The essential guide to the five stages of redundancy

We wish we could start the New Year with a happier topic - but many workers, in many different sectors, will face the threat and real fear of redundancy in the next 12 months.

 The year started with the unwelcome news that high street retailers Claire's and The Original Factory Shop are being put into administration, risking 2,500 jobs [ 1Cited 7.1.26]

 Research published late last year showed that concerns about job security intensified following the budget in November, which included a freeze on income tax thresholds and an increase in the minimum wage [2 Cited 7.1.26]

 The survey quizzed 2,500 people and it revealed that just over a third (35 per cent) of workers said they were worried about being made redundant or losing their job following the announcements.

 Then, of course, there is what is said to be the growing threat that Artificial Intelligence (AI) poses to jobs.

 As part of a study, 2,000 employers were questioned about their hiring, redundancy, and pay plans for the year. The findings revealed that the seven jobs considered most at risk of being replaced by AI were [3 Cited 7.1.26: 

• Clerical or administrator - 62%
• Manager or senior administrator - 28%
• Sales or services - 27%
• Semi-skilled or unskilled manual - 23%
• Professional - 17%
• Skilled manual work - 13%
• Foreman - 10%

 The most recent figures for redundancies in the UK show that over the three months from July to September 2025, about 134,000 people lost their jobs through redundancy, which works out to roughly 10,000 people every week in that period [ 4 Cited 7.1.26]

 Redundancy is one of the most difficult, worrying and stressful situations an employee can face at work.

It can also be incredibly challenging for an employer, because getting it wrong can have legal consequences and prove costly.  An unfair redundancy process can lead to a successful claim for unfair dismissal [ 5 Cited 7.1.26] .

 A fair redundancy process is essential because it protects everyone involved. Many employers will have their own procedures for handling redundancy, but ACAS provides a comprehensive guide setting out the basic standards of fairness [ 6 Cited 7.1.26] .

 Here we take a look at the five key stages of a fair redundancy process.

 Stage 1: Is there a genuine redundancy situation?

 Prior to employees being informed they are at risk of losing their jobs it has to be established that there is a legitimate need to reduce staff numbers.

 Legally, the employer must be able to show that there is a genuine business need to reduce the workforce.

 A genuine redundancy situation will exist when [ 7  Cited 7.1.26 ]:

• The business is failing
• The business, or part of it, has stopped operating (often called becoming insolvent or going bust)
• Your skills are no longer needed
• Your work is being done by other people, after a reorganisation
• The business, or the work you’re doing, moves to another location
• The business is taken over by another company
• Your employer was the sole owner of the business and they die

An employee can also be made redundant if new technology means the employer needs fewer people to do a particular job. However, redundancy should not happen if the technology simply changes how the job is done rather than removing the need for the job itself.

 Redundancy cannot be based on poor performance or conduct. It must be genuinely about the job no longer being needed.

 There are few things worse in this situation than an employee being told their job is at risk while the process is not open or transparent, or when the employer cannot answer basic questions about the reasons for it or appears to be withholding information.

The employer should explain the business reasons clearly, share the relevant information, and be honest and open about the difficulties and challenges it is facing.

 Stage 2: Redundancy plan

 Once it is established and evident that a genuine redundancy situation exists, the employer will need to make a clear redundancy plan.

 In workplaces where a trade union is recognised, it is sensible for the employer to work with them, or with any appointed employee representatives, when putting a plan together.

 A good redundancy plan will detail and explain all of the options that were considered before deciding that redundancies, which should always be a last resort, are necessary.

 It should set out how many roles are at risk, how members of staff will be informed and supported during the process and how consultation will take place.

 Timeframes for redundancy can vary, and the plan, regardless of the number of jobs under threat, should ensure there is enough time for proper consultation.

 Where a number of roles are at risk and a selection criteria will be used, details of how those criteria will be applied should always be provided [ 8 Cited 7.1.26 ]

 ACAS guidance emphasises the importance of planning and sharing that plan with employees. A good redundancy plan can include:

• The business reasons for the proposed redundancies
• The number of roles at risk
• The timeline for the process
• How employees will be consulted
• How selection will work (if applicable)
• Whether voluntary redundancy will be offered
• How alternative roles will be explored

 During what is inevitably a worrying time for all involved,  a well‑planned process reduces confusion, can help to avoid any misunderstandings and make sure that those affected feel informed rather than isolated or blindsided.

 Stage 3: Meaningful consultation

 Any fair and legal redundancy process should involve meaningful consultation with employees.

 It should not, as it can sometimes be, just be a case of going through the motions and having meetings to give the impression of fairness. It should always be  a genuine conversation about what is happening and whether redundancies can be avoided.

 How consultation will take place will depend on the number of jobs that need to be cut. An employer must consult employees and it must collectively consult if 20 or more redundancies are proposed within 90 days.

 ACAS advise that a meaningful consultation includes:

• Explaining the reasons for the proposed redundancy
• Sharing the redundancy plan
• Allowing employees to ask questions
• Listening to suggestions
• Considering alternatives to redundancy
• Exploring redeployment or changes to duties
• Allowing employees to be accompanied

 Consultation has to take place before any decision to dismiss is made. If such a decision is made beforehand, the process is unfair.

 During discussions employees should feel able to challenge the rationale, suggest alternatives, ask for clarification and raise any concerns they may have about fairness.

 Stage 4: Fair selection and consideration of alternatives

 Redundancy will often mean there are more people at risk than there are roles available, so the employer must use a fair and objective selection process in such situations. It is one of the most sensitive parts of the redundancy process because it can pit colleagues against each other in competing for limited roles, which means fairness is essential.

 Objective criteria are a key element of any fair selection process, it can help to avoid discrimination and allegations of unfairness, and it should be communicated clearly and applied consistently.

 Typically examples of fair criteria can include skills and qualifications, relevant experience, performance, attendance records that do not take account of any disability‑related absences and an employee’s disciplinary record.

 If any individual is selected for redundancy as a direct result of a protected characteristic such as age, disability, pregnancy, race, such a dismissal would automatically be unfair.

 At this stage, employers must also explore alternatives to redundancy.  Such considerations can include redeployment, reduced hours, job sharing, retraining or moving employees to a different department.

 Stage 5: The outcome.

 Once consultation is over and those who will be made redundant are selected, the employer should confirm the redundancy decision.

 The outcome should be communicated and clearly explained to staff. The decision should be confirmed in writing. This should include clear details regarding notice periods, redundancy pay,  details about the right of appeal the dismissal and any offer of support with the next steps.

 Those being made redundant will receive either statutory or contractual redundancy pay, payment for their notice period or the opportunity to work their notice, payment for any outstanding annual leave, information about pensions.

 Many employers will provide reasonable  time off to allow employees to look for new work.

 Finally

 Redundancy is never an easy process but when it is conducted fairly and follows the five stages it can be understandable and acceptable.

 Fairness and clarity make all the difference. When employees feel informed and respected throughout, the process can be far less distressing.