Planning a redundancy programme: costs, timeline, consultation

Start with the business case

Write down the problem you're solving before you decide how many roles go. Is work stopping, reducing, or moving to another place? Which roles are affected, and why those ones? That note becomes the basis of everything you tell staff and representatives, and of your defence if a decision is challenged.

Look at the alternatives first, and record what you looked at:

• stopping recruitment, overtime and agency or contractor work
• redeployment into vacancies, now or expected soon
• voluntary redundancy or reduced hours, offered fairly
• lay-off or short-time working, only if contracts allow it

Cost every person, not an average

Averages hide the expensive cases. Cost each person from their own pay, age, service and notice:

• Statutory redundancy pay: half, one or one and a half weeks' pay for each full year of service, depending on age, up to 20 years. A week's pay is capped at £751 for dismissals on or after 6 April 2026, so the most is £22,530.
• Any enhanced scheme, contractual or by custom and practice. Check what was paid last time.
• Notice, worked or paid in lieu. Pay in lieu is taxed as earnings, with employer National Insurance.
• Holiday built up and not taken.
• Paid time off to look for work, for anyone with 2 years' service, capped at 40% of a week's pay.
• Pension costs, such as strain costs where a redundancy triggers an early unreduced pension in some public sector schemes.
• Employer National Insurance: Class 1A at 15% on termination payments above £30,000, and Class 1 on notice and holiday pay.

Set the total against the yearly saving to get payback in months. Finance will ask for it.

The cap is set by the date of dismissal. It changes on 6 April 2027: we forecast £777, and the confirmed figure is usually published early in the year. If your programme runs across that date, cost both.

Count the numbers before you fix the dates

The number you propose to dismiss at one establishment within 90 days decides the minimum timetable:

• fewer than 20: individual consultation only, with no fixed minimum period
• 20 to 99: collective consultation at least 30 days before the first dismissal, and an HR1 to the Insolvency Service
• 100 or more: at least 45 days before, and the HR1 at least 45 days before

Getting this wrong is expensive. For dismissals on or after 6 April 2026, a tribunal can award up to 180 days' gross pay for each affected employee, with no cap on a week's pay.

The Employment Rights Act 2025 adds a second trigger, counting proposed redundancies across the whole organisation as well as at each establishment. It's expected from April 2027. The number hasn't been set yet.

A realistic timeline

1. Agree the business case, the numbers and the budget. Cost every person.
2. If 20 or more: invite employees to elect representatives, or approach the recognised union. Allow time for the election.
3. Send the HR1 and give representatives the written information about the proposals.
4. Consult with representatives and with each person. Share selection criteria, then individual scores, and look for alternatives.
5. Confirm outcomes in writing, with notice, figures and the right to appeal. No notice goes out until consultation has properly finished.
6. Hear appeals, run any trial periods, and pay everything due in the right pay run.

For a collective process, allow at least 8 to 10 weeks from announcement to the first leaving date. Add the longest notice period in the group on top.

Selection, alternatives and appeals

Fair pools and objective criteria matter more from 1 January 2027. From that date the qualifying period for ordinary unfair dismissal falls from 2 years to 6 months, and the cap on the compensatory award goes, for dismissals with an effective date of termination on or after 1 January 2027.

Keep looking for alternatives until the leaving date, and offer suitable vacancies to anyone with priority, such as employees on maternity leave or who are pregnant. Anyone offered a different job is entitled to a 4-week trial period.

Keep a record of every step

From 1 October 2026, most tribunal claims can be brought up to 6 months after the event, so a claim can arrive well after the programme closes. Keep the business case, the costing, meeting notes, scores, letters and appeal outcomes together, dated, for each person.