In an evolving economic climate, employers are increasingly facing the need to make decisions around their workforce resulting in restructures. There has been a notable rise in redundancies during 2026 and it is reported that this trend will continue into 2027.
With economic uncertainty, continued AI impacts changing the tasks associated in the workplace, and the cost increases affecting businesses, these as reported to have contributed to the increase in redundancies during 2026. Employers have looked at headcount (generally the highest business expense) as a way of reducing costs and to protect the future of the business. Where redundancy applies, the business rationale is a key factor in assessing whether the dismissal was ‘genuine’.
Understanding redundancy
Redundancy is one of the five fair reasons for dismissal. For reference fair reasons for dismissal include:
- Capability
- Conduct
- Redundancy
- Statutory restriction
- Some other substantial reason
Employers are required to follow the associated fair process where they are looking to make redundancy dismissals, and must have demonstrated that:
- The redundancy is genuine. This may include that the role is no longer required or a reduced need for the work to be carried out. It can also include a business closure.
- The process is fair and transparent, with the appropriate selection carried out
- A full consultation process has occurred (individual or collective depending on the number of potential dismissals expected)
- Any alternative options to redundancy have been considered
There are a number of additional areas to consider, HR guidance is recommended to avoid any potential disputes and claims.
Procedural fairness is vital where a redundancy situation occurs.
Employers are required to provide a ‘meaningful consultation’ and to consider ways of avoiding any potential dismissal, using an objective selection criteria applied to those selected at risk of redundancy, and considering whether there are alternative roles that exist within the business.
Where the decision is a redundancy dismissal, then the appropriate pay is applied: statutory redundancy pay (or company enhanced redundancy pay), contractual notice or payment in lieu of notice, plus any contractual holiday accrued but untaken at the employment termination date.
Impact on employees
Redundancy dismissal can have a longer term impact.
Employees leaving under redundancy dismissal may be feeling the emotional impact that they are no longer needed, and may assume that the dismissal is linked with performance. Uncertainty about their future career and income is a high consideration. This is a complex time for people and any support e.g. outplacement support, is a valued process that the employer can consider. Outplacement includes guidance with:
- Career support – coaching sessions to look at experience, skills, industries and focusing on employers
- CV review to update and make relevant to the future career
- Preparation for interviews
It is vital that the employer provides support during the redundancy process as well as supporting employees where they are leaving under redundancy dismissal. An employer that has shown compassion and empathy may reduce any company brand damage.
Employees who have been retained by the business following a redundancy process can experience ‘survivor syndrome’ which is a psychological term used to describe how the employees feel. It involves guilt for keeping their jobs, and uncertainty relating to their security in the future of the business. This feeling can result in a reduction in employee retention and productivity can decrease. To recognise the effects employers should:
- Engage with their remaining employees assuring them of the business future and opportunities
- Confirm that the redundancies were necessary, and that the company is not expecting to go through any further processes (this helps to reduce the worry and to maintain employee retention)
- Arrange some engagement activities
- Arrange 1-2-1s with employees, this focused time with line managers will help to understand employee concerns and enforce confidence from the business
This is a vital step to rebuild relationships and secure confidence back.
If your business is planning on implementing a restructure that is expected to result in redundancies, then reach out to our team for advice.