This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Can redundancy apply following a business merger? Detailed UK legal guide explaining TUPE protections, when redundancies are lawful after mergers, employer obligations, employee rights, ETO requirements, consultation duties, and unfair dismissal risks in England and Wales.
Business mergers often lead to significant organisational restructuring, combining two workforces, eliminating duplicated roles, and reshaping operational structures. In the UK, these changes frequently raise questions about redundancy rights and employer obligations.
Under UK employment law, redundancy can arise following a merger, but it is not automatic. Employees are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which prevent dismissals simply because a business changes ownership. Any redundancy after a merger must meet strict legal requirements and follow a fair process.
This article explains when redundancy can occur after a merger, how TUPE applies, employee rights, employer obligations, and the legal risks involved.
What Happens to Employees After a Business Merger?
When a merger takes place, employees typically transfer to the new or merged entity under TUPE. This means:
- Employment contracts automatically transfer to the new employer
- Continuous service is preserved
- Existing terms and conditions remain in place
- Statutory rights, including redundancy rights, continue uninterrupted
The purpose of TUPE is to ensure employees are not disadvantaged solely because their employer changes as part of a merger or acquisition.
Can Redundancy Happen After a Merger?
Yes, redundancy can occur after a merger, but only where there is a genuine redundancy situation.
A redundancy may arise where:
- Two businesses have overlapping roles after merging
- There is a reduced need for employees to carry out certain work
- Parts of the combined organisation close or are restructured
- New technology or systems reduce workforce requirements
However, redundancy cannot be used simply because employees transferred under TUPE. Dismissals connected only to the merger are automatically unfair unless a lawful exception applies.
The Key Legal Test: Economic, Technical or Organisational (ETO) Reasons
After a merger, redundancy dismissals linked to the transfer must be justified by an economic, technical or organisational (ETO) reason involving changes in the workforce.
ETO reasons include:
- Economic: cost reduction or financial pressures requiring fewer staff
- Technical: introduction of new systems or processes
- Organisational: restructuring of teams or management structures
Importantly, the reason must involve real changes in staffing levels or job roles, not just a change in employer identity.
Without a valid ETO reason, a redundancy dismissal may be automatically unfair under TUPE.
Typical Redundancy Scenarios After a Merger
1. Role duplication
If both merging businesses had similar departments (for example, two HR teams), the combined business may reduce headcount by removing duplicate roles.
2. Site closures or consolidation
One office may close after a merger, making roles at that location redundant.
3. Operational restructuring
A merged company may reorganise departments, reducing the need for certain job functions.
4. Outsourcing or automation after integration
Post-merger cost efficiencies may involve outsourcing or technology-driven role reduction.
Each scenario must still be supported by evidence of reduced workforce requirements and a fair selection process.
What Employers Must Do Before Making Redundancies
Even after a merger, employers must follow a fair redundancy process. This includes:
1. Meaningful consultation
Employers must consult affected employees about:
- The reasons for proposed redundancies
- Alternatives to dismissal
- Ways to avoid or reduce job losses
Consultation must be genuine, not a formality.
2. Fair selection criteria
Where fewer roles exist than employees, selection must be based on objective criteria such as:
- Skills and qualifications
- Experience
- Performance records
- Attendance (used cautiously to avoid discrimination risks)
Selection cannot be arbitrary or based on the fact an employee transferred during the merger.
3. Consideration of alternative employment
Employers must consider whether employees can be:
- Redeployed into other roles within the merged organisation
- Retrained for new positions
- Offered suitable alternative employment
Failure to consider alternatives is a common basis for unfair dismissal claims.
Redundancy Before vs After a Merger
Before the merger
Redundancies carried out because of the merger process itself are generally unlawful if the main reason is the transfer. Such dismissals are likely to be automatically unfair.
After the merger
Redundancies are lawful if:
- The merger has already taken effect
- A genuine redundancy situation exists
- The ETO reason requirement is satisfied where applicable
- A fair process has been followed
Employee Rights in a Post-Merger Redundancy
Employees affected by redundancy after a merger may be entitled to:
- Statutory redundancy pay (subject to qualifying service)
- Notice pay or payment in lieu of notice
- Accrued holiday pay
- Potential enhanced contractual redundancy payments
Eligibility depends on length of service, contract terms, and whether suitable alternative employment was refused unreasonably.
Risks of Unfair Dismissal Claims
A redundancy following a merger may be challenged in an employment tribunal where:
- The redundancy is linked solely to the merger or transfer
- Consultation was inadequate
- Selection criteria were unfair or biased
- Suitable alternative roles were not considered
- The ETO justification is not genuine
If successful, claims may result in compensation for loss of earnings and other financial losses.
Collective Consultation Obligations
Where 20 or more redundancies are proposed within a 90-day period, employers must engage in collective consultation.
This includes:
- Consultation with employee representatives or trade unions
- Minimum statutory consultation periods
- Provision of written information about redundancies
Failure to comply can lead to a protective award of up to 90 days' pay per affected employee.
Common Questions
Does TUPE stop redundancies after a merger?
No. TUPE does not prevent redundancies, but it prevents dismissals solely because of the merger.
Can merged companies choose who to keep?
Yes, but selection must be based on fair and objective criteria, not simply on transfer status.
Who pays redundancy after a merger?
The new merged employer is usually responsible for redundancy payments after completion of the merger.
Are redundancies common after mergers?
Yes. They are common where roles overlap or restructuring is required, but they must still comply with UK employment law.
Key Takeaways
Redundancy can apply following a business merger, but only where a genuine reduction in workforce requirements exists. Employees are protected under TUPE, meaning they cannot be dismissed simply because their employment has transferred. Any redundancy must be justified by economic, technical or organisational reasons, supported by a fair consultation and selection process, and accompanied by consideration of alternative roles.
Mergers often lead to restructuring, but legal compliance is essential to avoid unfair dismissal claims and financial liability.
