Redundancy Without Reputational Risk: A Practical HR Guide
For most founders, the hardest decisions are not about products, pricing or growth. They are about people.
If business conditions are tightening, investment is slowing, or priorities are shifting, reducing people costs can sometimes become a necessary decision, and that is okay. The important thing is how it is handled. Founders will naturally spend a lot of time working through the financial side, but the people side can be easy to underestimate. In our experience, that is usually where things start to go wrong, so it is worth giving both the same care and attention from the outset.
At JourneyHR, we regularly support businesses through restructures and redundancies. What we have learned is that it is rarely the decision itself that damages culture or employer brand. It is how the decision is handled.
Many of the challenges we see simply come from founders going through this for the first time, and that is completely understandable. Decisions are often being made under pressure, timelines are tight, and emotions are running high. It is rarely about bad intent. In our experience, most founders genuinely care about their people and want to do the right thing by them. The tricky part is that a fair and effective redundancy process needs a careful balance of commercial thinking, legal compliance and genuine care for the people going through it, and that is a lot to get right on your own, especially the first time.
Having sat on the People + Culture side of plenty of restructures, we have seen a clear pattern. The businesses that come through them well are not the ones that built the highest legal walls. They are the ones who worked out, often quite early on, that fairness and commercial necessity rarely pull in different directions. Treating people well and protecting the business are usually the same thing.
How to handle redundancy in the UK without damaging your reputation
In our experience, most people can come to terms with the redundancy itself. What tends to stay with them is how it felt: being treated as a line on a spreadsheet rather than as a person. Any stigma around redundancy rarely comes from the fact that roles were cut. It usually comes from how it was done, whether that is the surprise, the silence, or the sense that a number mattered more than a name.
For a founder-led business working with 25–200 people, this matters in a way it simply does not for a large corporation. Whatever your industry, it is probably smaller than you think. The person who leaves this quarter may well be having coffee next month with a future client, a current client or someone else in your network, and Glassdoor, LinkedIn, and the group chats tend to fill in the rest. Handled carelessly, a redundancy can become a story that follows the business around for years. Handled well, with care and honesty, it is remembered very differently, and often not remembered at all.
None of this is a reason to avoid a hard decision. It is a reason to make the hard decision in a way that looks after people properly and protects the relationships and reputation you have spent years building. The two go hand in hand.
The redundancy process for UK employers: what the law actually requires
Alongside the human side, there is a legal framework to redundancy that every UK employer needs to follow, and it is worth getting familiar with it early. Getting this part wrong can be costly, both financially and for your reputation, so it deserves the same care as everything else.
A genuine reason and fair selection
It is worth being clear from the outset about what redundancy actually is. Redundancy is only lawful where it is the role, not the person, that is no longer needed, for example because of a change in what the business does, where it does it, or how much of that work it requires. If the real issue is performance or conduct, redundancy is not the right route, and it is far better to address those concerns openly through the proper process. Using redundancy as a shortcut tends to be obvious to everyone involved, and it rarely ends well.
Where you are choosing between people in similar roles, the key is to use a fair selection pool and clear, objective criteria, such as skills, experience and measurable performance, applied consistently to everyone. It is also important to check that your criteria do not unintentionally disadvantage particular groups, for example around age, pregnancy or disability, as this is where discrimination claims can arise, and compensation for these is uncapped at tribunal. A little care in designing the criteria at the start goes a long way, and it is much easier to get this right up front than to unpick it later.
One misconception we encounter often is the idea that fairness means treating everyone exactly the same. In reality, fair does not always mean equal. Different roles have different business requirements, and different employees can be affected by change in different ways. Fairness comes from having a consistent process, making objective decisions, listening to concerns and treating people with respect throughout.
Consultation, notice and statutory pay
Even where only one role is affected, it is important to consult with the person properly before any final decision is made, giving them a genuine opportunity to share their thoughts, ask questions and suggest alternatives. As well as being a legal requirement, it is simply the right way to treat someone, and people often raise ideas or options that had not been considered.
Statutory redundancy pay is based on age, length of service (capped at 20 years) and a weekly pay limit set by the government, and is payable to employees with two or more years’ continuous service. From 6 April 2026, the weekly pay cap is £751, giving a maximum statutory payment of £22,530. These limits are reviewed every April, so always confirm the current figure before you rely on it. Statutory redundancy pay is tax-free up to £30,000; anything above that is taxable. Proper notice pay and any accrued holiday sit on top.
Handled properly, redundancy does not need to carry any reputational risk at all. The risk really comes from getting the process wrong, as that is when things can escalate into tribunal claims and unwanted attention. Taking the time to do it well protects the business just as much as it protects your people.
Collective redundancy consultation in the UK: the rules that trip employers up
If you are proposing to make 20 or more people redundant at one establishment within 90 days or fewer, collective consultation rules apply, and there are some important timescales to build into your planning. Consultation needs to start at least 30 days before the first dismissal where 20–99 roles are affected, and at least 45 days where 100 or more are affected. You will also need to notify the government in advance using form HR1. This one really matters, as failing to file it is a criminal offence, so it is better to start diarising early rather than leaving it to the last minute.
The consequences of getting collective consultation wrong recently became much steeper. From 6 April 2026, the maximum protective award doubled from 90 to 180 days’ gross pay per affected employee. That award is not capped by the weekly pay limit, and it applies per employee. Across a whole affected group, the total can run well into the millions, on top of any unfair dismissal claims.
It is also worth knowing that a wider, organisation-level trigger for collective consultation is expected under the Employment Rights Act 2025. This is designed to cover situations where redundancies are spread across several sites, which currently might not meet the threshold at any single establishment. The exact threshold has not been confirmed in legislation yet, so treat this as the current direction of travel rather than a fixed point, and keep an eye on GOV.UK as the secondary legislation is finalised. The overall message is a helpful one: consulting properly and in good time is only becoming more important, and employers who already do this well will be in a strong position.
When it goes wrong: two case studies every UK employer should know
The following two cases show what happens when the process is treated as an obstacle to clear rather than a genuine exercise to run.
P&O Ferries, 2022: the anatomy of reputational self-harm
On 17 March 2022, P&O Ferries announced by pre-recorded video message that it was dismissing around 800 seafarers with immediate effect, most to be replaced by cheaper agency crew. There was no union or staff consultation. The reaction was fast, cross-party and ferocious: protests at the ports, condemnation from every side, and safety concerns serious enough that ships were detained.
What makes the P&O case so striking is that it was not a communications slip. Chief executive Peter Hebblethwaite told a joint session of MPs that the company had made a deliberate decision not to consult, because it knew no union would ever have agreed to the plan. The TUC catalogued the breaches, dismissed staff brought claims, and P&O ultimately chose to settle rather than defend them at tribunal.
The commercial pressure behind the decision may well have been real, with P&O reporting losses of around £100 million a year. But the way it was handled caused serious and lasting damage to the company’s reputation, and to its parent group too. For a smaller employer, the lesson is not simply “we would never do that”. It is a little more uncomfortable than that: P&O convinced itself that a fast, drastic cut was the right business decision, and the fallout that followed legal, political and reputational is exactly what genuine consultation is there to help avoid. It is also worth noting that the government has since moved to restrict fire and rehire under the Employment Rights Act 2025, a helpful reminder that what looks like a shortcut today can become an unlawful practice tomorrow.
British Gas / Centrica, 2021: the slow burn of fire and rehire
In 2021, energy firm Centrica, owner of British Gas, moved to put its engineers onto new contracts involving longer hours and, for some, real-terms pay cuts. The mechanism was fire and rehire: accept the new terms or lose the job. After a dispute that ran for months, including sustained strike action, around 500 engineers were dismissed.
British Gas did get the contract changes it was looking for, but it came at a real cost: prolonged industrial action, large numbers of cancelled service visits, criticism from MPs, and lasting damage to the brand. It is worth knowing that the Employment Rights Act 2025 contains further restrictions on dismissal and re-engagement, commonly known as fire and rehire. The main reforms are expected to take effect in January 2027, and until then the existing law and statutory Code of Practice continue to apply, so treat that date as one to have on the radar.
In both cases, the common thread was treating consultation as a hurdle to get over rather than a genuinely useful part of the process. In our experience, it is one of the most common instincts founders have under pressure, and it is completely understandable. It is also the one we most often gently talk clients out of, because consultation done properly tends to protect the business just as much as it protects people.
HR redundancy best practice: protecting your people and your reputation together
Redundancy done well is not the soft option, and it is not at odds with commercial discipline. In our experience, it is the commercially sensible route, because it is the one that helps you avoid tribunals, protects your reputation as an employer, and means the people who stay feel confident about staying. Based on what we work through with clients, these are the things that make the difference.
Take advice early, ideally before you think you need it
Consultation only really means something while there is still time for it to change the outcome. If a decision has already been made and the conversation is just for show, people tend to sense it very quickly, so build in time for a genuine process.
Be honest about the why
A difficult business truth, explained clearly and kindly, is far easier for people to accept than a vague corporate answer. An honest, understandable reason builds goodwill; an evasive one loses it.
Keep selection objective, and write it down
Agree the pool and the criteria before you look at names, apply them consistently, and keep a simple record of your reasoning. It protects the business legally, and it means you can sit down with someone and explain the decision openly and fairly.
Treat people like the adults they are
No security walk-outs, no Friday-afternoon surprises, no dismissal by video. What most shapes how someone feels about the business afterwards is a private, face-to-face conversation with someone who genuinely knows them, handled with care.
Support people on the way out, and beyond
Proper notice, fair compensation or better where you can, references, and outplacement support or introductions where possible. Industries are small, and the person you help back onto their feet is far more likely to speak well of you than the person who was left to manage alone.
Do not forget the people who stay
Your remaining team will be watching how departing colleagues are treated and drawing conclusions about their own futures. Handled with care, a redundancy can actually strengthen trust in how the business is run. Handled badly, it costs you more than the people who leave.
How JourneyHR can help
Over the last 18 months, we have helped founders work through restructures, redundancies and organisational change calmly and with confidence. From people impact assessments and planning through to consultation support and communications, we help businesses make commercially sound decisions while looking after their culture, reputation and people. And our support does not stop once a decision has been made; often that is when it matters most.
Testimonials
“Navigating a consultation was never going to be easy, but the professionalism, clarity, and empathy shown throughout the process made a significant difference. The approach was structured yet sensitive, ensuring that communication was transparent and that everyone affected felt heard and respected. What could have been a highly disruptive period was instead managed with integrity and care, leading to outcomes that were not only fair but also strategically sound. I felt genuinely supported at every step, and I wouldn’t hesitate to recommend this team to others facing similar challenges.”
— JourneyHR client
“Not only did JourneyHR’s outplacement assist me in optimising my CV and LinkedIn profile, it also encouraged me to think deeply about my values and how to find a career path that genuinely embodied them. It helped me realise that a particular goal of mine wasn’t just a dream, but could be achieved by taking practical steps. The mock interview significantly boosted my confidence for my job search, and the feedback so adroitly balanced encouragement with constructive criticism. I would highly recommend this service to anyone seeking first-rate career advice and interview training.”
— JourneyHR outplacement client
The JourneyHR view
Difficult decisions are sometimes unavoidable, and that is sometimes the right call. Handled well, they do not have to damage your reputation as an employer, and they certainly do not have to define it. In our experience, the founders who find this hardest are the ones who feel they have to choose between empathy and commercial reality. The ones who come through it well are those who realise the two sit together: in a business built on people, how you say goodbye is genuinely part of how you run the business. Your reputation as an employer touches everything, from the people you attract, to the confidence of your clients, to the trust of your own team.
Redundancy is one of the moments where that reputation is most visible. Approach it with clarity, honesty and care, and people will remember how it was handled, including the people who leave. Some of the strongest advocates for a business are people who were made redundant well.
Thinking about organisational change or restructuring? We would love to help you work out the right decisions, made in the right way and at the right time. Whether you need support with the full process or just someone sensible to talk things through with, a conversation is a good place to start.
Get in touch: enquiries@journeyhr.com or journeyhr.com
FAQs
How do I make redundancies in the UK without damaging my reputation?
Run a genuine process: a real business reason, objective selection, genuine consultation, and honest, face-to-face conversations. Give proper notice, fair compensation and real support to those leaving. The reputational impact comes almost entirely from how people are treated, and fairness and commercial necessity nearly always pull in the same direction.
When is collective redundancy consultation legally required in the UK?
When you propose to make 20 or more people redundant at a single establishment within 90 days. Consultation must run for at least 30 days (20–99 roles) or 45 days (100 or more roles) before the first dismissal, and you must notify the government in advance using form HR1. Failing to consult can lead to substantial protective awards, now doubled to a maximum of 180 days’ gross pay per employee.
What is the current rate of statutory redundancy pay?
Statutory redundancy pay is calculated from age, length of service (capped at 20 years) and weekly pay (capped by the government). From 6 April 2026, the weekly cap is £751, giving a maximum statutory payment of £22,530. Two years’ service is required to qualify. Redundancy pay is tax-free up to £30,000, with anything above that taxable. The limits are reviewed each April, so confirm the latest figure before you rely on it.
What happens if you get collective consultation wrong?
The maximum protective award doubled from 90 to 180 days’ gross pay per affected employee from 6 April 2026. That award is not capped by the weekly pay limit and applies per employee, so for a group of 30 or more, the total exposure can be significant. This sits on top of any unfair dismissal or discrimination claims, making collective consultation one of the most financially costly things a UK employer can get wrong.
Is fire and rehire legal in the UK?
Dismissal and re-engagement remain possible in limited circumstances, but they carry substantial legal and reputational risks. Employers must consult genuinely, follow a fair process, comply with the statutory Code of Practice and be able to establish a sound business justification. Further restrictions contained in the Employment Rights Act 2025 are expected to take effect in January 2027, so employers should confirm the law in force before taking action. It should be treated as a last resort rather than a first step.
