Redundancy Consultation: A Step-by-Step Guide for Employers

Why consultation is legally required

Consultation is not optional. UK law — specifically the Trade Union and Labour Relations (Consolidation) Act 1992 and the Collective Redundancies Directive — requires employers to consult with employees (and their representatives, if applicable) before making any redundancies.

Consultation must be meaningful — meaning you must genuinely consider alternatives and employee feedback before making final decisions. A sham consultation where the outcome was predetermined is likely to render the dismissal unfair in a tribunal.

Individual vs collective consultation

Individual consultation is required for every employee at risk of redundancy — you must speak to each person individually about their situation, the options available, and the selection process.

Collective consultation is required in addition to individual consultation when you are making 20 or more redundancies at one establishment within a 90-day period. In this case, you must also consult with elected employee representatives (or a trade union if one is recognized).

Minimum consultation periods:

• Under 20 redundancies: as long as is reasonable — typically a minimum of a few days to a couple of weeks
• 20 to 99 redundancies: minimum 30 days consultation before any dismissals take effect
• 100 or more redundancies: minimum 45 days consultation before any dismissals take effect

Step 1 — Identify the pool and selection criteria

Before consulting, you need to decide who is at risk and how you will select who is made redundant. This must be done objectively and fairly:

• Define the pool — which employees are doing the same or similar work, and could potentially be considered together
• Set selection criteria — common ones include length of service (LIFO), performance record, disciplinary record, skills and qualifications, and attendance. Criteria must be objective, applied consistently, and non-discriminatory
• Score employees — apply the criteria fairly and score each employee. Keep records of the scoring
• Consider alternatives first — before finalising selections, explore whether there are alternative roles available that could avoid or reduce the number of dismissals

Discriminatory selection — for example, consistently selecting women of child-bearing age, older workers, or disabled employees — is likely to result in discrimination claims on top of unfair dismissal claims.

Step 2 — Hold consultation meetings

For each employee at risk, hold at least one consultation meeting. At this meeting you should:

• Explain the reasons for the proposed redundancies
• Share the selection criteria and how each employee has been scored
• Invite the employee to suggest alternative ways to avoid or reduce the number of redundancies
• Consider any representations the employee makes
• Offer any available alternative employment within the organisation

Employees have the right to be accompanied at these meetings by a colleague or a trade union representative. They are also entitled to a reasonable amount of time off to seek alternative employment during the notice period.

Step 3 — Explore redeployment and alternatives

Before finalising any dismissals, you are legally required to explore whether suitable alternative employment is available — either within the organisation or within any associated group companies. Suitable alternative employment is work that is:

• On the same terms as the current role, or no worse than marginally worse
• Appropriate given the employee's skills, experience, and circumstances
• On a permanent basis (not a fixed-term contract unless that is reasonable)

If an employee unreasonably refuses a suitable alternative role, they may lose their entitlement to statutory redundancy pay. You must document the offer and the employee's response carefully.

Step 4 — Issue dismissal notices and notice pay

After consultation is complete and you have confirmed the dismissals, issue written dismissal notices to affected employees. The notice must:

• State the reason for dismissal (redundancy)
• Specify the termination date
• Outline the employee's entitlements (notice pay, redundancy pay, any enhanced elements)
• Confirm the date of the last working day
• Offer the right to appeal the decision

You must also complete a P45 for each employee and provide this on or before their last day.

Penalties for getting it wrong

If you fail to consult properly, employees can bring tribunal claims for:

• Unfair dismissal — if the process was defective, even genuine redundancies can be ruled unfair
• Failure to consult collectively — the government can impose a protective award of up to 90 days' pay per employee, payable to a protective fund for employees
• Discrimination — if selection criteria indirectly or directly discriminate against protected groups

ACAS provides free guidance and pre- tribunal conciliation services. Using ACAS before a tribunal claim is raised can often resolve disputes without litigation.