There is a persistent myth among small employers that redundancy consultation only matters for big restructures — that if you are making one or two people redundant in a team of twelve, you can simply have a difficult conversation, pay what is owed, and move on. That myth is expensive. The collective consultation rules have a threshold, but the obligation to consult individually and meaningfully applies to every redundancy, whatever the size of your business. Get it wrong and you are looking at unfair dismissal findings, even where the redundancy itself was entirely genuine.

Two regimes, not one

UK redundancy law operates at two levels:

Collective consultation is triggered when you propose to dismiss as redundant 20 or more employees at one establishment within 90 days, under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. It carries minimum consultation periods, election of representatives, and an HR1 notification to the Secretary of State — with a protective award of up to 90 days' pay per employee for failure. Most small employers will never hit this threshold. Note that the Employment Rights Act reforms include changes to how the collective threshold is counted (moving away from the single-establishment test), so check the current position on GOV.UK before assuming the 20-per-site rule still applies to your structure.

Individual consultation applies to every redundancy dismissal, full stop. Employment tribunals have been consistent for decades — the principle runs back to Williams v Compair Maxam (1982) — that a fair redundancy requires warning and genuine consultation with affected employees, fair selection, and a search for alternatives. There is no minimum headcount for fairness.

This article is about the second regime: running a small redundancy properly.

Step 1 — Be sure redundancy is real

Redundancy has a statutory definition (section 139, Employment Rights Act 1996): the business is closing, the workplace is closing or moving, or the need for employees to do work of a particular kind has diminished. "We want someone better" or "their attitude is a problem" is not redundancy — dressing a capability or conduct exit as redundancy is one of the fastest routes to an unfair dismissal finding, because the consultation that follows is a sham.

Document the business reason before you announce anything: the numbers, the lost contract, the restructure logic. If you cannot write the reason down credibly, stop.

Step 2 — Plan before you speak

Work out, on paper:

• The pool. Who does work of the particular kind that is diminishing? Selecting one person from a team of five without considering a pool is a classic error. Sometimes the pool is one person — but that should be a reasoned conclusion, not an assumption.
• Selection criteria. If a pool exists, you need objective, measurable criteria: skills, qualifications, performance records, disciplinary record. "Attitude" and "fit" invite subjectivity and discrimination claims. ACAS guidance on redundancy selection is the standard reference.
• The numbers. Statutory redundancy pay requires two years' service and is calculated by age and service from a capped weekly wage — check the current cap and use the calculator on GOV.UK redundancy pay. Add notice pay (statutory or contractual, whichever is greater), accrued holiday, and any enhanced contractual terms.
• The timeline. You need enough time for genuine consultation before any dismissal takes effect. For small redundancies there is no statutory minimum period, but two to three weeks with at least two meetings is a defensible rhythm for a single-role redundancy.

Step 3 — Consult like you mean it

Consultation must happen while proposals are still proposals — before decisions are final. In practice:

At-risk announcement. Meet the affected employee(s) privately. Explain the business reason, that their role is at risk of redundancy, that no decision has been made, and that there will be a consultation process with further meetings. Confirm in writing the same day. The employee has the right to be accompanied at consultation meetings by a colleague or trade union representative.

Consultation meetings. At least one further meeting, usually two. Discuss: why the role is at risk, the selection pool and criteria (and their scores if a matrix was used), the employee's own suggestions, and — critically — alternatives. Could the role be reduced in hours? Is there another vacancy? Would they consider a different role? You must genuinely consider what they say; a consultation where the outcome was fixed in advance is worse than none, because the letters will show it.

Alternatives to redundancy. Tribunals expect evidence you looked: vacancies elsewhere in the business (including roles at a lower grade, which the employee can refuse), redeployment, reduced hours, ending agency or contractor spend first. Keep notes of what was considered and why it did not work.

The decision meeting. If redundancy is confirmed, hold a final meeting, give the decision with the reasons, confirm notice, redundancy pay, holiday, and any support (time off to look for work is a statutory right for those under notice of redundancy with two years' service — section 52, Employment Rights Act 1996). Confirm everything in writing and offer an appeal.

The discrimination tripwires

Small redundancies concentrate risk. With one or two people affected, who you select is the whole story. Before finalising selection, check: pregnancy and maternity (redundancy protection is now enhanced — employees on maternity, adoption or shared parental leave, and for a period after return, have priority for suitable alternative vacancies under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023); disability (selection criteria that penalise disability-related absence can be discriminatory); age (length-of-service criteria indirectly disadvantage younger workers); and part-time status. When in doubt, take advice before scores are finalised, not after letters are sent.

Small-team redundancy checklist

• □ Written business rationale for the redundancy before any announcement
• □ Selection pool identified and reasoned
• □ Objective selection criteria, scored with evidence, discrimination-checked
• □ At-risk letter issued; consultation timeline set
• □ Right to be accompanied confirmed for all meetings
• □ Minimum two consultation meetings held while proposals are open
• □ Alternatives (redeployment, reduced hours, vacancies) explored and documented
• □ Statutory redundancy pay, notice and holiday calculated and checked
• □ Final decision letter with reasons, payments and appeal
• □ Pregnancy/family-leave priority rules checked for any alternative vacancy
• □ HR1 and collective obligations reviewed if numbers could reach 20 across the business

The practical takeaway

A small redundancy done properly takes three to four weeks and a modest amount of paperwork. A small redundancy done badly takes months — a tribunal claim, management time, and a settlement that dwarfs the cost of the process you skipped. The law does not ask small employers to be lawyers; it asks them to be fair, and to be able to prove it.

If you are planning a restructure or facing a redundancy decision now, book a confidential discovery call with The People Powered at start a conversation with The People Powered. It is far easier to build the process correctly at the start than to repair it afterwards.

This article is general guidance for employers, not legal advice on a specific case.