Responsible Redundancy: What employers can learn from Wilko’s mistakes

The recent case involving Wilko’s redundancy failings has sparked important conversations about how employers handle job losses during challenging times. When businesses face financial distress, redundancies are often necessary, but what the tribunal ruling in the Wilko case has made clear is that the process must still reflect fairness, humanity and legal compliance. For employers, the message is simple: taking shortcuts in redundancy planning can lead to serious legal, financial, and reputational consequences.

What Happened in the Wilko Case?

When Wilko went into administration in August 2023, nearly 10,000 employees were affected by redundancies as over 400 stores closed their doors. However, the process Wilko followed fell well short of legal requirements. The tribunal found that the company had failed to undertake proper collective consultation, which is mandatory under UK employment law when a company proposes making 20 or more redundancies at a single site within a 90-day period.

Employers in such situations must engage with either elected employee representatives or a recognised trade union to hold meaningful conversations about the proposals. This includes giving employees the chance to ask questions, explore alternatives, and raise concerns. Wilko did not allow the 45 days required for this consultation process, even though the scale of the redundancies was entirely foreseeable given the company’s financial difficulties.

As a result, the tribunal awarded a protective award to nearly 10,000 Wilko employees. This type of award financially compensates staff when they are denied their right to fair consultation. For Wilko, it has added a further layer of financial and reputational damage during what is already a difficult time for the business.

Why is it important to ALL businesses, no matter the size?

The Wilko ruling is a reminder to all businesses that redundancy is about more than just ticking legal boxes. The process is underpinned by fairness and trust, and when mishandled, the fallout can go far beyond the immediate costs.

For employers, mishandling redundancies can hurt workplace culture and morale, particularly for the employees who remain. Seeing colleagues treated poorly can create resentment, sap motivation, and leave the workforce distrustful of management. These kinds of cultural impacts often linger long after the initial redundancies have taken place.

From a reputational perspective, how a business handles redundancies speaks volumes about its values and priorities. Perceptions of unfairness can lead to public backlash, not only from affected employees but also from customers, clients, and even future talent. Trust is difficult to rebuild, and the reputational damage from a poorly managed process can far outweigh short-term efforts to cut corners.

While the Wilko case involved large-scale redundancies, no employer should overlook what these implications mean for their business, no matter its size. If you are making less than 20 people redundant, the risk is still high if the process is mismanaged. Unfair dismissal claims can quickly find their way to an employment tribunal. Redundancies need careful consideration to ensure the selection process is fair, transparent, and respectful. The principles of clear communication, properly assessing alternatives, and treating people with dignity apply universally, not just when collective consultation legally kicks in.

Legal compliance in redundancies

As we’ve seen in this case, when redundancies are on the horizon, legal compliance is not optional. Employers should remember that time pressures or financial constraints are not considered valid excuses for failing to consult appropriately.

The purpose of any redundancy process isn’t just bureaucratic. It creates an opportunity for meaningful engagement, where employees can offer input, raise alternatives, and better understand the situation. Even in cases where redundancies remain unavoidable, following a fair and transparent process helps employees feel respected and valued.

Tribunals, as the Wilko case illustrates, take a firm view of any wilful disregard for these duties. The protective awards resulting from non-compliance are significant, adding costs at a time when many organisations can least afford them. Properly embedding consultation with employment law solicitors in the planning stages not only mitigates legal risk but also demonstrates to employees that their voices are being heard during a difficult time.

Responsible redundancy goes beyond compliance

Redundancy processes are deeply personal for those affected. What the Wilko ruling has reinforced is that treating it as just a business transaction can lead to damaging results. Responsible redundancy means respecting employees’ contributions and ensuring they have the support and clarity they deserve during such a significant change.

For businesses, this approach isn’t just about following the letter of the law. Demonstrating fairness, transparency, and integrity during redundancies can help preserve trust within the workforce. Employees are far more likely to stay engaged and motivated if they have confidence that the process is being handled thoughtfully and ethically.

While legal compliance should always be a priority, businesses should also strive to treat redundancy as a people-driven process. Addressing redundancies responsibly is an opportunity for companies to show leadership and values, even in the face of difficult decisions.

In the end, the Wilko case makes one thing clear: getting redundancies right is about much more than avoiding an employment tribunal. It is about handling change in a way that maintains trust, protects morale, and shows that even during tough times, people remain the heart of the business. Responsible redundancy matters for everyone involved, and it’s a principle that no employer should overlook.

Our team of expert employment law solicitors is here to guide you through every step of the redundancy process, whether you're considering individual redundancies or larger organisational changes. Contact us today for tailored advice and practical solutions that help you navigate these challenges responsibly and effectively.