JOB CUTS COMING
A Third of UK Employers Plan Job Cuts: Legal Considerations for Redundancies
The recent Boss Business Owner Sentiment Survey 2025, who spoke to 500 employers across the UK paints a stark picture of employer sentiment in the current economic climate. Almost a third (31%) of businesses surveyed said they expect to make redundancies in the coming months, citing ongoing cost pressures, the increase to National Insurance Contributions (NICs), and a continued downturn in demand.
You don’t have to look hard to find headlines including major UK employers and job losses. But, cost-cutting remains high on the agenda for many employers, particularly small and medium-sized enterprises. For HR professionals and business leaders, this serves as a timely reminder to ensure any redundancy process is approached with care, fairness, and legal compliance. Saving salaries quickly may feel an easy option but a fair redundancy process (even if it take a little longer) will be worth it in the long run.
Legal Overview: Redundancy in England & Wales
Redundancy is a potentially fair reason for dismissal under the Employment Rights Act 1996, but employers must still follow a fair procedure. The key legal obligations include:
1. Fair Reason for Redundancy
A genuine redundancy typically arises where:
The employer has ceased or intends to cease business or a particular part of it;
The business no longer needs employees to carry out work of a particular kind;
The business needs fewer employees to carry out that work in a specific location.
2. Consultation
For fewer than 20 redundancies: Employers must consult individually with affected employees.
For 20 or more redundancies within a 90-day period at one establishment: Collective consultation rules apply, including obligations to:
Consult appropriate employee representatives (e.g. trade union or elected reps);
Notify the Redundancy Payments Service using an HR1 form;
Begin consultation at least 30 days before the first dismissal (or 45 days if 100+ redundancies).
Failure to comply with collective consultation obligations can lead to claims and protective awards of up to 90 days’ gross pay per affected employee.
3. Selection and Alternatives
Employers must adopt fair and objective selection criteria and consider alternatives to redundancy such as redeployment, job sharing, or reduced hours. Employees on maternity, parental or sick leave must not be disadvantaged in this process.
“Even in difficult trading conditions, how redundancies are handled will impact not just legal risk but also morale, brand reputation and future recruitment.”
4. Redundancy Pay
Eligible employees (with 2+ years’ service) are entitled to:
Statutory redundancy pay based on age, length of service and weekly pay (subject to the current cap – £719 per week from April 2025); and
Notice pay (or payment in lieu) and accrued holiday pay.
5. Right of Appeal and Support
It is good practice to offer a right of appeal and support employees with job-seeking or training during their notice period.
Practical Takeaways
If your business is considering job cuts, it is essential to:
Begin early planning and seek legal advice;
Document the business rationale clearly;
Engage with employees openly and consistently;
Ensure fairness in selection and process;
Review risks of discrimination, unfair dismissal, or failure to consult.
Even in difficult trading conditions, how redundancies are handled will impact not just legal risk but also morale, brand reputation and future recruitment.
Need support?
Our employment law team is advising clients across sectors on redundancy strategy, legal compliance, and communications. Please get in touch if you are planning changes to your workforce in the coming months.
