Redundancy is often viewed as a straightforward business decision. A reduction in work, a restructure, a need to reduce costs. The reality is that most redundancy challenges don't arise because there wasn't a genuine business reason for reducing headcount. They arise because of issues in the process. A rushed consultation. A poorly chosen selection pool. A failure to properly consider alternative roles. A decision that was effectively made before consultation even began.
And with the Employment Rights Act introducing reforms that are actively increasing the cost of getting redundancy wrong, the stakes have never been higher.
Here are the 10 biggest redundancy mistakes employers make — and what HR teams and business leaders should be doing to avoid them.
Using Redundancy to Solve the Wrong Problem Redundancy should be about the role, not the person doing it. One of the most common mistakes employers make is using a redundancy process to address concerns that are really about performance, conduct, attendance or another employee issue. If the work still exists and the real concern is the individual carrying it out, redundancy is unlikely to be the right route. Make sure your business case focuses on the reduction or change in work — not concerns about a particular employee.
Deciding the Outcome Before Consultation Starts Employees should be placed at risk of redundancy. They should not be told, either directly or indirectly, that redundancy is inevitable. Tribunals will be quick to criticise employers who appear to have made their minds up before consultation begins. Consultation is supposed to be a genuine opportunity for employees to influence the outcome. Keep an open mind throughout the process and be prepared to properly consider feedback, alternatives and challenges.
Choosing the Wrong Selection Pool Before deciding who may be redundant, employers need to identify who should be included in the selection exercise. A selection pool that appears engineered to target a particular employee can quickly undermine an otherwise reasonable process. Employers should consider who performs similar work, whose duties overlap and whether a wider pool may be appropriate. Document your reasoning and be prepared to back up why the chosen pool is fair.
Using Selection Criteria That Won't Stand Up to Scrutiny Selection criteria are often at the heart of redundancy disputes. Criteria such as skills, qualifications, experience and performance can be perfectly legitimate. Criteria such as attitude, fit, potential or commitment are often much harder to justify. Even where the criteria themselves are reasonable, employers still need to be able to explain how scores were reached. Use objective, evidence-based criteria wherever possible and ensure managers can support scores with records, data or specific examples.
Not Spotting Discrimination Risks A redundancy process can be fair in principle but discriminatory in practice. Attendance criteria may disadvantage disabled employees. Flexibility requirements may affect employees with caring responsibilities. Performance measures may need adjusting where employees have been absent due to pregnancy, maternity leave or disability-related sickness. Review your criteria for potential discrimination risks before scoring begins and again once provisional scores are available.
Treating Consultation as a Tick-Box Exercise Consultation is often where redundancy processes succeed or fail. Many employers focus on explaining what is happening rather than consulting on whether it should happen and how it should be implemented. Meaningful consultation should cover the business rationale, selection pool, criteria, provisional scores, alternatives to redundancy and any other relevant concerns raised by employees. Give employees enough information to understand the proposal and a genuine opportunity to respond before decisions are made.
Getting Collective Obligations Wrong Collective consultation remains one of the most significant redundancy risks for employers. The obligations arise where 20 or more redundancies are proposed within a 90-day period. From January 2025, the maximum compensation award for failure to collectively consult doubled from 90 to 180 days pay per affected employee, with a further 25% uplift applicable for failing to comply with the statutory Code of Practice. That is a total potential exposure of up to 225 days pay per affected employee. Assess redundancy numbers early, keep them under review and seek advice if there is any doubt about collective consultation obligations.
Failing to Properly Explore Alternative Employment Many employers identify a redundancy situation and immediately focus on dismissal. Redeployment, retraining, relocation, reduced hours and other alternatives should all be considered before a final decision is made. Simply directing employees to an internal vacancies page is unlikely to be enough. Take an active role in identifying suitable vacancies and discussing realistic alternatives throughout consultation and notice.
Forgetting Employees With Enhanced Redundancy Protection Employees connected with pregnancy, maternity leave, adoption leave and shared parental leave may benefit from enhanced protection in a redundancy situation. Where a suitable alternative vacancy exists, they may have priority over other employees. This is an area where employers can easily find themselves exposed to claims if they fail to identify protected employees early enough. Review family leave protections at the start of the process and assess alternative vacancies carefully before dismissal decisions are made.
Assuming a Redundancy Process Is Low Risk Some employers still view redundancy as a relatively low-risk form of dismissal. That assumption is becoming increasingly precarious. Issues such as TUPE, collective consultation, discrimination risks, family leave protections, redundancy payments and upcoming Employment Rights Act reforms mean redundancy exercises are becoming more heavily scrutinised than ever. Plan early, document decision-making carefully and seek advice before small issues develop into expensive disputes.
👉 Employer guidance: https://myredundancyrights.co.uk/employer 👉 Find an employment law partner: https://myredundancyrights.co.uk/partner