Your rights if you are made redundant

Statutory redundancy pay requires two years' continuous service and is calculated by age band: half a week's pay for each full year worked while under 22, one week for each year aged 22 to 40, and one and a half weeks for each year aged 41 and over. Service is capped at 20 years and weekly pay is capped at a statutory maximum that rises each April. Your contract may provide more.

Statutory notice is one week after a month's service, then one week for each complete year, capped at 12 weeks. Your contract may again provide more, and the employer may pay in lieu of notice instead of you working it.

Accrued but untaken holiday must be paid in full. Any contractual benefits owed up to the termination date remain payable.

You have a right to reasonable paid time off during the notice period to look for work or arrange training, if you have two years' service.

Tax treatment is favourable: the first £30,000 of a genuine redundancy payment is free of income tax and National Insurance. Payments in lieu of notice are treated as earnings and taxed normally. Accrued holiday pay is taxed normally too.

There must be a genuine redundancy situation. If the same work is being done by someone else afterwards, or a replacement is hired shortly after, the redundancy may not be genuine.

There must be meaningful consultation, individually with each affected employee, before any decision is final. Consultation that begins after the decision has been made is not consultation and is a common ground of successful claims.

Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation with recognised trade unions or elected representatives is mandatory: at least 30 days before the first dismissal, or 45 days where 100 or more are proposed. Failure can lead to a protective award of up to 90 days' pay per employee.

Selection must be fair and objective, using criteria applied consistently — length of service, skills, qualifications, attendance and disciplinary record are common. Selection is automatically unfair if based on pregnancy or maternity, trade union membership or activity, whistleblowing, asserting a statutory right, part-time or fixed-term status, or a protected characteristic.

The employer must consider suitable alternative employment within the business and any associated employer. Employees on maternity, adoption or shared parental leave have enhanced priority for suitable alternative vacancies, and that protection now extends for a period after returning to work.

With two years' service you can bring an ordinary unfair dismissal claim. The redundancy is unfair if there was no genuine redundancy situation, if the selection criteria or their application were unfair, if consultation was inadequate, or if alternative employment was not properly considered.

Some dismissals are automatically unfair with no qualifying period at all: dismissal for pregnancy or maternity, for asserting a statutory right such as the minimum wage or holiday, for whistleblowing, for trade union membership or activity, or for a health and safety reason.

Discrimination claims under the Equality Act have no qualifying period either. If selection appears to correlate with age, race, sex, disability, religion or another protected characteristic, that is a separate and potentially more valuable claim.

Time limits are strict: generally three months less one day from the effective date of termination. Acas early conciliation is a mandatory step before lodging and pauses the clock while it runs.

If you are offered a settlement agreement, it must be in writing and you must receive independent legal advice for it to be binding — the employer normally pays a contribution toward that advice. Do not sign at the meeting. A settlement agreement waives your right to claim, so understand what you are giving up.

You do not lose your entitlements. Where an employer is formally insolvent, the Redundancy Payments Service pays statutory redundancy pay, notice pay, up to eight weeks' arrears of wages and up to six weeks' holiday pay from the National Insurance Fund.

You claim through GOV.UK using a case reference number given to you by the insolvency practitioner. Payments are subject to the same statutory weekly pay cap.

Amounts above the statutory limits become a claim in the insolvency itself, which usually recovers little.

If the business is sold rather than closed, TUPE may apply instead, transferring your employment to the buyer on existing terms. A dismissal that is by reason of the transfer itself is automatically unfair.

Free advice on all of this is available from Acas on 0300 123 1100, from Citizens Advice, and from your union if you belong to one.