Being made redundant is one of the most disorienting experiences in working life. Even when you know it may be coming, the reality of losing your job — along with the income, routine, and identity that comes with it — can feel overwhelming. But redundancy also comes with legal rights, financial entitlements, and strategic options that many employees are unaware of.

This guide explains what redundancy means, what you are entitled to, and what to do next.

What is redundancy?

Redundancy is a specific legal reason for dismissal. It occurs when an employer needs to reduce their workforce — because a role no longer exists, the business is closing, or a particular location is shutting down. Redundancy is not the same as being fired for performance or conduct.

This distinction matters because it determines what you are entitled to receive.

What are you entitled to?

Statutory redundancy pay

If you have been employed for at least two years, you are entitled to statutory redundancy pay. The amount depends on your age, weekly pay (up to a statutory cap), and length of service. You can calculate your entitlement using the government's redundancy pay calculator.

Notice period

You are entitled to a minimum notice period based on your length of service — one week per year of service, up to a maximum of 12 weeks. Your contract may provide for a longer notice period, in which case the contractual notice applies.

Accrued holiday pay

Any unused holiday you have accrued must be paid out on termination.

Consultation

Your employer is legally required to consult with you before making you redundant. If 20 or more employees are being made redundant at the same time, there are additional collective consultation requirements. Failure to consult properly can make a redundancy unfair.

What is a settlement agreement?

In many redundancy situations, employers offer a settlement agreement — a legally binding contract in which you agree not to bring employment tribunal claims in exchange for a financial payment, typically above the statutory minimum.

Settlement agreements must be signed with the benefit of independent legal advice. The employer usually contributes to the cost of that advice.

Key things to understand about settlement agreements: the first £30,000 of a redundancy payment is usually tax-free; you can negotiate the terms; and signing means you waive your right to bring future claims, so understanding what you are giving up is essential.

What should you do immediately?

In the days following a redundancy announcement, the most important steps are:

  • Get everything in writing — the reason for redundancy, your notice period, and what you will be paid
  • Do not sign anything immediately — take time to review any settlement agreement
  • Check your contract — your contractual entitlements may exceed the statutory minimum
  • Understand the selection process — if you were selected from a pool of employees, ask how the selection was made and whether the criteria were applied fairly
  • Consider whether the redundancy is genuine — if your role is being advertised shortly after your dismissal, this may indicate the redundancy was not genuine

What if the redundancy was unfair?

If your employer failed to follow a fair process — did not consult properly, applied selection criteria unfairly, or made you redundant for an automatically unfair reason (such as pregnancy or whistleblowing) — you may have grounds for an unfair dismissal claim at an employment tribunal.

Claims must generally be brought within three months of the date of dismissal, so acting quickly matters.

Where to go from here

If you want a complete, step-by-step guide to navigating redundancy — covering your rights, how to evaluate a settlement agreement, what to negotiate, and how to protect your financial position — the Complete Layoff & Severance Survival Blueprint covers the full process in plain English.

Get the Layoff & Severance Survival Blueprint →

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Summary

Redundancy comes with legal rights that many employees do not fully understand. Statutory redundancy pay, notice entitlements, consultation requirements, and the right to challenge an unfair process all exist to protect you. Taking the time to understand your position before signing anything is the most important step you can take.

This article is for informational purposes only and does not constitute legal advice. Employment law is complex and fact-specific. Always seek professional legal advice for your individual circumstances.