What does redundancy mean?

Redundancy is a potentially fair reason for dismissal, but only if the role has genuinely gone and the process is fair. In the UK, GOV.UK says the employer must be able to show the job will no longer exist, should take steps to avoid redundancies, must not select people unfairly and must try to find suitable alternative employment, which the employee can trial for four weeks without losing redundancy pay. If an employer proposes 20 or more redundancies at one establishment within 90 days, collective consultation must start at least 30 days before the first dismissal (45 days for 100 or more), and the employer must notify the government on form HR1. Employees with two years’ service are entitled to statutory redundancy pay: half a week’s pay for each full year under age 22, one week’s pay for each year from 22 to 40, and one and a half weeks’ pay for each year at 41 or over, counting up to 20 years. For redundancies on or after 6 April 2026, a week’s pay is capped at £751 and the statutory maximum is £22,530.

Australia’s Fair Work Act gives redundancy pay on a sliding scale by length of service, from four weeks’ pay for one to two years up to 16 weeks for nine to ten years, then 12 weeks from ten years. Employees with less than 12 months’ service and employees of small business employers (fewer than 15 employees) are excluded. In Canada, federally regulated employees with 12 months’ service who are dismissed other than for just cause receive severance of two days’ wages per completed year, with a minimum of five days’ wages, on top of notice.

In India, the Industrial Relations Code 2020 calls this retrenchment. A worker with at least a year’s continuous service must receive one month’s written notice (or wages in lieu) and compensation of 15 days’ average pay for every completed year, and the employer must notify the government. Industrial establishments with 300 or more workers need prior government permission and must give three months’ notice. The employer also pays 15 days’ wages per retrenched worker into a worker re-skilling fund. In the US there is no statutory redundancy or severance pay; severance is a matter of agreement, and the WARN Act requires 60 days’ notice of large layoffs at employers with 100 or more employees.

Plan redundancies with the selection criteria and the consultation timeline written down before anyone is told, and keep notes of each meeting. This is general information, not legal advice.

Also called: retrenchment (India), layoff (US), redundancy pay, voluntary redundancy.