Case Studies

Redundancy: where do we stand in 2025?

Green-chair-meeting

In April we're set to see a significant increase in employment costs. This is down to an increase in National Insurance contributions for employers and an increase in the National Minimum Wage in 2025.

It's fair to say that these changes are high on the agenda for business owners in Cumbria and Dumfries & Galloway, particularly the increased costs and how these additional expenses can be accounted for.

Some employers are already considering whether a reduction in their team will help to balance their books, and if so, whether their business model can sustain a reduction in members of the team.

If you're thinking about making changes to your team that might involve the redundancy of at least one role, then you'll need to follow a proper redundancy process. As well as good practice, this will help protect from unfair dismissal and other employment tribunal claims.

If you're not sure what a redundancy process involves, then read on. I've set out the main points of a process, but you should always seek professional advice from an HR consultant to ensure you meet all of your legal obligations.

Approaching the redundancy process

It's the role, not the person

A redundancy process should always be based around the roles in an organisation rather than an individual. You should identify the role that could potentially be made redundant rather than a specific person.

It's a proposal for consultation

Redundancy is never a done deal and consultation with those involved is a legal requirement.

The consultation

This should be a two-way process, in which the employee has an opportunity to have their say. Employers should give full consideration to any suggestions that are made by the employee.

Avoiding redundancies

The consultation process should always be approached with an aim of avoiding the redundancy of the role and the person. This is a fundamental part of achieving a meaningful consultation with those involved.

The timeline

Unless you're proposing 20 or more redundancies, there's no defined time period for consultation. However, the consultation should be meaningful and not rushed, so it's wise to build at least two weeks into your process timeline.

Redundancy payments

There are two main payments made in a redundancy situation.

1. Redundancy pay

Think of this as compensation for the person losing their job.

Redundancy pay is based on age and length of service. There's a statutory cap on a week's pay, which is reviewed each year by the government.At present (Jan 2025), this is £700 per week.

Redundancy pay isn't usually subject to tax or NI deductions (up to £30,000) so for most it's a tax-free lump sum payment.

Use my ready reckoner below to calculate the number of weeks' redundancy your employee is entitled to.

2. Notice pay

Notice is a payment required under the employment contract. Think of this as payment for breaking that contract.

As a minimum, this is one week's notice for each complete year of service, up to a maximum of 12 weeks. Sometimes the contract of employment provides more notice.

A week's notice pay should be a week's normal pay for the individual. This will be subject to all of the usual deductions for tax, NI and pension, etc.

Other payments that might be due in a redundancy situation include holidays that have been accrued but not taken. There can also be entitlements to bonus and other benefits that should be considered.

In practice, before taking steps towards a redundancy process, I'd suggest costing out what the likely payments would be. You can then consider the savings versus the cost of making that role/person redundant.


Voluntary redundancy

There's no legal requirement to offer a voluntary redundancy option, but many employers consider this as part of their process.

There are benefits to voluntary redundancy. In particular, it can result in the reductions being achieved with the person largely content with leaving the business.

However, there's a number of pitfalls: including when those who would be entitled to a larger redundancy payment volunteer, making it difficult to control your costs.

Redundancy or dismissal?

Redundancy is a dismissal as you're terminating someone's employment. Therefore the same rules apply.

1. Conduct a fair process,

2. Invite a person to a meeting to discuss and give them the right to be accompanied,

3. Give the person the right to appeal against their dismissal.

Next steps

If you're concerned about increasing costs and redundancy has crossed your mind, then get in touch and let's talk.


This blog is a summary of the main elements of redundancy, but it's not a comprehensive guide. With many technical points to consider, you should always take professional advice prior to opening a redundancy process. 

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Monday, 10 February 2025