Redundancy Process for Small Business UK: A Fair, Practical Guide for Employers
A practical, people-first guide for founders, senior leaders and people professionals navigating redundancy in a UK small business.
No one sets out wanting to run a redundancy process. More often, the conversation starts with a commercial reality the business can no longer ignore.
Revenue has changed. A client has gone. Two jobs now overlap.
Perhaps the team has grown faster than the work available, or a structure that made perfect sense two years ago no longer fits the business you are running today.
That is when the difficult part begins.
You may be clear that the organisation needs to change. But turning that commercial decision into a fair and thoughtful redundancy process is another matter.
For a small UK business, this can feel especially exposed. There may be no large internal HR team between the decision and the people affected. Founders and senior leaders are often making the business case, explaining it to employees, answering difficult questions, reviewing roles and trying to keep everything else moving at the same time.
The important thing to remember is that a fair redundancy process begins well before anyone is told that their role is redundant.
It begins with a genuine business case, a proposed structure rather than a predetermined outcome, meaningful consultation, fair selection decisions and a willingness to rethink the proposal if someone gives you a good reason to.
The CIPD’s April 2026 guidance describes a redundancy process as involving planning and recording the rationale, identifying the selection pool without deciding in advance who will leave, consulting employees, considering volunteers, making fair selections, exploring suitable alternative employment, hearing appeals and arranging the correct payments.
For small UK businesses, that sequence matters whether one person is affected or 20.
In this guide, we walk through what a fair process looks like in practice: from making one employee redundant in the UK and understanding the difference between individual and collective consultation, to creating a fair selection process and checking the right details before any final decision is made.
Current-law note: Legal and statutory information in this article was checked on 3 September 2026. Employment law changes, so current GOV.UK and Acas guidance should always be checked before acting. JourneyHR provides HR and People + Culture support rather than legal advice on an individual case.
What makes a redundancy process fair in a small business?
Redundancy can be a fair reason for dismissal, but only where there is a genuine redundancy situation and the employer also follows a fair and reasonable process.
In other words, the process matters just as much as the business reason.
Even where a role genuinely disappears, the business can create unnecessary risk if the outcome was effectively decided before consultation began. The same is true if the selection pool is too narrow, the criteria rely heavily on personal judgement, relevant evidence is not shared, or suitable alternative work is overlooked.
A fair process normally means consulting while the proposals are still open to change, giving affected employees enough information and time to respond, listening properly to questions and alternatives, and considering ways to avoid or reduce redundancies and soften their impact. If 20 or more redundancies are proposed within 90 days, the collective consultation and HR1 notification rules must also be checked before dismissals take effect.
Before the process starts, we would pause and work through these questions:
What has changed in the business, and does it amount to a genuine redundancy situation?
What work and skills will the organisation need after the change?
Which roles are genuinely affected, and have all similar or interchangeable roles been considered when defining any selection pool?
Could redundancies be avoided or reduced through vacancies, redeployment, reduced hours, voluntary redundancy or other reasonable alternatives?
Are the proposed selection criteria objective, evidence-based and capable of being applied consistently?
Could the pool, criteria or consultation arrangements disadvantage anyone because of a protected characteristic or protected activity, including pregnancy, maternity or other family leave, disability-related absence, part-time or fixed-term status, trade union or employee representative activity, whistleblowing or another statutory right?
Does anyone need reasonable adjustments or another accessible way to take part fully in consultation?
Does anyone have priority rights to be offered a suitable alternative vacancy because they are pregnant or are taking, or have recently taken, protected family leave?
If 20 or more redundancies are proposed, have collective consultation, representative election or trade union consultation, timing and HR1 notification requirements been identified?
What parts of the proposal are genuinely still open to consultation, and who will review any challenge to the pool, scoring or outcome?
How will the final decision, payments, notice, right of appeal and support available be explained clearly?
These checks help make sure the process is fair for everyone affected, including people who are absent from work or may need extra support to take part.
They also bring us back to the heart of consultation: it is difficult to defend if every important decision has already been made.
You can have a preferred organisational structure and a clear commercial view about what the business needs. But employees and their representatives must still have a genuine opportunity to influence the proposal before the final decision is made.
How do you make one employee redundant in the UK?
We are asked about this a lot, because making just one role redundant can look much simpler than it really is.
There may be no large selection exercise and no employee representatives to involve. It can therefore be tempting to explain the business decision, confirm the redundancy and move on.
We would pause at that point. A single redundancy still needs a fair process.
If fewer than 20 redundancies are proposed, the statutory collective consultation rules and minimum consultation periods do not apply. There is no set legal format or minimum length for individual consultation, but affected employees should still be informed and consulted meaningfully before any final decision is made. Failing to consult properly can make a redundancy dismissal unfair.
So, if you are considering how to make one employee redundant in the UK, our practical starting point is simple:
Treat redundancy as a proposal first, not a foregone conclusion.
Explain why the role is at risk and share enough information for the employee to understand and respond to the business rationale. Give them a genuine opportunity to ask questions, correct factual errors and suggest alternatives. Check whether other employees do the same or similar work before deciding on the selection pool, and keep vacancies and other ways of avoiding dismissal under review. Make any reasonable adjustments needed so the employee can take part fully, and check whether pregnancy or recent family leave gives them priority for a suitable alternative vacancy.
Only once consultation is complete, and the employee’s points have been considered with an open mind, should the business make and communicate its final decision, including notice, payments and the opportunity to appeal.
A pool of one can be fair, but it should never be the automatic answer
Sometimes there really is only one role in scope.
Imagine a 35-person company with one standalone events manager. If the business is stopping events altogether and no one else carries out the same or similar work, a pool containing that one role may be reasonable. GOV.UK also recognises that a separate selection exercise may not be needed where a role genuinely no longer exists and the employee is the only person doing that work.
The picture changes if colleagues carry out the same or similar work, or have skills that are sufficiently interchangeable. In that situation, the business should genuinely consider whether a wider selection pool is appropriate and consult while that question can still influence the outcome.
That was the issue in Mogane v Bradford Teaching Hospitals NHS Foundation Trust [2022] EAT 139.
The employer needed to reduce costs and employed two people on fixed-term contracts. It used the earlier contract expiry date as the single criterion, which effectively decided both the pool and the person selected before meaningful consultation had taken place. The Employment Appeal Tribunal held that the dismissal was unfair. It confirmed that a pool of one can be reasonable in the right circumstances, but where more than one employee could potentially be considered, the employer should not reach that position without prior consultation.
For us, the practical lesson is straightforward.
A pool of one can be the right answer, but it is not a shortcut.
You should be able to explain, with evidence, why the role is genuinely unique and why a wider pool of similar or interchangeable roles would not be reasonable. That reasoning should be shared and tested through consultation before the selection outcome is finalised.
What should a small business redundancy consultation process include?
For a small UK business, consultation does not need to become a huge corporate exercise.
It does, however, need to be genuine and meaningful.
The employee should understand what is being proposed, why their role is at risk and what will happen next. They should have enough information and time to ask questions, challenge assumptions, correct factual errors and suggest alternatives before any final decision is made.
In practice, we would normally expect individual consultation to cover:
the business reason for the proposed change and the roles affected
the current and proposed organisation structure, where this is relevant
why the employee’s role is at risk
the proposed selection pool and why it is considered appropriate
the proposed selection criteria, any provisional scoring and the evidence relied on
ways to avoid or reduce redundancies, including alternatives suggested by the employee
current and upcoming vacancies, suitable alternative employment and any priority vacancy rights
the proposed consultation timetable and when a decision is likely to be made
notice, redundancy pay and any contractual or enhanced arrangements
support available, including reasonable adjustments and time off where applicable
the employee’s questions, the business’s responses and any further information needed
Consultation does not mean the business has to agree with every suggestion an employee makes.
It does mean listening properly, considering each proposal with an open mind and explaining the response. The aim is to try to reach agreement where possible, although agreement is not required before individual consultation can end.
We have seen consultation change outcomes, and that is exactly why it matters.
An employee might point out that part of their role is still needed. They may suggest reduced hours, job sharing or another workable option. A suitable vacancy may become available during the process.
Someone outside the original at-risk group may volunteer for redundancy, although the business does not have to accept a volunteer. The proposed structure may also need to change because an employee has identified an operational issue that had not previously been spotted.
If none of those possibilities could ever affect the outcome, the process is unlikely to amount to genuine consultation.
A useful reminder of the human impact:
“One thing I keep noticing around redundancy is how quickly a business decision starts to feel personal.”
“When redundancy knocks your confidence,” Creativebrief, 1 October 2026
Case study: what genuine consultation changed in a JourneyHR client restructure
One JourneyHR client had roughly 80 employees and was reviewing its structure after a period of ambitious growth.
The business had concluded that its existing model was no longer efficient enough and proposed a restructure involving more than 20 employees at risk of redundancy. We supported the organisation through the collective consultation process.
We started with the business rationale and a people impact analysis. Similar roles were pooled and selection criteria were prepared. Because no recognised trade union was in place, employee representatives were elected and trained before consultation meetings began.
Then the process did something important.
It changed.
During consultation, an employee who had been placed at risk presented a detailed case explaining why their role remained necessary. The business considered the argument and removed that employee from risk. Other employees reconsidered their own plans, including one person outside the original at-risk population who volunteered for redundancy. The proposed shape of the redundancies changed as those conversations developed.
That is what proper consultation can look like.
The organisation still needed to restructure. Just over 20 employees ultimately left, but the final result was not identical to the first proposal. JourneyHR's published case study records positive employee feedback about the fairness and consideration shown during the process.
The business case remained. The process allowed the route to that outcome to be tested.
JourneyHR case study: Collective + Individual Consultation
When does collective redundancy consultation apply?
For larger restructures, there is an additional legal process to follow. As at 6 October 2026, collective consultation is generally required where an employer proposes 20 or more redundancies at one establishment within a period of 90 days or less. Consultation must begin in good time and at least 30 days before the first proposed dismissal where 20 to 99 redundancies are proposed, or at least 45 days before the first proposed dismissal where 100 or more are proposed. No dismissal can take effect before the relevant minimum period has ended. GOV.UK: Redundancy consultations
Where collective consultation applies, the business must consult the appropriate representatives: normally the recognised trade union, or elected employee representatives where there is no recognised union. The aim is to work with them on ways to avoid or reduce redundancies and lessen their impact. Representatives must also receive the legally required written information about the proposals, including the reasons, the numbers and categories of employees affected, the proposed selection method, how the dismissals would be carried out and how redundancy payments would be calculated.
There is a separate notification duty too. The employer must submit form HR1 to the Redundancy Payments Service and send a copy to the employee representatives. As at 6 October 2026, this must be done at least 30 days before the first proposed dismissal where 20 to 99 redundancies are proposed, or at least 45 days beforehand where 100 or more are proposed. The notification should be made before individual notices of dismissal are issued.
This is not simply a procedural box to tick. For dismissals taking effect on or after 6 April 2026, an employment tribunal can make a protective award of up to 180 days’ full pay for each affected employee if the collective consultation duties are not met. Employees do not need two years’ service to qualify for that award. There can also be separate criminal consequences for failing to make the HR1 notification without good cause. Business.gov.uk: Protective awards for collective redundancy
There is another reason we would check the law at the start of every larger restructure rather than relying on an old template.
The Employment Rights Act 2025 introduces a further organisation-wide threshold for collective redundancy obligations. The Government consulted on the detailed threshold in February and March 2026, and current government guidance says further threshold changes are expected in 2027. Until those provisions take effect, the existing one-establishment threshold remains the rule.
For larger exercises, current legal advice is worth taking early.
How do you create a fair redundancy selection process in a small business?
Selection is often the point where a redundancy process starts to feel most difficult. The conversation has moved from roles and structures to decisions that may directly affect individual people.
The principle itself is straightforward, even if applying it needs care.
Start with the work and skills the future organisation genuinely needs. Then identify a reasonable selection pool and agree criteria that are relevant, evidence-based and as objective and measurable as reasonably possible. The same criteria should be applied consistently to everyone in the pool.
Acas says selection pools should include roles that are the same or similar, and employers should also consider roles requiring similar skills. The proposed pool and criteria should be included in consultation. Criteria should be fair, based on facts that can be measured and not driven by personal opinion. Before scoring begins, it is also important to check whether any criterion could directly or indirectly disadvantage someone because of a protected characteristic, family leave, disability-related absence, part-time or fixed-term status, or another protected reason. Acas: Selecting employees for redundancy
Depending on the roles involved, fair selection criteria might include:
skills, qualifications or expertise that are relevant to the future roles
the standard of work or performance, supported by reliable evidence
relevant experience or aptitude, where these can be assessed fairly
an accurate disciplinary record, where it is reasonable and relevant to use it
attendance, provided protected and disability-related absences are removed and the criterion does not discriminate
The important thing is that the criteria reflect what the future business genuinely needs, are explained during consultation and are applied consistently to everyone in the pool.
That sounds simple, but it makes a real difference.
If the new structure needs strong account-management capability, for example, assess the skills the role will actually require rather than simply favouring the person with the longest service. Length of service can sometimes form part of a matrix, but relying on it alone may create age discrimination risks and should be objectively justified.
If technical expertise matters, define what good looks like before anyone is scored and use the same evidence and scoring approach across the pool.
And if performance is included, base the scores on up-to-date, documented evidence and give employees a meaningful opportunity to challenge factual errors during consultation.
We would be cautious about broad labels such as ‘attitude’, ‘culture fit’ or ‘future potential’. If a factor like this is genuinely relevant, spell out the behaviours or capabilities being assessed, explain why they matter and identify the evidence that will support each score.
Without that clarity, subjective criteria can give scorers too much discretion and increase the risk of inconsistent or discriminatory decisions.
Case study: consultation does not have to start before every piece of preparation
There is an interesting counterpoint in Haycocks v ADP RPO UK Ltd [2024] EWCA Civ 1291.
Mr Haycocks was scored against a redundancy selection matrix before formal consultation began and was not shown his scores during the initial consultation process. The Employment Appeal Tribunal considered the consultation inadequate and found the dismissal unfair. The Court of Appeal later allowed the employer's appeal and upheld the Employment Tribunal's original conclusion that, looking at the process overall, the dismissal had been fair. The Supreme Court refused permission to appeal on 4 June 2025.
We would not read that case as permission to make the decision first and explain it afterwards.
The useful point is more nuanced.
Fairness is assessed across the process as a whole. Employers need to allow consultation at a stage when it can still make a difference, but preparation before the first consultation meeting does not automatically make the process unfair.
For small businesses, our practical preference is still to make the process as open as possible.
If you have developed a scoring matrix, explain it. If scores are part of the decision, give employees enough information to challenge factual mistakes. If somebody's performance rating is wrong because a manager has missed a project or used outdated information, you want to discover that before dismissal.
Case: Haycocks v ADP RPO UK Ltd [2024] EWCA Civ 1291 and UKSC/2025/0029 permission decision
What alternatives to redundancy should employers consider?
A redundancy process should leave room to explore whether there is another workable way forward, rather than moving straight from ‘this role is at risk’ to ‘this person leaves’.
An important part of consultation is genuinely considering whether the proposed redundancies can be avoided, reduced or their impact softened.
Depending on what is realistic for the business, options could include:
removing or not filling vacant roles
reducing the use of agency workers, contractors or freelancers where appropriate
freezing or restricting recruitment and overtime
inviting volunteers for redundancy, while making clear that the business does not have to accept every request
agreeing reduced hours, flexible working or job sharing
redeployment, retraining or other suitable alternative employment
combining or redesigning roles, where this is workable and any contractual changes are properly consulted on and agreed
Of course, not every alternative will be workable.
The commercial need behind the proposal still matters.
A business that genuinely needs to remove £300,000 from its annual cost base is unlikely to solve the underlying problem with an option that saves £20,000 and leaves the structure largely unchanged.
But employers should still consider reasonable alternatives with an open mind, discuss them through consultation and keep a clear note of why an option was accepted or ruled out. That helps show that redundancy was treated as a serious decision and not simply the easiest answer.
Suitable alternative employment needs active consideration
If another role exists, do not assume the employee will not want it.
Acas says suitability normally depends on factors including pay and benefits, location, similarity to the existing job, contractual terms and whether the employee has the necessary skills and abilities. An employee offered suitable alternative employment normally has a statutory four-week trial period. Acas: Taking another job with your employer
There are also special redundancy protections affecting employees who are pregnant or taking certain types of family leave when suitable vacancies exist. That is another area where we would check the current rules against Acas guidance before offers are made.
What redundancy pay and notice does an employer need to consider?
Employees will usually qualify for statutory redundancy pay where they have at least two years' continuous service and meet the legal eligibility requirements.
For redundancies taking effect on or after 6 April 2026, statutory redundancy pay is currently calculated using a weekly pay cap of £751, with a maximum statutory redundancy payment of £22,530. Length of service used in the calculation is capped at 20 years. GOV.UK: Redundancy pay
The calculation is age-related:
half a week's pay for each full year of employment when the employee was under 22
one week's pay for each full year when aged 22 to 40
one and a half weeks' pay for each full year when aged 41 or over
Employers must also provide a written statement explaining how the redundancy payment has been calculated.
Notice is separate.
The statutory minimum is one week's notice for employees with between one month and two years' service, one week for each full year between two and 12 years, and 12 weeks for employees with 12 or more years' service. Contractual notice may be longer. GOV.UK: Notice periods
For us, the practical point is to calculate all of this before the process reaches its final stages.
People will ask.
A conversation about redundancy is difficult enough without the employer appearing uncertain about dates, notice or money.
Redundancy checklist for employers UK
This practical checklist can help UK employers pause, check the detail and make sure the right steps have been taken before any redundancy dismissal is confirmed.
1. Write down the business rationale
Start by setting out what has changed and why. ‘Cost savings’ on its own is rarely enough: explain which costs need to change, the commercial reason for the proposal and how the proposed structure is expected to address it.
2. Map the current and proposed structure
Keep the role separate from the person. Map what work will disappear, what will remain, where responsibilities will sit and what skills the future organisation will genuinely need.
3. Identify who is genuinely at risk
Look carefully at who may be affected. Check for the same, similar or interchangeable roles, and do not assume a pool of one is right simply because one job title appears unique. The proposed pool should be open to meaningful consultation.
4. Decide whether collective consultation rules apply
Count all proposed redundancies carefully across the relevant 90-day period. If collective consultation may be triggered, identify the appropriate representatives and confirm the consultation timetable, written information and HR1 notification requirements before decisions or dismissal notices are finalised.
5. Prepare fair selection criteria
Choose criteria that reflect the future needs of the business and are as objective, measurable and evidence-based as reasonably possible. Explain them during consultation, apply them consistently across the pool and keep the evidence supporting each score.
6. Start consultation before the outcome is final
Consult while the proposal can still change. Give affected employees enough information and time to understand the case, ask questions, challenge factual points and suggest alternatives. Listen with an open mind and keep a clear note of the questions raised and the business’s response.
7. Consider alternatives and vacancies
Keep ways of avoiding or reducing redundancy, and all current and upcoming vacancies, under review throughout consultation. Offer suitable alternative employment where required, check whether anyone has priority vacancy rights and remember the statutory trial period where it applies.
8. Check protected absences and discrimination risk
Check the pool, criteria, evidence and consultation arrangements for discrimination risk. Do not unfairly penalise pregnancy, maternity or other protected family leave, disability-related absence, part-time or fixed-term status, trade union activity, whistleblowing or another protected reason. Put reasonable adjustments in place where needed.
9. Confirm the decision properly
Only make the final decision once consultation is complete and the points raised have been genuinely considered. Confirm the outcome in writing, including the reason, termination date, notice arrangements, redundancy and other payments, alternative-work position and the opportunity to appeal.
10. Think about the people who remain
The work does not end when the final redundancy letter is sent. The people who remain will have noticed how colleagues were treated, and they may be taking on different responsibilities or still feeling uncertain about what the change means for them.
Managers may need support to answer questions consistently, while teams will need a clear and honest explanation of the new structure, priorities and next steps.
It is an easy part to overlook after an intensive process, but it can make a real difference to trust and confidence.
It matters.
“Making the people who stayed feel chosen, not leftover.”
“Why People Feel Leftover After Mergers and Acquisitions,” LinkedIn post
How JourneyHR can help
Redundancy processes often arrive when leadership teams are already stretched and have very little spare capacity to manage them well.
There may already be financial pressure, a lost client, a new operating model, changes in senior leadership or a need to reduce costs at pace.
Our support can start well before a business has decided that redundancies are needed. We partner with founders and leadership teams at the decision-making stage, helping them understand the challenge, map the skills and capabilities they have today and identify what the organisation will need in the future. Together, we can explore different options, test the assumptions behind a proposed structure and consider whether the change can be achieved in another way.
We can also work with leaders on what good change management should look like: how to sequence the change, involve the right people, assess the impact on teams, communicate clearly and support managers and employees through the transition. If redundancy does become part of the proposal, we then help turn the commercial need into a fair, thoughtful process. That can include reviewing the business case, mapping current and proposed structures, identifying fair selection pools, designing objective criteria, preparing consultation documents, briefing managers and supporting individual or collective consultation. We can also help with representative elections, alternatives to redundancy, suitable alternative employment, redundancy calculations and clear communication of final decisions.
We also recognise when a particular issue needs specialist employment-law advice, rather than relying on HR judgement alone.
In our experience, early support gives the business more room to consider its options and consult genuinely. Once someone has been informally promised a role, employees have been told who is leaving, or managers are talking about the new structure as though it is final, it becomes much harder to show that the proposal is still open to change.
If you are still shaping a restructure, that is often the best time to talk to us.
Get in touch: JourneyHR contact page or read more about our Restructuring + Redundancies support.
Final thought
A fair redundancy process is not about adding paperwork to a decision the business has already made.
It is about bringing the commercial decision, the legal process and the way people are treated into line.
We have supported enough restructures to know that genuine consultation can feel uncomfortable and may raise questions the business was not expecting.
But that is often exactly where its value lies.
Give people enough information and time to understand the proposal, ask questions, correct factual points and suggest alternatives before any final decision is made. Listen properly, consider what they say with an open mind and explain the reasons for the eventual outcome. If someone gives you a good reason to rethink the original plan, be prepared to do so.
In practice, that is usually what a fair and meaningful process looks like.
FAQs
How do you make one employee redundant fairly in the UK?
Start by identifying the genuine business reason the role is at risk, then consult the employee before making a final decision. Explain the proposal, consider whether other employees perform comparable work, discuss alternatives and review available vacancies. There is no statutory minimum consultation period for fewer than 20 proposed redundancies, but proper individual consultation is still important to fairness.
How long should a small business redundancy consultation last?
There is no fixed statutory consultation period where fewer than 20 redundancies are proposed. The process should last long enough for genuine consultation to take place before the employer reaches a final decision. For collective redundancies, current minimum periods are 30 days for 20 to 99 proposed redundancies and 45 days for 100 or more.
Can a small business use a redundancy selection pool of one?
Yes, a pool of one can sometimes be fair where a genuinely unique role is disappearing. It should not be assumed automatically where several employees perform similar or interchangeable work. The EAT's decision in Mogane v Bradford Teaching Hospitals NHS Foundation Trust shows why employers should think about and consult on the pool rather than using a criterion that effectively decides the outcome in advance.
What criteria can employers use when selecting someone for redundancy?
Criteria should be fair, relevant to the future needs of the business and as objective and measurable as reasonably possible. Acas gives examples including skills, qualifications, expertise, performance and accurate attendance data. Employers should check that criteria do not disadvantage employees because of protected circumstances such as pregnancy, maternity or disability-related absence.
How much statutory redundancy pay is an employee entitled to in 2026?
Employees with at least two years' qualifying continuous service will normally be entitled to statutory redundancy pay. From 6 April 2026, the weekly pay used in the calculation is capped at £751 and the maximum statutory redundancy payment is £22,530. The calculation also depends on the employee's age and completed years of service, up to 20 years.
