Individual Redundancy Explained

Individual redundancy occurs when a single employee's role is no longer required within an organisation due to business needs, operational changes, or restructuring. In England and Wales, the law sets out specific procedures and rights to ensure that redundancies are carried out fairly and lawfully. Understanding these rules is essential for employees facing redundancy and for employers seeking to comply with statutory obligations while avoiding employment tribunal claims.

Legal Definition of Redundancy

Under section 139 of the Employment Rights Act 1996, a redundancy arises when an employee is dismissed because:

• the employer ceases, or intends to cease, to carry on the business in which the employee is employed;
• the employer no longer requires employees to do work of a particular kind; or
• the employer no longer requires employees to carry out work of a particular kind at a particular location.

Individual redundancy is a subset of redundancy situations, applying when only one employee is affected rather than multiple employees at a single establishment.

Identifying an Individual Redundancy Situation

Employers must establish a genuine need for the redundancy. This may include:

• operational restructuring;
• reduction in workload or services;
• closure of a department or office.

It is not sufficient to target an employee for unrelated reasons such as performance or misconduct. Mislabeling a dismissal as redundancy can result in unfair dismissal claims.

Key Steps in an Individual Redundancy

Step 1: Early Notification

Employees must be informed as soon as the employer identifies that redundancy is likely. Early notification allows meaningful discussion and consideration of alternatives.

Step 2: Consultation

Even in individual redundancies, consultation is mandatory. Employers must:

• Explain the reason for the proposed redundancy;
• Discuss possible alternatives, such as redeployment or flexible working;
• Allow the employee to respond and suggest solutions.

A failure to consult properly can render the redundancy unfair in the eyes of a tribunal.

Step 3: Selection Criteria

When multiple employees perform similar roles, fair selection criteria must be applied. For an individual redundancy, criteria may still be relevant if there are colleagues who could be at risk. Objective factors include:

• skills, experience, and qualifications;
• performance records;
• length of service;
• attendance.

Criteria must not discriminate based on protected characteristics such as age, gender, disability, or union membership.

Step 4: Considering Alternatives

Employers are required to consider alternatives to redundancy. For example:

• redeployment within the company;
• adjusting the employee's role;
• offering voluntary redundancy or reduced hours.

Employees should be given the opportunity to trial an alternative role, generally for up to four weeks, without losing statutory redundancy pay entitlement.

Step 5: Notice of Termination

Employees are entitled to statutory or contractual notice, calculated based on length of service:

• 1 month's notice for 1–2 years of service;
• 1 week's notice for each year of service from 2–12 years;
• Maximum 12 weeks for service exceeding 12 years.

Employers may choose payment in lieu of notice (PILON) if the employee does not work during the notice period.

Step 6: Redundancy Pay

Eligible employees with two or more years' continuous service are entitled to statutory redundancy pay, calculated according to age, length of service, and weekly pay, subject to statutory caps. Redundancy pay is separate from notice pay and accrued holiday pay.

Step 7: Formal Dismissal Letter

A written dismissal letter should be issued, covering:

• reason for redundancy;
• notice period;
• redundancy pay entitlement;
• appeal rights.

Step 8: Right to Appeal

Employees may appeal the redundancy decision, allowing a review of procedural fairness, selection criteria, and consideration of alternatives. Employers should handle appeals fairly and document the process.

Time Limits and Tribunal Claims

Employees can bring claims for unfair redundancy to an employment tribunal within three months less one day from the termination date, following Acas Early Conciliation. Tribunals assess:

• whether the redundancy was genuine;
• whether the consultation and selection process was fair;
• whether alternatives were considered;
• any evidence of discrimination or procedural failures.

Common Issues in Individual Redundancy

• Misrepresenting the reason for dismissal as redundancy;
• Failing to consult adequately;
• Ignoring redeployment opportunities;
• Applying subjective or discriminatory criteria;
• Failing to provide correct notice or redundancy pay.

Employers who neglect these duties risk tribunal claims, protective awards, and compensation payments.

Key Takeaways

Individual redundancy occurs when a single employee's role is no longer required due to business or operational changes. A lawful process involves early notification, consultation, fair selection criteria, consideration of alternatives, proper notice, redundancy pay, and an appeals process. Compliance with these steps ensures fairness, protects employee rights, and reduces the risk of claims before an employment tribunal.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.