Making a senior manager redundant: a guide for employers

When you’re looking to save money in your business, the salary of a department head or senior executive can stand out on the spreadsheet. But removing a role means deciding what happens to the work it covers. Some responsibilities may disappear, while others may be shared across the management team. Understanding that overlap early can change who you need to consider for redundancy and whether there’s another way to achieve the savings you need.

From 1 January 2027, the qualifying period for ordinary unfair dismissal will fall from two years to six months, and the cap on the compensatory award will be removed. These changes could affect both who can bring a claim and the potential cost to employers, particularly where a highly paid employee takes time to find comparable work.

If you’re planning a restructure or considering a senior redundancy, contact our employment solicitors for advice on consultation on the proposal, selection, and your options.

Start with the role and consider the selection pool

Consider what the business needs to change and what that means for the work currently being done. Senior job titles can make roles look distinct even where responsibilities overlap. For example, if you plan to reduce two regional management roles to one, consider whether both managers should be put together in a “pool” and scored against selection criteria.

A pool of one may be appropriate where the role is genuinely distinct or unique. You should record how you reached that decision, including which other roles you considered and why you excluded them to show you turned your mind to the question of pooling. If you need to select between employees, use objective criteria where possible and keep the evidence that supports the scores.

Consult at proposal stage before making decision

For a fair dismissal, it is important to consult with employees at the proposal stage.  Give the employee(s) a chance to challenge the proposal and suggest alternatives before confirming that the proposed redundancy is going ahead.  The employee may suggest a potential way to avoid the redundancy that you hadn’t considered.

If the senior redundancy is part of a wider exercise, it’s worth checking early whether collective consultation duties apply. You may find our step-by-step redundancy guide for employers helpful as you plan the process.

Look for suitable alternative employment

Review available vacancies and consider whether the employee could carry out any of them. Look at the duties, pay, status, and location. If an employee’s role is made redundant, you are generally required to offer them another role within your organisation if there is a vacancy and it is a suitable alternative role.  An employee may also be willing to take on a role at a different level or on lower pay, so you do need to plan ahead.

Check whether anyone affected has priority (e.g. someone on maternity leave) for a suitable vacancy before deciding how to allocate it.

How the January 2027 unfair dismissal changes affect senior redundancies

The new rules apply where the effective date of termination falls on or after 1 January 2027. A senior hire with six months’ service may therefore qualify to bring an ordinary unfair dismissal claim. Even if your restructure starts before Christmas, any dismissals could take effect after 1 January 2027, so check the expected termination dates to assess your exposure.

From 1 January 2027, the cap on the compensatory award for unfair dismissal (currently £123,543 or 52 weeks’ gross pay, whichever is lower) will be removed. This may increase the potential cost of a claim. For example, a highly paid employee who takes more than a year to find comparable work may have a significant loss of earnings and could be awarded more than the previous cap.

The shorter qualifying period also matters when you’re making decisions about probation and performance. We cover those implications in our guide to preparing your business for the 2027 unfair dismissal changes.

When to consider a settlement agreement

A settlement agreement is often a good option, as it can give both parties a way to agree on amicable terms for a senior person’s departure. Beyond financial terms, it can cover the handover, an agreed reference, and how the departure will be communicated to colleagues and clients.

Take advice on when and how to raise a settlement proposal, what claims the agreement should cover, and how to proceed if the employee declines. In that case, you would need to go down the formal route and be able to demonstrate a genuine redundancy situation and follow a fair procedure before dismissing.

The terms can be more involved when the employee also holds a board position or has share options. Our guide to settlement agreements for directors and senior executives explains what to consider in those circumstances.

Taking advice on a senior redundancy

Before you speak to the employee, review the proposed structure, map out who does similar work, and check which vacancies might be suitable. Doing that early gives you a clearer basis for consultation and helps you decide whether to explore an agreed exit.

Matthew Irvine, head of employment at SO Legal, says,

“One of the biggest mistakes employers make is focussing on the individual rather than the role. Look at the work the role involves, consider whether others are doing similar work, and check what suitable alternatives are available. Taking those steps can help bring about a positive outcome even when the business case for redundancy seems clear.”

If you’re considering making a senior employee redundant, contact our employment solicitors for advice on consultation, selection and the risk of a claim. We can also help you negotiate a settlement agreement where appropriate.