Made redundant? What to check before you accept

General guidance for UK employees. Not legal advice. Last reviewed: 29 July 2026. How this guidance is produced.

You have been told your role is at risk, or that it has gone. The word redundancy makes it sound settled, as though the decision has been taken and your only job now is to accept it gracefully. That is not the position. Redundancy is a legal test with conditions attached, a process the employer has to run properly, and a payment with rules behind it. All three are worth checking before you sign anything, and most people check none of them.

This page covers what counts as a genuine redundancy, what your pay should be, how consultation and selection are supposed to work, and what to look at before you accept an offer. It is written for UK employees and it is general guidance, not advice on your own case.

What redundancy actually means in law

Redundancy is one of the five potentially fair reasons for dismissal. It has a specific definition in section 139 of the Employment Rights Act 1996, and it is narrower than most people assume. A dismissal is by reason of redundancy where the employer has stopped or intends to stop carrying on the business, or has stopped or intends to stop carrying it on at the place where you were employed, or where the need for employees to carry out work of a particular kind has ceased or diminished.

Read that last one again, because it is the one that matters most. The test is about the need for employees to do work of a particular kind. It is not about you, your performance, or whether your face fits. If the work is still there and still needs doing in the same volume, the redundancy is doing something other than what it says on the label.

So there are three questions worth asking early. Is the work genuinely going, or is it being redistributed to people who remain? Is the role genuinely going, or is it reappearing under a new title with a similar description? And is anyone being recruited into something that looks like your job in the weeks after you leave? A redundancy that fails those questions can be an unfair dismissal, and the fact that the employer called it redundancy does not make it one.

This matters practically as well as legally. An employer who knows the redundancy is thin is an employer with a reason to be generous, and that reason is worth understanding before you talk about numbers.

What you should be paid

There are usually four separate things in a redundancy package, and they are taxed and calculated differently. Confusing them is how people end up accepting less than they should.

Statutory redundancy pay is the legal minimum, and GOV.UK publishes the current rates. You need two years of continuous service to qualify. The calculation is based on your age in each year of service: half a week's pay for each full year worked under the age of 22, one week's pay for each full year between 22 and 40, and one and a half weeks' pay for each full year from 41 onwards. Only the most recent 20 years count.

A week's pay is capped for this purpose. For dismissals on or after 6 April 2026 the cap is £751, which makes the maximum statutory redundancy payment £22,530. If you earn more than £751 a week, and most readers of this page will, the statutory calculation uses £751 rather than your actual pay. That is why the statutory figure often looks small against a long career, and it is why the rest of the package matters.

Contractual or enhanced redundancy pay is anything above the statutory minimum. Some contracts and staff handbooks promise it, some employers offer it as a matter of practice, and some offer it only in exchange for signing a settlement agreement. Check your contract and your handbook before you accept a figure, because an enhanced scheme you had forgotten about is the single most common thing people leave on the table.

Notice is separate from redundancy pay and is often confused with it. Statutory minimum notice is one week if you have been employed between one month and two years, then one week for each complete year, to a maximum of 12 weeks. Your contract may give you more. Notice is pay for a period, so it is taxed as earnings, and it does not come out of your redundancy entitlement.

Accrued holiday, unpaid bonus and commission are the fourth part. These are money you have already earned. They should be paid in addition to everything above and should never be quietly absorbed into a headline redundancy figure.

How the tax works, in short

Statutory redundancy pay is free of income tax and National Insurance. Additional ex-gratia compensation is normally free of income tax up to £30,000, and the statutory element counts towards that £30,000 rather than sitting outside it. Above £30,000, income tax applies at your marginal rate, though you do not pay employee National Insurance on that excess. Anything that is pay for working, and any notice you do not work, is taxed in full as earnings however the paperwork describes it.

If a settlement agreement is involved, the arithmetic gets more detailed, and the notice element in particular is worth working through properly before you agree a number. The settlement page covers the four-number breakdown that shows what an offer is really worth after tax. Have your own figures confirmed by a qualified tax adviser before you rely on them.

Consultation, and what counts as real

Consultation is not a courtesy. It is part of what makes a redundancy dismissal fair, and a failure to consult properly is one of the most common reasons redundancy dismissals are found unfair even where the redundancy itself was genuine.

Individual consultation applies in every redundancy, however small, and ACAS sets out what a fair process looks like. It means a genuine discussion, at a point when the outcome is still open, about the reason for the redundancy, the selection, and whether there is any alternative. A meeting that tells you a decision already taken is an announcement, not a consultation, and the difference is worth noting at the time.

Collective consultation applies on top where 20 or more redundancies are proposed at one establishment within 90 days. It is set out in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. Consultation must begin in good time and at least 30 days before the first dismissal takes effect where 20 to 99 redundancies are proposed, and at least 45 days where 100 or more are proposed. It happens with recognised trade union representatives or elected employee representatives rather than with you individually, and it must cover ways of avoiding the dismissals, reducing the numbers, and lessening the effect.

One change is coming here. Under the Employment Rights Act 2025 the existing 20-at-one-establishment trigger is being kept, and a second organisation-wide trigger is being added alongside it, so that large employers spreading redundancies across many sites are caught as well. The threshold figure has not been set. The government consulted on it in early 2026 and it is expected to take effect during 2027. Treat that as a direction of travel rather than a date to rely on, and check the current position before it matters to you.

Selection, and how to test it

Where some people in a group are going and others are staying, the employer has to define a pool and apply selection criteria to it. Both are open to challenge, and both are worth looking at closely.

The pool is the group of employees from which the selection is made. A pool that has been drawn tightly enough to contain only the person the employer wanted to remove is a common and effective way of dressing up a decision that was taken first. Ask how the pool was defined and why, and ask why colleagues doing similar work were excluded from it.

The criteria should be objective and capable of being evidenced. Attendance records, disciplinary records, skills and qualifications, and measurable performance data are the usual defensible ones. Scores for things like attitude, flexibility or potential are far weaker, because they are subjective judgements presented as measurements. Ask for your scores, ask who scored you, ask what evidence each score was based on, and ask to see the scoring matrix. You are entitled to understand how you were assessed.

Some selection reasons make a dismissal automatically unfair regardless of anything else. Selecting someone because of pregnancy or maternity, trade union membership or activities, whistleblowing, or asserting a statutory right falls into that category. Selection influenced by age, sex, race, disability or another protected characteristic is discrimination as well, and discrimination claims are not capped and do not need two years of service. If you are 50-something and the pool went the way the pool went, that is a pattern worth writing down rather than dismissing.

Alternative employment and the trial period

An employer running a fair redundancy has to take reasonable steps to look for suitable alternative employment within the business, and within any associated companies in the group. This is an active duty, not a matter of waiting for you to apply for things on the intranet.

If you are offered a suitable alternative role, you get a statutory trial period of four weeks to see whether it works. Taking the trial does not waive your redundancy rights, and if the role turns out not to be suitable during it, you remain entitled to your redundancy payment. Unreasonably refusing an offer of suitable alternative employment, on the other hand, can cost you the payment altogether, so refusing outright without thinking is a risk.

Whether a role is suitable turns on the pay, the status, the hours, the location and the skills involved, judged against what you were doing before. A significant drop in any of those is a reasonable basis to say a role is not suitable, but say it in writing and say why, rather than simply declining.

If you have two years of service you are also entitled to reasonable paid time off during your notice period to look for work or arrange training. Employers rarely mention it and it is worth asking for.

The settlement agreement question

Many redundancies end with a settlement agreement rather than a plain redundancy dismissal. The enhanced payment is offered on condition that you sign, and what you are signing is the surrender of your right to bring claims, including unfair dismissal.

That trade can be a perfectly good one. It is only a good one if you know what you are giving up and what the payment is actually worth after tax. If the redundancy process has been weak, if the pool looks constructed, if consultation was an announcement, or if there is an age pattern in who went, then the claims you are being asked to waive have value, and the first offer is unlikely to reflect it.

Two things are worth knowing. A settlement agreement is not legally binding until you have taken independent legal advice on its terms from a qualified adviser who is named in it and carries insurance, so this step is not optional. And the employer almost always contributes to the cost of that advice, often paying your solicitor directly, which keeps it free of tax to you.

The clock you cannot see

There are two deadlines in a redundancy and your employer will only mention one of them.

The first is the date they want your answer by. That one is usually softer than it looks, and asking for more time in writing, in a calm and cooperative tone, is normal and expected.

The second is the time limit for bringing a tribunal claim. For most claims, including unfair dismissal and discrimination, it is three months less one day from the act complained of, which for a dismissal is normally your last day of employment. Miss it and the claim is gone whatever its merits. This matters even if you have no intention of claiming, because the possibility of a claim is what gives a negotiation its weight. The day your limit expires, the employer's exposure disappears with it.

Before you agree anything, work out your own limitation date and write it down. If it is close, look at notifying ACAS for early conciliation, which is the step you have to go through before lodging most claims and which pauses the clock while it runs. It does not end a negotiation and it does not stop you settling. Under the Employment Rights Act 2025 the limit is expected to extend from three months to six from October 2026, but that is a commencement target and it can move, so do not run a negotiation on the strength of it.

What to do this week

Get the paperwork into your own hands first. Forward your contract, your staff handbook or the redundancy policy, your last two appraisals, and anything setting out the proposal to a personal email address, because company access disappears quickly once a date is set. Save your own material only, not company data or colleagues' information.

Then ask, in writing, for the things you are entitled to understand: the reason for the redundancy, how the pool was defined, the selection criteria and your scores against them, and what alternative roles exist across the business and any group companies. Asking in writing is not aggressive. It is how you find out whether there is a real process behind the announcement, and it creates a record either way.

Write down what was said in the meeting while you still remember the words, along with who was there. A note made at the time carries weight precisely because it was written before anyone knew how things would turn out.

Then work out your numbers before you respond to any offer. If the process is starting to look like a managed exit rather than a genuine redundancy, the PIP page covers how performance processes are used the same way, and raising something formally is covered on the grievance page.

When to get a solicitor involved

Get advice early where the sums are large because of your seniority or service, where you think the redundancy is not genuine, where there is an age or other discrimination pattern in the selection, or where a settlement agreement is on the table. You will need a solicitor for the settlement agreement in any event, because it is not binding without independent advice, and the employer usually pays towards that.

You will get far more from that meeting if you arrive with your timeline, your paperwork, your selection scores and a clear statement of what you actually want. An hour spent explaining the basics is an hour not spent on your position.