and 2027. Some redundancy-related reforms are already in force. Because the reforms are being implemented in stages, the law applying to a particular redundancy can depend on the effective date of termination and the circumstances of the case. The key changes are:

• Since 6 April 2026, the maximum protective award for failure to comply with collective redundancy consultation requirements has increased from 90 days’ pay to 180 days’ pay per affected employee.
• From 1 October 2026, the time limit for most Employment Tribunal claims will increase to six months less one day.
• From 1 January 2027, the qualifying period for ordinary unfair dismissal protection will reduce from two years to six months’ service, and the current cap on the compensatory award for unfair dismissal will be removed. The way compensatory awards are calculated will otherwise remain unchanged, with tribunals continuing to assess the employee’s actual and future financial loss. Existing day-one protections against discrimination and automatically unfair dismissal are not being removed.

 

What happens to redundancy rights if my employer becomes insolvent?

Insolvency does not automatically remove collective redundancy consultation obligations. In a sudden and unexpected insolvency, an employer may be able to rely on the limited ‘special circumstances’ defence where consultation was genuinely not reasonably practicable. However, this defence is narrow and the employer should still inform and consult employees as far as reasonably possible. If your employer has become insolvent and you have lost your job, it is sensible to obtain advice promptly about your redundancy entitlement, the insolvency process and any potential Employment Tribunal claim as soon as possible.

If your employer becomes insolvent through administration, liquidation or another formal insolvency process, you may still be entitled to redundancy pay and other employment-related payments. If you are made redundant by an insolvent employer, eligible employees may be able to claim from the Government’s Redundancy Payments Service (RPS) for statutory redundancy pay, certain unpaid wages, accrued holiday pay, statutory notice pay, and certain protective awards. The amounts available are subject to statutory limits. The insolvency practitioner or official receiver should explain how your employment is affected and provide a CN case reference number, which you need when making a claim to the RPS. The Redundancy Payments Service deals separately with different elements of an employee’s claim, including redundancy pay, arrears of pay, holiday pay and loss of notice. If you have claimed statutory notice pay, you will subsequently receive an LN reference number, which you need to make the separate loss-of-notice claim. Claims to the Redundancy Payments Service are subject to statutory time limits, and applications for redundancy pay and other qualifying payments generally need to be made within six months of the relevant dismissal or insolvency event.

 

Need advice about redundancy?

If you have been told that your role is at risk of redundancy, are concerned about the fairness of the process, have been offered a settlement agreement or are unsure what you are entitled to, our Employment Team can advise you on your options.

Contact our Employment Team on 01457 761 320 or email us for an initial no-obligation discussion.

This article provides general information about redundancy law in England and Wales and is not a substitute for advice on your individual circumstances. Employment law is subject to change and the legal position can depend on the date of the redundancy, the effective date of termination, your employment contract and the circumstances of your case. The timescales for the implementation of the Employment Rights Act 2025 are subject to change by the Government.

This article was last reviewed by Kenneth Lees, Solicitor and Head of Employment on 20 August 2026.

 

Redundancy Rights: Frequently Asked Questions

Kenneth Lees