Part of the Department of Trade and Industry: makes redundancy payments to employees of insolvent companies, the RPS then has a subrogated claim against the insolvent company.

This Practice Note provides an overview of redundancy in an insolvency context, and provides links to further detailed materials. Forthcoming changes The Employment Rights Act 2025 (ERA 2025) received Royal Assent on 18 December 2025 and introduces staged reforms relevant to redundancy in insolvency contexts. ERA 2025 introduces alternative statutory thresholds for triggering collective redundancy consultation. The change is not yet in force and is expected to take effect in 2027. For further detail and information on the expected implementation timetable, see Practice Note: Restructuring & Insolvency—horizon scanner. What is redundancy? For the purposes of entitlement to a redundancy payment, an employee is dismissed by reason of redundancy if the reason for dismissal is: • the employer ceases carrying on the business in which the employee worked • the employer ceases carrying on the business in the place in which the employee worked, or • the business needed fewer people carrying out work of the kind which the employee performed A much wider definition of redundancy applies (solely) in the context of consultation—there,

A statutory payment by an employer to an employee on the basis that the employee has been made redundant.

This Practice Note explains that an employee may claim a statutory redundancy payment without being dismissed in certain circumstances where the employer suspends the contract (a lay-off) or asks the employee to work shorter hours for less pay (time lost or short-time). It notes the overlap with the right to a guarantee payment. It covers the minimum period of lay-off or short-time before a claim can be made, the requirement for the employee to give the employer written notice of their intention to claim and terminate the contract, the circumstances in which an employer can resist an employee’s claim by serving a counter-notice and how claims for redundancy payments in lay-off and short-time situations are dealt with by the employment tribunal. An employee may claim a statutory redundancy payment without being dismissed in one of two situations: • where the employee is ‘laid-off’ by the employer, ie when the employer temporarily shuts down its operation because it cannot find any or enough work for the employees • where an employee is put on short-time working,

This Practice Note highlights the issues for an employer to consider in relation to a redundancy policy or procedure, including the advantages and disadvantages of having a written procedure, whether it should be in a collective agreement or policy document, contractual or non-contractual, the terms to be covered and the level of detail to include. Employers typically choose to deal with redundancies in one of three ways: • on an ad hoc basis, without having a written procedure in place • by having a written procedure, set out in a policy (which may be contractual, but is more likely not) • by having a written procedure, set out in a collective agreement A summary of the relevant considerations is set out below: Type of approach What it involves When it may be appropriate Ad hoc No written procedure in placeEmployer’s process may vary according to the circumstances of each round of redundancies Smaller employersNumber of redundancies unlikely to trigger collective consultation obligationsEmployer wants to avoid employee representatives ‘interfering’ in business decisions Redundancy policy

Name of employee: Employment start date and current length of service [Insert date][Insert length of service] Job Title: Section/Department Evaluated by: Date of evaluation: Position: Ratified by: Date: Position: Guidance: Reasonable adjustments may need to be made when applying the criteria (apart from disciplinary record) to employees with a disability (as defined by the Equality Act 2010, s 6) where a failure to do so would place them at a substantial disadvantage compared to employees without a disability. Service means continuous employment with the company and any associated company. Where the employee has not completed 12 months' service, the absence record should be converted to an annual equivalent. The following absences must be disregarded: • absences connected to a disability (as defined by Equality Act 2010, s 6); • maternity leave • parental leave; • dependant care leave; • paternity leave; • adoption leave; • shared parental leave; • parental bereavement leave; • carer’s leave; • neonatal care leave; • bereaved partner’s paternity

This Checklist outlines steps to be taken in collective consultation about proposed redundancies. It sets out practical considerations involved in identifying whether there is a redundancy situation, whether the collective consultation obligations are triggered, how to plan an appropriate timetable for the process and the obligation to notify the Secretary of State of proposed redundancy dismissals. The Checklist goes on to describe key steps in the consultation process itself, including open meetings with staff, letters to staff, election of employee representatives (if necessary), letters to employee representatives, consultation meetings with employee representatives, trying to reach agreement with employee representatives and the commencement of individual consultation. For further guidance on collective redundancy consultation obligations generally, see Practice Notes: Redundancy—fair procedure: collective consultation and How to carry out collective redundancy consultation. The guidance in this Checklist takes account of Acas guidance on Collective consultation for redundancy and the archived Acas non-statutory advisory booklet entitled Identify redundancy situation The Acas non-statutory guidance recommends that, before starting a redundancy exercise, the employer should consider all options to reduce or avoid redundancies,

Death of the employer—effect at common law At common law, where an employer is a natural person (as opposed to a legal person, such as a corporate entity or partnership), the death of the employer frustrates and so terminates the contracts of employment of all the employer’s employees. The ownership of the business necessarily passes from the deceased to their personal representatives. They have no power to continue to operate the business, except for the purpose of preserving it with a view to selling it as a going concern. The deceased may, however, by their Will, expressly or impliedly confer upon their personal representatives a power to continue to operate their business, and such a power may apparently be inferred from the usual clause giving the executors power to postpone the sale of the whole or any part or parts of the deceased’s estate. Death of the employer—redundancy payment and fair dismissal The employee is deemed to be dismissed by reason of redundancy for the purposes of the Employment Rights Act 1996 (ERA 1996),

This Practice Note deals with the general requirement for fairness where redundancy is the reason for dismissal, and focuses on the elements of a fair dismissal procedure in a collective redundancy situation. It explains when collective consultation must be undertaken and provides an overview of the collective redundancy procedure, including warning and consultation, information to be given to employee representatives regarding the reasons for the proposed redundancy, considering measures to avoid dismissal, identifying a selection pool, identifying fair selection criteria and applying those criteria fairly, considering and consulting on alternative employment and conducting an appeal. This Practice Note contains guidance on what constitutes a fair procedure to be followed where: • an employer is proposing to dismiss as redundant 20 or more employees within any period of 90 days or less, ie where there is a statutory obligation to consult collectively (see Practice Note: Collective redundancy—the triggers for the statutory consultation obligations) • there is no statutory obligation to consult collectively, but the employer otherwise needs to consult with employee representatives, because: ◦ there is an agreement to

This Practice Note examines the need for a fair procedure on a dismissal for redundancy, and the stages that should be included in that procedure. Where there is no statutory obligation to consult with any existing employee representatives (see Practice Note: Collective redundancy—the triggers for the statutory consultation obligations), the employer may nonetheless wish to do so to ensure that the process is fair for unfair dismissal purposes and for good industrial relations, particularly where there is a collective bargaining agreement to this effect. For guidance on the procedure to be followed where statutory consultation obligations apply, or it is otherwise necessary to consult with union or other employee representatives, see Practice Note: Collective redundancy—statutory information and consultation obligations. This Practice Note contains guidance on a fair procedure to be followed where: • the statutory collective consultation obligations do not apply, and • there is no other requirement (or need) to consult with union or other employee representatives, eg under a collective bargaining agreement See also Practice Note: How to carry out individual redundancy consultation

This Checklist outlines steps to be taken in individual redundancy consultation, whether or not consultation has also taken place at a collective level. It sets out practical considerations involved in planning a redundancy process and covers what should be discussed at open meetings with affected employees, what should be included in letters to affected employees, what should be discussed at individual consultation meetings, what should be included in the notice of dismissal and information to be given about the right of appeal. For further guidance on individual redundancy consultation obligations generally, see Practice Notes: Redundancy—fair procedure: individual consultation and How to carry out individual redundancy consultation. This Checklist assumes that the employer has determined whether collective consultation is required (see Checklist: Redundancy—collective consultation checklist for employers—Identify redundancy situation). This Checklist is to be used: • where there is an obligation to consult collectively as, even where that obligation is fulfilled, the employer must still consult individually with the employees • where there is no obligation to consult collectively, when the letters and meetings referred to in this checklist

This Practice Note explains the circumstances in which a payment will be made to an employee out of the state guarantee fund (the National Insurance Fund) ie a ‘fund payment’, and the type of employer liability that will give rise to a fund payment. It covers amounts owed to an employee by an employer as a statutory redundancy payment, payment under a formal settlement agreement and payment under a collective agreement, in circumstances either where the employer either refuses to pay or is unable to pay because it is insolvent following a voluntary liquidation or compulsory liquidation arrangement, a winding-up order being made or collective insolvency proceedings being opened. It also deals with interest on an overdue payment, the procedure for claiming, applicable time limits, information to be provided to the Secretary of State (the Insolvency Service), and the subrogation of the employee’s rights and remedies to the Secretary of State once a fund payment has been made. Other debts owed to an employee by an insolvent employer which could qualify for a fund payment are