Redundancy

Redundancy is one of the potentially fair reasons for dismissal, listed in the Employment Rights Act 1996. The main definition of redundancy is that a person loses their job wholly or mainly because:-

a) The employer has ceased or intends to cease

i. To carry on the business for the purposes of which the individual was employed, or

ii. To carry on the business in the place where the individual was employed, OR

b) The requirements of the business have ceased or diminished, or are expected to cease or diminish.

i. The need for employees to carry out work of a particular kind , or

ii. The need for employees to carry out work of a particular kind at the place where the individual was employed by the employer.

The definition covers a wide range of events. The first part of the definition covers the closure of the employer’s entire business or just at the place where the individual was employed e.g. one of a number of shops or offices used by the business is closed. The second part of the definition deals with the situation where the employer needs fewer employees to carry out certain work. The relevant court cases indicate that it is not necessary that there should be a reduction in the employer’s need for work of the kind done by the particular individual for there to be a redundancy, so this means that if Mr A’s job is about disappear, so he is moved to do the work of Mr B (who is dismissed instead of Mr A) Mr B will lose his job on grounds of redundancy. Naturally the fairness of that particular redundancy will depend on other factors, such as the selection criteria and consideration of suitable alternative roles for Mr B; but Mr B would still be regarded as having lost his job because of redundancy.

On the occasions that redundancy is the basis of the dismissal, an employer will still be vulnerable to a claim of unfair dismissal if it has not acted fairly. There are a number of aspects to a fair dismissal for redundancy. Basically the employer will need to establish the following:-

1. There is a genuine redundancy (rather than it being used simply as a label for dismissing someone for different reasons e.g. underperformance),
2. That the individual has been advised of the potential redundancy at the earliest available opportunity,
3. That there has been some consultation with the individual about the redundancy, addressing the issue of trying to avoid the need to make the role redundant,
4. There has been a fair basis of selection for redundancy
5. The individual has been able to appeal against the selection for redundancy, and
6. Possible suitable alternatives to redundancy have been considered.

Employers should implement and use a documented redundancy procedure (see PAYG redundancy policy), to ensure that a fair, consistent, and relevant procedure is used in dealing with any redundancy.

There is a wealth of case law on redundancy procedures which the Employment Tribunal will refer to in considering the fairness of any redundancy dismissal, but it is always important to consider the fairness in the particular circumstances of the case in question (which will include considering the size and resoures available to the employer).

There are no specific time limits, or minimum periods for the consultation over redundancy if there are fewer than 20 people likely to lose their jobs. In the event that 20 or more people are likely to or may possibly lose their jobs on the grounds of redundancy there are statutory minimum consultation periods. In these cases consultation should be with any recognised trade union representatives (if there are any) or, failing that, with elected employee representatives. This may require the business to arrange for their staff to elect representatives to consult with.

There are a number of grounds on which the selection for redundancy is classed as being automatically unfair, e.g. the selection for dismissal was union-related, the selection was health and safety-related, the selection was because the employee has asserted a statutory right, or the selection was because the individual was absent from work for jury service.

Protection from unfair redudnancy dismissal generally only arises once the employee has been employed for two years by the employer. A similarly qualifying period applies to the right to a statutory redundancy payment.