What to Do If You're Being Made Redundant

Being told you are at risk of redundancy can be unsettling, even if you half expected it. There is a lot to think about and it is easy to feel overwhelmed. The most important thing is not to rush into any decisions. You have rights, you have time, and there are practical steps you can take right now to protect your interests and prepare for what comes next.

This guide provides a clear, step-by-step checklist covering everything from the moment you are told about the redundancy through to starting your next chapter.

Step 1: Stay Calm and Do Not Sign Anything Immediately

When you first hear the news, your instinct may be to react emotionally or to agree to whatever is put in front of you just to get the process over with. Resist this. You are under no obligation to respond immediately or to sign any documents on the spot.

• Ask for everything in writing, including the reasons for the redundancy and the proposed timeline.
• Take notes during any meetings, or ask if a colleague can accompany you.
• Request time to consider any proposals. A reasonable employer will give you several days or weeks.
• If you are offered a settlement agreement, you have a legal right to take independent legal advice before signing.

Step 2: Check Your Employment Contract

Dig out your contract of employment (and any updated written statements of terms). Look for:

• Notice period: What does your contract say? Compare this to the statutory minimum notice period -- you are entitled to whichever is longer.
• Redundancy terms: Does your contract or staff handbook include an enhanced redundancy scheme? Some employers commit to paying more than the statutory minimum.
• PILON clause: Does your contract include a pay in lieu of notice clause? This affects whether your employer can end your employment immediately.
• Restrictive covenants: Check for non-compete or non-solicitation clauses that might affect your ability to start a new role immediately.
• Bonus and commission: Are there any outstanding payments due?

Step 3: Calculate What You Are Owed

Make sure you know the minimum you should receive. Your entitlement typically includes:

1. Statutory redundancy pay: Based on your age, length of service (up to 20 years) and weekly pay (capped at £719, or £749 in Northern Ireland). Use our redundancy pay calculator to get your exact figure.
2. Notice pay: Your full pay during the notice period, whether you work it, are on garden leave, or receive a lump sum in lieu.
3. Accrued holiday pay: Payment for any annual leave you have built up but not taken.
4. Final wages: All pay owed up to your last working day.
5. Any contractual entitlements: Enhanced redundancy pay, outstanding commission, bonus or expenses.

Remember that redundancy pay up to £30,000 is tax-free, while notice pay, holiday pay and wages are taxed as normal earnings.

Step 4: Understand the Consultation Process

Your employer must follow a fair redundancy consultation process. This means:

• You should be warned that redundancies are being considered before any decision is made.
• There should be at least one individual consultation meeting (ideally two or three).
• Your employer should explain the selection criteria and how you scored.
• You should be given a genuine opportunity to suggest alternatives, such as redeployment, reduced hours or voluntary redundancy.
• If 20 or more employees are at risk at one establishment, collective consultation rules apply with minimum periods of 30 or 45 days.

If you feel the process is being rushed or that your views are not being genuinely considered, raise this in writing. A failure to consult properly can make the dismissal unfair.

Step 5: Consider Negotiation

Redundancy pay is not always set in stone, particularly when a settlement agreement is involved. Here are some areas where negotiation may be possible:

• Enhanced lump sum: Ask whether the employer will increase the payment, especially if you have concerns about the fairness of the process or the selection criteria.
• Notice period: You may be able to negotiate a longer notice period or garden leave rather than immediate termination.
• Pension contributions: Ask whether the employer will make an additional pension contribution, which can be more tax-efficient than a cash payment for amounts above £30,000.
• Reference: Negotiate an agreed reference in writing, particularly if you are in a senior role.
• Outplacement support: Some employers will pay for career coaching, CV writing services or recruitment agency support.
• Legal costs: If a settlement agreement is offered, the employer should contribute towards your legal advice costs (typically £350-£500 plus VAT).
• Benefits continuation: Ask whether benefits like private medical insurance or life insurance can continue for a period after you leave.

The strength of your negotiating position depends on the circumstances. If the employer has not followed a proper process, or if there are potential discrimination or unfair dismissal issues, you may have more leverage.

Step 6: Take Time Off to Look for Work

If you have 2 or more years of continuous service, you have a statutory right to reasonable paid time off during your notice period to:

• Look for new employment
• Attend job interviews
• Arrange training or retraining

Your employer must pay you for this time off at your normal rate, up to a maximum of 40% of a week's pay. You do not need to prove you have a specific interview -- looking for work or arranging training is sufficient.

Step 7: Apply for Other Roles Within the Organisation

Before accepting redundancy, check whether your employer has any suitable alternative vacancies. Your employer has a legal obligation to consider you for suitable alternative roles within the organisation and any associated companies. If a suitable role is offered and you unreasonably refuse it, you could lose your right to statutory redundancy pay.

You are entitled to a trial period of at least four weeks in any new role. If the role turns out not to be suitable during this trial period, you can leave and still claim your redundancy entitlement.

Step 8: Get Your Paperwork in Order

Before you leave, make sure you have collected or requested:

• A written statement of how your redundancy pay was calculated
• Your P45 (your employer must provide this)
• Copies of any relevant documents: your contract, payslips, pension statements
• An agreed reference if you have negotiated one
• Confirmation of your final pay date and what it includes
• Details of any ongoing benefits (pension, share schemes, insurance)

Step 9: Claim Benefits Without Delay

If you are not moving straight into a new job, apply for benefits as soon as your employment ends:

• New Style Jobseeker's Allowance (JSA): Contribution-based, so it is not affected by your redundancy lump sum or savings. Paid for up to 182 days. Apply online at GOV.UK.
• Universal Credit: Means-tested benefit that can help with living costs and housing. Any capital over £6,000 may affect your entitlement, and over £16,000 will usually disqualify you.
• Council Tax Reduction: You may be eligible for a reduction in your council tax. Apply through your local council.
• Help with mortgage interest: If you have a mortgage, you may qualify for Support for Mortgage Interest (SMI) after a waiting period.

Receiving a redundancy payment does not prevent you from claiming New Style JSA because it is based on your National Insurance record, not your capital. However, Universal Credit is means-tested, so a large redundancy payment held as savings could affect your eligibility.

Step 10: Plan Your Next Move

Redundancy, while difficult, can also be a chance to reassess your career direction. Use the transition period productively:

• Update your CV and LinkedIn profile promptly while your achievements are fresh in your mind.
• Register with recruitment agencies that specialise in your sector.
• Network: Let former colleagues, professional contacts and friends know you are looking. Many roles are filled through personal connections.
• Consider retraining: The National Careers Service offers free advice and guidance. Your local Jobcentre Plus may also have information about funded training programmes.
• Review your finances: Create a budget that accounts for your reduced income. Understand how long your redundancy payment and savings will last.
• Look after your wellbeing: Redundancy can be stressful. Speak to friends, family or a professional if you are struggling. Mind and the Samaritans both offer free support.

Key Contacts

• ACAS (Advisory, Conciliation and Arbitration Service): Free, impartial employment advice -- 0300 123 1100
• Citizens Advice: Free help with employment rights, benefits and debt -- citizensadvice.org.uk
• GOV.UK Redundancy: Government guidance on your redundancy rights
• National Careers Service: Free careers advice -- 0800 100 900