8 things you need to know if you're at risk of redundancy

The UK redundancy rate rose to 4.6 per thousand people in the three months to January 2024 - the highest since 2021, according to the latest data from the Office for National Statistics (ONS).

Between November 2023 and January 2024 there were around 133,000 redundancies made in the UK compared with 116,000 in the previous three months.

The unemployment rate also climbed in the three months to January 2024, to 3.9% and is expected to hit 4.5% by the end of the year. 

Here, Which? explains the key things you need to know if you're at risk of being made redundant.

• Which? Legal can offer its members personal advice on redundancy. Visit Which? Legal to find out more.

1. Being 'at risk' doesn't necessarily mean you'll be made redundant

Redundancy is one of the few legitimate reasons why an employer can terminate someone's employment, but before this happens they should notify you you're 'at risk' of redundancy.

Being told you're at risk doesn't necessarily mean you will be made redundant. In some cases, your employer may decide to keep you in your existing role, or try to redeploy you.

You have the right to refuse an offer of alternative employment, but if you unreasonably refuse an offer of suitable alternative employment you miss out on your statutory redundancy pay.

2. Your employer must follow a set of procedures under UK law

If your employer doesn't follow the procedures required by employment law and you have worked there for more than two years, your dismissal could be deemed unfair.

For example, if your employer is reducing staff numbers in a particular role within the business, they must:

• Identify a suitable pool of people to select from
• Use fair selection criteria to decide who from the pool will be made redundant
• Consult with each employee meaningfully about any possible alternatives to redundancy
• Consult with trade unions/staff representatives if more than 20 redundancies are proposed within a period of 90 days.

Failure to comply with the law means a claim can be made, and may result in an employment tribunal finding the dismissal to be unfair. 

If the tribunal agrees that the dismissal is unfair, compensation may be awarded. 

If you are dismissed and have the requisite two years' service, you will have three months less one day from the date your employment ends in which to issue a claim. Prior to issuing a claim you need to contact the conciliation service Acas to commence Early Conciliation.

3. You can't be made redundant for certain reasons

These are some of the reasons why any selection for redundancy could be deemed unfair:

• Pregnancy
• Being on maternity, paternity or parental leave
• On the grounds of a protected characteristic, including your sex, race, sexual orientation, any disability, gender reassignment, religion or belief
• For whistle-blowing
• For making a flexible working request
• Your role as a representative for, or your membership of, a trade union
• Working part time or on a fixed-term contract
• Your work as an employee representative
• Being a pension trustee
• Reasons relating to your rights to minimum pay and working hours, including annual leave.

Your employer must give you a full explanation of why you have been selected for redundancy – and it must not include any of the reasons above or any other reasons that are deemed unfair. 

Seek advice to find out whether your selection for redundancy could fall under an automatically unfair reason (the above list is not exhaustive), and if so, what action you can take.

From April 2024, a new law will give greater protection to pregnant women and new parents. 

Under the current rules, employers have an obligation to offer a suitable alternative vacancy (where one exists) to employees on maternity leave, shared parental leave or adoption leave - before offering them redundancy.

The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 extends the priority status to pregnant employees and those who have recently returned from maternity/adoption leave and shared parental leave.

4. You'll usually get a notice period

The length of notice period can vary depending on what's in your contract and how long you've been with the company.

Statutory minimum notice periods in England, Wales and Scotland are:

• At least one week if you've been with the company for between one month and two years
• For those employed for between two and 12 years, a week for each year of employment
• If employed for 12 years or over, 12 weeks.

In some cases your employer may give you a longer notice period, regardless of how long you've worked for it.

If the company is unable to keep you on for your notice period (for example, if it's going out of business), you're still entitled to compensation for your notice period.

You may be offered payment in lieu of notice. This means your employer asks you to leave the firm earlier, but still pays your basic salary for your notice period. Unless your contract says otherwise, it's unlikely you will be entitled to the monetary equivalent of any entitlements/benefits you would have received had you worked your notice period, for example pension contributions.

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5. You're entitled to a redundancy package

Redundancy pay can depend on several factors, including what your contract says and what you agree to in your consultation.

Everyone who has been with the business for two or more years is usually entitled to statutory redundancy, which is worked out based on how long you've worked at the organisation (up to a maximum of 20 years' service), and your age.

In this situation, if you are made redundant (in England, Scotland and Wales) on or after 6 April 2023, you will have weekly pay capped at £643. This will rise to £700 from 6 April 2024. The maximum amount of statutory redundancy pay is capped at £19,290.

You can use the government calculator to work out your redundancy pay. 

In some instances – for example, if you refuse suitable alternative work without a valid reason – you won't be eligible for statutory redundancy pay.

It's worth noting that statutory redundancy pay tends to be a minimum and some employers may offer more, so make sure you discuss redundancy pay during your consultation.

Whether you're offered more money or not, you're still entitled to any holiday pay, commission and bonuses you are owed. These types of payments will be subject to tax.

You can use our income tax calculator for 2023-24 to work out how much tax you'll pay on your total income.

• Find out more: how to calculate redundancy pay

6. You'll receive your redundancy pay in the same way you receive your salary

Your employer should pay your redundancy on the date you leave the company or your next normal pay date. It will usually be paid into your bank account.

Your employer should also provide you with a written document explaining how your redundancy payment was calculated.

If your employer doesn't pay you, or doesn't pay you in the way it should, you can write to request payment.

If this doesn't work, you have three months less one day from the date you should have received any outstanding salary, commission, bonuses or holiday pay, in which to issue a claim in the Employment Tribunal. Generally speaking, you have six months in which to issue a claim for an outstanding statutory redundancy payment, although it's best to start proceedings as soon as possible.

Before issuing a claim, you first need to go through ACAS Early Conciliation. It will see if your employer will resolve the dispute without going to a tribunal. You need to start Early Conciliation within the three months less one day deadline to issue a claim.

If your employer is insolvent and hasn't paid you what you're owed, you can also claim from the National Insurance Fund by using the claim for redundancy and monies owed service.

7. You may be asked to sign a settlement agreement

A settlement agreement is a legally binding agreement between you and your employer. You might be asked to sign one if you are being made redundant, or if you're leaving your job for complicated reasons. 

Settlement agreements are written by lawyers, and the language is often difficult to understand and could be confusing. 

You need to make sure you know what rights you’re giving up when you sign one. This is because when you sign the agreement you are giving up the right to make a future claim against your employer. 

You need to take legal advice for a settlement agreement to be binding. Your employer will normally pay for the cost of you getting legal advice.

• Which? Legal can review your settlement agreement and give personal advice on redundancy. Visit Which? Legal to find out more.

8. You might be able to claim benefits while you're not working

If you're made redundant and your income falls as a result, you may be able to claim benefits while you look for another job – but the kind of help you'll qualify for, and how much you'll get, will depend on your circumstances. 

• New Style Jobseeker’s Allowance: This is for those under state pension age, who are unemployed or working less than 16 hours a week on average, and have made enough National Insurance contributions to qualify – usually over the previous two to three years. What you get isn't affected by your savings or your partner’s income.
• New Style Employment and Support Allowance (ESA): This is for those under state pension age, who have a disability or health condition that affects how much you can work, and have made enough NI contributions to qualify, usually over the past two to three years. Your savings and partner’s income will not affect how much you get.
• Universal Credit: For those under state pension age, who are out of work or on a low income. Your savings and partner's income will affect how much you get – as will other circumstances, such as whether you have any dependants, or need help with housing payments. You can find out more in our guide Universal Credit explained.
• Pension Credit: This is for those with low incomes, where either you, or you and your partner have reached state pension age. How much you get will depend on your circumstances - you can find out more in our guide to pension credit.

This story was originally published on 21 June 2020 and has since been updated. The last update was on 18 March 2023