What is redundancy?

Know the key facts!

Redundancy is where an employee is dimissed and their dismissal is wholly or mainly attributable to the emplyer

Redundancy is a potentially fair reason for dismissal under section 98(2) of the Employment Rights Act 1996. However, it is important to ensure that an employer follows the correct procedure when making an employee redundant otherwise the dismissal may be found to be unfair.

What is redundancy?

The legal definition of a redundancy is where an employee is dismissed and their dismissal is wholly or mainly attributable to the employer:

  • Ceasing or intending to cease to carry on the business for the purpose of which the employee was employed by it;
  • Ceasing or intending to cease to carry on that business in the place where the employee was so employed; or
  • The requirements of the business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.

What is the redundancy process?

There are a number of steps that need to be taken in order to minimise the risk of the dismissal being unfair. These include:

Identifying a selection pool

Identifying the relevant employee(s) likely to be affected by the redundancy and who may therefore be at risk. If more than one employee then a pool should be identified. An example of a pool could include employees who perform same or similar roles.

Applying objective selection criteria

Selection criterion needs to be applied to the affected employees and should be both objective and transparent.

Be careful when deciding and applying selection criteria to ensure it is not discriminatory.

Consulting with affected employee(s)

Once the identified employee(s) have been identified as being at risk of redundancy the employer should then consult with them.

Where 20 or more employees are at risk of redundancy then an employer is required to consult for a minimum of 30 days. 

Where 100 or more employees are at risk of redundancy then an employer is required to consult for a minimum of 45 days.

Consider suitable alternative employment

Where an employee is to be made redundant the employer must consider whether there are any suitable alternative roles within the business that the employee can be offered.

The role must be offered on a 4 week trial period during which time the employee can reject the role and claim redundancy. However, if the role is deemed to be a suitable alternative the employee loses their right to claim redundancy.

For further advice on employment, redundancy, and whether an alternative role is a “suitable alternative employment”, please contact Nicola Cockerill on 01733 882800.

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.