If you are closing your UK agency to relocate to Dubai, you cannot simply shut the doors and walk away. Your employees have statutory rights under UK employment law. Get the redundancy process wrong, and you could face an employment tribunal even after you have left the country.

This is not a theoretical risk. Tribunal claims can be pursued against a company in liquidation, and directors can be pursued personally in certain circumstances. So before you book that flight, you need a clear, legally compliant plan for handling UK employee redundancies closing agency operations.

When Does Redundancy Law Apply to a Closing Agency?

Redundancy law applies whenever you dismiss an employee because the business is closing. It does not matter that you are moving to Dubai. It does not matter that you plan to start a new agency there. For UK employees, their employment ends because their workplace is shutting down. That is a redundancy situation.

The key distinction is between redundancy and resignation. If an employee chooses not to relocate with you, that is still redundancy. They are not resigning. You are ending their role because the UK business is closing. The statutory protections still apply.

The Three Pillars of a Compliant Redundancy Process

UK employment law requires three things when making employees redundant:

  • Statutory redundancy pay, a legal minimum payment based on age, length of service, and weekly pay
  • Notice pay, statutory or contractual notice, whichever is higher
  • Consultation, a meaningful process of informing and discussing with affected staff

Fail on any of these, and you open the door to an unfair dismissal claim or a protective award. Let us look at each one in detail.

Statutory Redundancy Pay: What You Must Pay

Statutory redundancy pay is calculated as follows:

  • Half a week's pay for each full year of service where the employee was under 22
  • One week's pay for each full year of service where the employee was between 22 and 40
  • One and a half weeks' pay for each full year of service where the employee was 41 or older

The maximum reckonable service is 20 years. The maximum weekly pay used in the calculation is capped (currently £643 per week for 2025/26). The maximum statutory redundancy pay is therefore £19,290 (30 weeks x £643).

If your agency has a contractual redundancy scheme that is more generous, you must use that instead. Check your employment contracts and staff handbook before you calculate.

Notice Periods: What You Must Give

Statutory minimum notice periods are:

  • One week for continuous service between one month and two years
  • One week for each full year of continuous service between two and 12 years
  • 12 weeks for 12 or more years of continuous service

If your contracts specify a longer notice period, you must honour that. Garden leave or payment in lieu of notice (PILON) are both options, but you still owe the pay.

Employees must work their notice period unless you agree otherwise. If you want them to leave immediately, you pay PILON. That includes salary, pension contributions, and any benefits in kind for the notice period.

Consultation: The Step Most Founders Get Wrong

Consultation is not a tick-box exercise. It is a legal requirement that the Employment Rights Act 1996 treats seriously. The purpose is to inform employees about the situation, discuss alternatives to redundancy, and consider their feedback before making final decisions.

If you are making 20 or more employees redundant within a 90-day period, collective consultation rules apply. That means:

  • You must consult with employee representatives (either trade union or elected representatives)
  • Consultation must start at least 30 days before the first dismissal (45 days if 100 or more redundancies)
  • You must notify the Department for Business and Trade using form HR1

Most agencies closing to move to Dubai will have fewer than 20 staff. In that case, individual consultation is sufficient. But it must still be genuine. You cannot simply send a letter saying "you are redundant, here is your pay". You must meet with each employee, explain the situation, discuss whether there are alternative roles (including in your new Dubai entity if relevant), and consider their suggestions.

A protective award can be made by a tribunal if you fail to consult properly. That award can be up to 90 days' pay per employee. For a team of 10 people on £40,000 each, that is potentially £90,000 in uncapped liability. The award is not capped by the statutory weekly limit. It is based on actual weekly pay.

The Step-by-Step Process for a Small Agency Closure

Here is the exact process you should follow if you are closing a small agency (under 20 employees) to move to Dubai:

Step 1: Confirm the decision to close. This is a board decision. Minute it. You need a clear record that the business is ceasing trading, not just restructuring.

Step 2: Identify the affected employees. All employees whose roles are disappearing are at risk of redundancy. That is everyone if the whole business is closing.

Step 3: Put employees at risk of redundancy. Write to each employee individually. Explain that the agency is closing, their role is at risk, and you will be consulting with them individually. Give them a date for the first consultation meeting. Provide a written statement of the proposed redundancy terms.

Step 4: Hold individual consultation meetings. At least two meetings per employee is standard. Discuss the reasons for closure, whether there are any alternative roles (including in the Dubai entity, if one exists), and the redundancy terms. Take notes. Keep records of what was discussed.

Step 5: Consider alternatives. If you are setting up a Dubai entity, could any employees transfer there? If not, explain why. Document this discussion.

Step 6: Confirm the redundancy. After consultation, write to each employee confirming that their redundancy is unavoidable. Give them their notice period, their redundancy pay calculation, and the date their employment will end.

Step 7: Offer the right to appeal. Employees have the right to appeal the redundancy decision. Give them a process and a deadline (usually 14 days). If they appeal, hold an appeal meeting.

Step 8: Pay what is owed. On or before the termination date, pay all statutory redundancy pay, notice pay, accrued holiday pay, and any contractual entitlements. Issue a P45 and a final payslip.

Step 9: Notify HMRC. File a final RTI submission for each employee. Close your PAYE scheme once all employees have left.

Step 10: Liquidate or dissolve the company. Once all employees have been paid and all other debts cleared, you can apply to strike off the company or place it into creditors' voluntary liquidation. If there are insufficient assets to pay redundancy, you may need to apply to the Insolvency Service for the Redundancy Payments Service to make payments on your behalf.

What Happens If You Cannot Afford the Redundancy Payments?

This is a common scenario. Your agency is closing because it is not profitable, or because you have stripped cash out for your Dubai move. Either way, the company may not have enough money to pay statutory redundancy.

If the company is insolvent, you must stop trading and either enter creditors' voluntary liquidation or apply for compulsory liquidation. At that point, the Redundancy Payments Service (part of the Insolvency Service) will step in to pay employees their statutory entitlements. This includes:

  • Statutory redundancy pay
  • Statutory notice pay (up to a cap)
  • Holiday pay (up to six weeks)
  • Arrears of pay (up to eight weeks)

There are caps on what the Redundancy Payments Service will pay. For 2025/26, the maximum weekly amount is £643. Anything above that is a claim against the company, which is usually unrecoverable if the company has no assets.

If you have paid yourself dividends or salary while the company was unable to meet its redundancy obligations, a liquidator may challenge those payments as wrongful trading or transactions at undervalue. This is a real risk. Do not strip cash from the company before dealing with your employees.

Can You Avoid Redundancy by Asking Employees to Resign?

No. This is a common misconception. If you ask an employee to resign so you do not have to pay redundancy, and they agree, that resignation is likely to be considered a dismissal in law. The employee can still bring a claim for unfair dismissal and statutory redundancy pay.

If an employee genuinely chooses to resign because they do not want to relocate to Dubai, that is still redundancy. You are ending their role because the UK business is closing. The statutory protections still apply. Do not try to dress it up as a resignation to save money. It will not hold up in a tribunal.

What About the Dubai Move? Does That Change Anything?

Your move to Dubai does not change your obligations under UK employment law. The employees are employed by a UK company, governed by UK employment law, and working in the UK. Your personal relocation is irrelevant to their statutory rights.

However, your move does create practical complications. If a tribunal claim is brought after you have left the UK, you will need to defend it. That means instructing a UK solicitor, potentially attending hearings remotely or returning to the UK, and dealing with enforcement of any award against you personally if the company is dissolved.

If you have dissolved the company without properly dealing with redundancy, and a tribunal finds that you acted in bad faith, you can be pursued personally. That is rare but it happens. The safest approach is to deal with redundancy properly before you leave, or to keep the company alive (or in liquidation) until all claims are resolved.

Practical Steps Before You Book That Flight

Before you move to Dubai, do the following:

  • Get legal advice on the redundancy process. An employment solicitor can review your process and documentation. The cost of advice is far less than a tribunal award.
  • Calculate all redundancy and notice costs. Work out the total liability. Make sure the company has enough cash to cover it, or that you are prepared to fund it personally if needed.
  • Run the consultation process properly. Do not rush it. Allow enough time for genuine consultation. Document everything.
  • Pay all statutory entitlements before dissolving the company. If the company cannot pay, use the Redundancy Payments Service route rather than simply walking away.
  • Close your PAYE scheme properly. File final RTI submissions. Issue P45s. Notify HMRC that the scheme is closed.
  • Consider the timing of your move. If you are still involved in the redundancy process, you need to be contactable. Ensure you have a UK address for service of legal documents, or appoint a UK representative.

How We Can Help

As ICAEW qualified accountants working exclusively with agency founders, we regularly help agency owners plan their exit from the UK. We work alongside employment solicitors to ensure the redundancy process is handled correctly, and we can help you structure your Dubai move tax-efficiently once the UK business is closed.

If you are planning to close your UK agency and move to Dubai, get in touch. We will help you map out the redundancy process, the company closure, and the personal tax implications of your move. Do not leave your employees' rights to chance.

For more on agency-specific financial planning, see our guides on agency finance essentials and incorporation and structure.