This guide is maintained as a current resource for July 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.
A clear guide to redundancy definition in UK employment law, explaining statutory meaning under the Employment Rights Act 1996, fair redundancy procedures, consultation requirements, selection criteria, and employee rights. Includes tribunal processes, statutory redundancy pay, and unfair dismissal claims in England and Wales.
Redundancy is a legally defined form of dismissal under UK employment law. It occurs when an employer needs to reduce its workforce because a job role is no longer required, rather than because of the individual employee's conduct or performance.
In England and Wales, redundancy is governed primarily by the Employment Rights Act 1996, which sets out the statutory definition and the legal framework for fair redundancy procedures, including consultation duties, selection criteria, and entitlement to redundancy pay.
Understanding the legal definition is essential because employers must follow a fair process, and employees may have rights to claim unfair dismissal or statutory redundancy payments if the process is not correctly applied.
Legal Definition of Redundancy
The statutory definition of redundancy is set out in section 139 of the Employment Rights Act 1996.
A dismissal is treated as redundancy if it is wholly or mainly attributable to one of the following situations:
1. Business Closure
Where the employer stops carrying on the business altogether.
Example:
- A company permanently shuts down its operations.
2. Workplace Closure
Where the employer closes a particular workplace.
Example:
- A shop branch closes, even though the company continues operating elsewhere.
3. Reduced Need for Employees
Where there is a diminished requirement for employees to carry out work of a particular kind.
Example:
- Automation reduces the need for administrative staff.
- A company restructures and requires fewer marketing employees.
These three categories form the core legal test used by employment tribunals when deciding whether a redundancy dismissal is genuine.
Key Legal Principles of Redundancy
Employment tribunals focus on the reality of the employer's needs, not just the label used.
A redundancy must be genuine and not a disguised dismissal for another reason, such as:
- Capability or performance issues
- Conduct concerns
- Personal disputes
- Replacement hiring under a different job title
If redundancy is used incorrectly, the dismissal may be treated as unfair.
Redundancy vs Other Types of Dismissal
It is important to distinguish redundancy from other forms of termination:
Capability Dismissal
Based on performance or ability to do the job.
Conduct Dismissal
Based on misconduct or disciplinary issues.
Redundancy Dismissal
Based on business need, not the individual.
Tribunals will examine evidence to determine the true reason for dismissal, regardless of how the employer describes it.
Fair Redundancy Process Requirements
Even where redundancy is genuine, employers must follow a fair procedure. Failure to do so may result in an unfair dismissal claim.
Key requirements include:
1. Meaningful Consultation
Employers must consult with affected employees before final decisions are made.
Consultation should include:
- Explanation of reasons for redundancy
- Discussion of alternatives
- Opportunity for employee input
The Advisory, Conciliation and Arbitration Service (ACAS) provides guidance on fair redundancy consultation procedures through ACAS.
2. Fair Selection Criteria
Where fewer employees are needed, employers must select fairly.
Common selection criteria include:
- Skills and qualifications
- Performance records
- Attendance (excluding protected absences)
- Experience
Selection must not be discriminatory or arbitrary.
3. Consideration of Alternative Employment
Employers are expected to explore suitable alternative roles within the organisation.
Failure to consider redeployment may render a dismissal unfair.
Collective Redundancy Rules
Where an employer proposes to dismiss 20 or more employees within a 90-day period, collective consultation rules apply under the Trade Union and Labour Relations (Consolidation) Act 1992.
This requires:
- Consultation with employee representatives or trade unions
- Minimum consultation periods depending on numbers affected
- Notification to the government (HR1 form)
Failure to comply can result in a protective award of up to 90 days' pay per employee.
Statutory Redundancy Pay
Employees with at least two years' continuous service may be entitled to statutory redundancy pay.
The amount is based on:
- Age
- Length of service (capped at 20 years)
- Weekly pay (subject to a statutory cap)
Some employers offer enhanced redundancy packages through contract or policy terms.
Unfair Dismissal and Redundancy Claims
Even where redundancy is the stated reason, employees may bring claims for unfair dismissal if:
- The redundancy was not genuine
- A fair process was not followed
- Selection was unfair or discriminatory
- Consultation was inadequate
- Suitable alternative employment was not considered
Employment tribunals assess both the reason for dismissal and the procedure followed.
Tribunal Assessment of Redundancy
Employment tribunals typically examine:
- Whether the redundancy situation existed
- Whether the employer genuinely needed fewer employees
- Whether fair consultation occurred
- Whether selection criteria were objective and fairly applied
- Whether alternative employment was considered
The burden is on the employer to show both a valid reason and a fair process.
Notice Periods in Redundancy
Employees are generally entitled to statutory or contractual notice, whichever is longer.
Minimum statutory notice is:
- At least 1 week's notice after 1 month of service
- Increasing to 1 week per year of service (up to 12 weeks)
Payment in lieu of notice may apply if allowed under the contract.
Common Issues in Redundancy Cases
Employment tribunals frequently consider disputes involving:
- “Pool for selection” definitions
- Whether roles were genuinely redundant
- Whether new roles are substantially similar to old roles
- Use of scoring systems in selection
- Allegations of disguised dismissal
These issues often determine whether redundancy is lawful or unfair.
Redundancy and Protected Rights
Redundancy must not be based on discriminatory or prohibited grounds, including:
- Pregnancy or maternity leave
- Disability
- Race, sex, or age discrimination
- Trade union membership or activities
Dismissals linked to protected characteristics may result in discrimination claims in addition to unfair dismissal claims.
Practical Legal Outcomes
Where redundancy is proven to be unfair or improperly handled, tribunals may award:
- Compensation for financial loss
- Basic and compensatory awards for unfair dismissal
- Protective awards for collective consultation breaches
- Payment of unpaid redundancy entitlements
Compensation is subject to statutory limits in most cases.
Key Takeaways
Redundancy in UK employment law is defined by section 139 of the Employment Rights Act 1996 and arises where a job is no longer needed due to business closure, workplace closure, or reduced need for employees. However, redundancy must be both genuine and fairly implemented. Employers are required to follow a fair consultation process, apply objective selection criteria, and consider alternative employment. Employment tribunals carefully assess both the reason for redundancy and the procedure followed, and failures can lead to unfair dismissal or financial compensation claims.
