Redundancy in 2026: common risks and how to avoid them

Making employees redundant is one of the most difficult decisions any employer has to make. Whether driven by rising employment costs, changing market conditions, organisational restructuring or advances in technology, redundancy is rarely just a commercial decision, it is also a legal process that must be handled fairly and carefully.

In 2026, employers are operating against a changing employment law landscape. The Employment Rights Act 2025 is being implemented in stages throughout 2026 and 2027, introducing a number of significant changes affecting businesses. While many of these reforms do not directly alter the legal definition of redundancy, they reinforce the importance of following fair procedures and understanding your obligations before making difficult workforce decisions.  

At Gordons Partnership, we regularly advise businesses on restructuring, redundancy exercises and wider employment law matters. What often begins as a necessary commercial decision can quickly become an expensive legal dispute if the correct procedures are not followed. The good news is that with careful planning and early legal advice, many of the common risks associated with redundancy can be avoided.

1. Make sure there is a genuine redundancy situation

Not every dismissal labelled as redundancy will satisfy the legal definition. Under the Employment Rights Act 1996, redundancy generally arises where:

• A business closes altogether.
• A particular workplace closes.
• The employer’s need for employees to carry out work of a particular kind has ceased or diminished.

Before beginning any redundancy process, employers should be able to clearly demonstrate the commercial rationale behind the proposed redundancies. This might include:

• A downturn in work.
• Business restructuring.
• Automation or technological change.
• Cost-saving measures.
• Relocation of the business.

What concerns us most is when redundancy is used to resolve unrelated issues such as poor performance or conduct. These situations should usually be managed through separate employment procedures, and attempting to disguise them as redundancy can expose employers to claims for unfair dismissal. Establishing and documenting the genuine business reasons from the outset provides a strong foundation for a fair process.

2. Consultation should be genuine, not a formality

Consultation remains one of the most important parts of any redundancy exercise. Unfortunately, many employers mistakenly believe consultation simply involves informing employees that a decision has already been made.

It does not.

ACAS guidance makes clear that consultation should be meaningful. Employers should genuinely engage with affected employees, explain the reasons for the proposals, listen to feedback and consider suggestions that may avoid or reduce redundancies.  

Consultation may include discussions around:

• Ways to avoid redundancies.
• Alternative roles.
• Flexible working arrangements.
• Reduced hours.
• Voluntary redundancy.
• How employees are selected.

Where an employer proposes to make 20 or more redundancies within a statutory consultation period, collective consultation obligations will also apply.

Recent changes introduced in April 2026 have significantly increased the potential consequences of failing to comply. Employment Tribunals can now award up to 180 days’ pay per affected employee where collective consultation requirements have not been met, doubling the previous maximum award.  

Taking consultation seriously is therefore not only good employment practice, it is an important way of reducing legal and financial risk.

3. Apply fair and objective selection criteria

If only some employees are at risk of redundancy, employers must ensure that selection decisions are objective, evidence-based and consistently applied. Selection criteria might include:

• Skills and qualifications.
• Relevant experience.
• Performance records.
• Attendance records (where appropriate).
• Disciplinary history.

Subjective criteria such as “attitude” or “team fit” can be far more difficult to justify if challenged.

Employers should also carefully review their proposed selection criteria to ensure they do not unintentionally discriminate against employees with protected characteristics under the Equality Act 2010. For example, using attendance records without considering disability-related absence or maternity leave could expose a business to discrimination claims. 

A well-documented selection process supported by objective evidence is far easier to defend than decisions based on opinion alone.

4. Consider alternatives before confirming redundancy

Redundancy should usually be viewed as a last resort rather than the first option. Before confirming dismissals, employers should consider whether suitable alternatives exist that could preserve employment while still achieving the organisation’s commercial objectives. Depending on the circumstances, this may include:

• Redeployment into suitable alternative roles.
• Recruitment freezes.
• Reduced overtime.
• Flexible working arrangements.
• Voluntary redundancy.
• Natural staff turnover.
• Retraining employees for different roles.

Exploring reasonable alternatives demonstrates that the employer has approached the situation fairly and responsibly. It can also help retain valuable skills and experience within the organisation at a time when recruiting replacement employees may prove more expensive once trading conditions improve.

5. Follow a fair redundancy process from beginning to end

Even where there is a genuine redundancy situation, employers must still follow a fair process. A typical redundancy exercise will involve:

• Identifying the business need.
• Identifying the appropriate redundancy pool.
• Applying objective selection criteria.
• Consulting with affected employees.
• Considering alternative employment.
• Confirming decisions in writing.
• Offering the opportunity to appeal where appropriate.

The uncomfortable truth is that many successful Employment Tribunal claims arise not because redundancy was unnecessary, but because the process itself was flawed. Employment Tribunals will often examine whether employers acted reasonably throughout the process, rather than focusing solely on the commercial reasons behind the redundancy.

Following a clear, consistent and well-documented procedure can significantly reduce the likelihood of disputes while demonstrating that employees have been treated fairly and with respect.

6. Understand your legal obligations

Employers have a number of legal obligations throughout the redundancy process, and these will vary depending on the circumstances and the number of employees affected. These may include:

• Statutory redundancy pay for eligible employees.
• Contractual or statutory notice periods.
• Payment for accrued but untaken holiday.
• Individual consultation requirements.
• Collective consultation obligations (where applicable).
• Considering suitable alternative employment within the organisation.

It is also important to ensure that employees receive clear written confirmation of decisions and understand the next steps. Taking legal advice early can help employers understand their obligations before decisions are implemented, reducing the risk of procedural errors that may later be challenged.

7. Keep accurate records throughout the process

A well-documented redundancy process is one of the strongest protections an employer can have if decisions are later questioned. Employers should keep records of:

• The business reasons for the proposed redundancies.
• Consultation meetings and correspondence.
• Selection criteria and scoring.
• Alternative roles that were considered.
• Notes of discussions with affected employees.
• Final decisions and the reasons behind them.

Good record-keeping demonstrates transparency and consistency. It also makes it much easier to explain how decisions were reached should an Employment Tribunal claim arise.

8. Communicate clearly and sensitively

Redundancy affects more than just those leaving the business. Poor communication can create uncertainty, reduce morale and damage trust across the wider workforce. Employees should understand:

• Why the business is proposing redundancies.
• The process that will be followed.
• The expected timescales.
• What support is available.
• How decisions will be made.

Managers should be prepared to answer questions honestly and consistently while avoiding speculation or making promises that cannot be guaranteed.

A professional and empathetic approach can help preserve working relationships and maintain confidence amongst employees who remain with the business after the restructuring is complete.

9. Be alert to discrimination risks

Employers should ensure that redundancy decisions are not influenced, either directly or indirectly, by protected characteristics under the Equality Act 2010. This includes characteristics such as:

• Age.
• Disability.
• Pregnancy and maternity.
• Race.
• Religion or belief.
• Sex.
• Sexual orientation.

Indirect discrimination can be particularly easy to overlook. For example, selection criteria based solely on attendance records could unfairly disadvantage employees who have taken disability-related absence or maternity leave.

Similarly, relying heavily on length of service or recent performance without considering the wider context may create unintended legal risks. Reviewing selection criteria carefully before consultation begins can help identify potential issues early and demonstrate that decisions have been made fairly and objectively.

10. Seek legal advice before difficult decisions are made

Redundancy exercises rarely involve legal issues alone. They also require employers to balance commercial objectives, employee relations and reputational considerations. Seeking legal advice at the planning stage can help employers:

• Structure a fair redundancy process.
• Identify potential legal risks.
• Prepare consultation documentation.
• Review redundancy pools and selection criteria.
• Consider suitable alternative employment.
• Ensure compliance with current employment legislation.

Early advice is often significantly more cost-effective than defending an Employment Tribunal claim once the process has concluded.

The cost of getting redundancy wrong

Even where redundancies are commercially justified, a poorly managed process can have lasting consequences. An employer may face:

• Employment Tribunal claims.
• Compensation awards.
• Legal costs.
• Significant management time.
• Reputational damage.
• Reduced employee engagement and morale.

Beyond the legal implications, poorly handled redundancies can affect how customers, suppliers and future employees perceive a business.

In today’s competitive employment market, organisations that demonstrate fairness, transparency and professionalism during periods of change are often better placed to retain trust and attract talent in the future. Taking time to plan the process properly is rarely time wasted.

What should employers do?

If your business is considering redundancies, start by identifying whether a genuine redundancy situation exists and whether alternatives have been fully explored.

Plan the process carefully, consult meaningfully with affected employees, apply objective selection criteria and ensure every stage is properly documented.

Employment law continues to evolve, and redundancy exercises are rarely one-size-fits-all. Taking advice early can provide clarity, reduce legal risk and help employers navigate what is often a sensitive and complex process with confidence.

How Gordons Partnership can help

Gordons Partnership advises employers across a wide range of employment law matters, including unfair dismissals, restructures, workplace reorganisations and Employment Tribunal claims.

Our experienced Employment Law team provides clear, commercially focused advice tailored to your organisation, helping you manage change while meeting your legal obligations and protecting your business.

Whether you are considering a small-scale redundancy exercise or a larger organisational restructure, we can help you plan the process, minimise legal risk and support you through every stage. If your business is facing workforce changes, contact Gordons Partnership’s Employment Law team for practical, tailored legal advice.