Redundancy

Redundancy is a dismissal that happens when an employer no longer needs a role, not when a worker did anything wrong. The job goes, the person has not failed. Statutory notice, genuine consultation and redundancy pay all still apply to the exit.

Employers reach for it when a job function ends, moves offshore, or folds into another team.

What separates a lawful redundancy from an unfair dismissal is process. Consultation windows, selection criteria and statutory pay are all regulated — skip a step and a tribunal can award compensation years later.

Legal duty varies by jurisdiction. UK, European Union and Australian law wrap the process in written notices, timelines and appeal rights, as government guidance sets out.

At-will US states allow faster cuts. The federal Worker Adjustment and Retraining Notification (WARN) Act still triggers 60 days of notice on mass layoffs hitting 50 or more workers at a single site.

Key takeaways

• Redundancy ends a role, not a person, and the worker leaves with statutory rights intact.
• Fair selection uses objective criteria such as skills, performance scores, attendance and length of service.
• Statutory pay, notice and genuine consultation are the three legal minimums every employer must respect.
• Common triggers include downturns, restructures, automation, site closures and offshoring to business process outsourcing (BPO) providers.
• In the UK the first £30,000 of redundancy pay is tax free, with weekly pay capped at £751 since 6 April 2026.

How it works

Redundancy runs through four regulated stages: a documented business case, a defensible pool with objective selection, genuine consultation, then dismissal with correct notice and statutory pay. Miss a stage and the dismissal turns unfair.

The business case

The employer documents why the role is no longer needed. Falling revenue, restructures, mergers, automation and outsourcing to a third party are the usual triggers. A written case protects the decision if a tribunal later tests it.

Pool and fair selection

Managers define the affected group, then score its members against objective criteria. Skills, performance ratings, attendance and length of service are the standard inputs.

Scoring must exclude protected characteristics, so age, gender, race and pregnancy stay outside the matrix. Employees can ask to see their own scores.

A sound workforce planning model flags the risk long before any pool is drawn.

Consultation

Consultation is a genuine two-way conversation, not a briefing. UK law sets a 30-day minimum where 20 to 99 roles are at risk, and 45 days where 100 or more are affected.

Acas sets out what employers must share and when notice can follow.

Notice and pay

Once consultation closes, the employer serves notice and calculates statutory pay from age, weekly wage and years of service.

Since 6 April 2026 the UK counts weekly pay up to £751, raised from £719, and caps the maximum statutory redundancy payment at £22,530, raised from £21,570.

The first £30,000 of qualifying redundancy pay stays tax free — that exemption does not stretch to pay in lieu of notice, holiday pay or bonuses. Employees keep the right to appeal.

Tribunal risk

A tribunal checks the four stages in order: business case, fair pool, individual consultation, then notice with the correct sum. Any missing step invites an unfair dismissal finding — and awards routinely reach the tens of thousands.

Severance pay above the statutory floor often settles a claim before it reaches a hearing.

Examples

Redundancy waves cluster in tech, manufacturing and retail whenever demand shifts or automation lands. The cases below run from 2022 to 2026 and show how scale, sector and government intervention change both the trigger and the final outcome.

• Microsoft (2023 and 2025): 10,000 roles went on 18 January 2023, about 5% of staff. Two more rounds followed in 2025, roughly 6,000 in May and about 9,000 in July.
• Meta (2022 and 2023): 11,000 roles in November 2022, then 10,000 more in March 2023. That is 21,000 across two waves, close to a quarter of the company.
• Tesla (April 2024): more than 10% of global headcount, around 14,000 roles, after electric vehicle price cuts squeezed margins. The cuts spanned California, Nevada and Shanghai.
• British Steel (2025 to 2026): consultation opened on up to 2,700 redundancies at Scunthorpe, then the cuts were averted. The UK government took operational control in April 2025 and moved the company into full public ownership on 16 July 2026.

British Steel is the instructive case — consultation can run its full course and still end with nobody dismissed. The law fixes the timetable, never the outcome.

Scale reads more clearly across whole years. Tracker data from layoffs.fyi records 262,682 tech roles cut in 2023, 152,922 in 2024 and 122,549 in 2025, with 2026 already past the 2025 total by mid-September.

Offshoring stays a common trigger. When work moves to a BPO provider in the Philippines, India or Eastern Europe, the onshore role usually ends, and downsizing targets set at board level decide how deep the cut runs.

The International Labour Organization, the United Nations agency for labour standards, tracks how these shifts reshape employment patterns.

Related terms

Redundancy sits beside a cluster of workforce exit terms that people mix up daily. What separates them is who decides, whether the role ever returns, and whether statutory money is owed.

• Retrenchment: the Asia-Pacific term for the same cut, covering the business decision rather than the employee’s entitlements.
• Severance Pay: the negotiated package that sits above the statutory minimum.
• Layoff: a temporary suspension of work, common in seasonal industries and often reversed.
• Workforce Planning: the capacity model that flags redundancy risk long before dismissals begin.
• Attrition: voluntary staff loss that shrinks headcount with no formal process and no statutory payment.
• Outsourcing: shifting a function to a third party, one of the most frequent redundancy triggers.
• Business Process Outsourcing: the offshore delivery model that often absorbs work made redundant onshore.

FAQ

What triggers a redundancy?

Roles disappear when demand drops, work is automated, a site closes, or a function moves to a third party. The employer must prove the trigger is genuine before consultation opens.

How much redundancy pay is required?

Statutory pay depends on age, weekly wage and years of service. In the UK, weekly pay counts up to £751 and the total is capped at £22,530 from 6 April 2026, with the first £30,000 tax free. Contractual schemes can pay more, never less.

Is redundancy the same as being fired?

No. Redundancy removes the role, while dismissal for cause removes the person. The paperwork, the tax treatment and the reference letter all read differently.

What is collective consultation?

It is the legal window an employer opens with employee representatives once 20 or more roles are at risk. In the UK it runs 30 days for 20 to 99 workers, 45 days for 100 or more. Reasons and selection method go in writing.

Can outsourcing cause redundancy?

Yes. When a company shifts a function to a BPO provider, the onshore role often ends. Consultation rules still apply, and transfer regulations such as TUPE in the UK may protect affected staff.

Can I refuse an alternative role?

Yes, but turning down a genuinely suitable alternative can cost you the statutory payment, and suitability turns on pay, location, duties and hours.

Explore more outsourcing terms and workforce guidance at Outsource Accelerator.