Workplace Closure: Your Redundancy Rights Explained

When a workplace closes, whether permanently or for an extended period, employees may face redundancy. UK law recognises a workplace closure as a distinct redundancy situation under the Employment Rights Act 1996, triggering specific rights and legal processes. This guide explains what constitutes workplace closure redundancy, what employees can expect, how employers should manage the process lawfully, potential legal claims, and practical steps for both employees and employers.

What Is Redundancy in a Workplace Closure Context?

Redundancy occurs when an employee's dismissal is attributable to business reasons such as:

• The employer ceases to carry on the business, or
• The employer ceases to carry on the business in the place where the employee was employed (a workplace closure), or
• The employer's need for work of a particular kind ceases or diminishes.

These situations are set out in section 139 of the Employment Rights Act 1996. A workplace closure – for example the shutting of a factory, shop, office or branch – qualifies as a redundancy if the role at that location no longer exists. This can apply even if the company continues elsewhere.

A temporary closure can also count as redundancy if it lasts long enough that the employee's job effectively disappears during the closure.

Understanding Employment Status and Rights

Only employees (people under a contract of employment) have statutory redundancy rights; workers without employment contracts, contractors and agency staff generally do not.

In addition to statutory redundancy pay, employees with sufficient service can bring claims for unfair dismissal if the process is flawed.

Statutory Redundancy Pay

Employees with at least two years' continuous service are normally entitled to statutory redundancy pay if dismissed because of redundancy, including a workplace closure. Statutory redundancy pay is calculated by age, length of service and weekly pay (subject to a statutory cap). Employers must provide a written explanation of how this has been calculated.

Some employers offer enhanced redundancy payment schemes above the statutory minimum. These are contractual and must be honoured if included in employment contracts.

Notice Periods

Employees dismissed due to workplace closure must be given the correct notice period, which is the greater of:

• The statutory minimum notice based on length of service, or
• A longer contractual notice period if set out in the employment contract.

Notice can be worked or paid in lieu.

The Redundancy Process When a Workplace Closes

1. Planning and Early Communication

Employers should plan before announcing closures. Even small workplaces need a fair process that explains the business reasons for closure and how redundancy decisions will be made.

2. Individual Consultation

Employees at risk of redundancy must be consulted individually. Consultation gives employees the opportunity to:

• Ask questions about the redundancy rationale, timeline and criteria.
• Suggest measures to avoid redundancy (such as redeployment).
• Discuss alternatives or concerns about selection.

3. Collective Consultation (Where Applicable)

If a workplace closure leads to 20 or more proposed redundancies at one establishment within a 90‑day period, the employer must carry out collective consultation with recognised trade unions or elected employee representatives. Employers must also notify the Redundancy Payments Service (RPS) using form HR1 before consultation begins:

• 20–99 redundancies: notify at least 30 days before the first dismissal.
• 100+ redundancies: notify at least 45 days before the first dismissal.

Collective consultation must cover efforts to avoid redundancies, reduce numbers, and limit the consequences for employees.

4. Selection and Fair Criteria

Employers should apply objective, fair selection criteria where redundancies affect some but not all employees at a closing workplace. Selection may consider skills, experience and business needs, but must not be discriminatory. Employees selected should be informed of the criteria and how they were applied.

5. Alternative Employment

Before finalising redundancies, employers should offer suitable alternative roles where available. Accepting a suitable alternative role may mean the employee forfeits their right to redundancy pay.

6. Notices, Pay and Support

Once final decisions are made, employers must issue notice of termination, settle redundancy and other payments (such as accrued holiday pay), and support employees with their transition where possible.

Unfair Dismissal Protection

Employees with two years' continuous service can bring claims for unfair dismissal if they believe the redundancy process was not handled fairly. Unequal treatment, failure to consult, unreasonable selection or ignoring alternative roles can give rise to tribunal claims.

Time Limits and Claims

• Unfair dismissal claims and claims for failure to consult typically must be brought to an employment tribunal within three months less one day from dismissal, after first notifying Acas Early Conciliation.
• Claims for statutory redundancy pay must generally be presented within six months less one day at the relevant tribunal.

Missing these time limits can prevent an employee from pursuing legal remedies.

Common Issues in Workplace Closure Redundancy

Mobility Clauses and Relocation

If an employee's contract includes a mobility clause allowing relocation, an employer may attempt to avoid redundancy obligations by offering a different workplace. If the relocation is reasonable and within contract terms, refusing may affect redundancy pay. Employees should check their contracts carefully.

Temporary Closures

Temporary workplace closures may still constitute redundancy if the work effectively disappears for a significant period. This depends on business context and the expected duration of the closure.

Settlement Agreements

Employers may offer settlement agreements that include enhanced payments in return for waiving claims. Such agreements should be reviewed carefully as they may affect redundancy and unfair dismissal rights.

Practical Steps for Employees

1. Ask for written details of redundancy criteria, consultation notes and proposed timelines.
2. Participate in consultation and suggest alternatives where possible.
3. Check your contract for mobility clauses or enhanced redundancy terms.
4. Keep records of meetings and correspondence relating to redundancy and closure.
5. Contact Acas or Citizens Advice early if you believe process flaws or discrimination occurred.
6. Engage in early conciliation before filing tribunal claims.

Practical Steps for Employers

1. Document business reasons for workplace closure and redundancy decisions.
2. Communicate early and clearly with employees about the closure plan.
3. Conduct genuine consultations and record responses.
4. Apply fair selection criteria grounded in objective business need.
5. Explore suitable alternative employment before final dismissals.
6. Ensure legal compliance with collective consultation and notification requirements where thresholds are met.

Common Questions

Does a workplace closure always lead to redundancy?
Yes, if the job role at that workplace ceases to exist and the employee cannot be redeployed. A closure is treated as redundancy even if the business continues elsewhere.

What if the employer offers relocation?
If there is a contractual mobility clause and the relocation is reasonable, refusing may affect redundancy pay. Check terms carefully.

Can I challenge a closure redundancy?
Employees with sufficient service can challenge the fairness of the process, especially if consultation was inadequate or selection was discriminatory.

Key Takeaways

Redundancy arising from a workplace closure is a recognised form of dismissal in England and Wales. Employers must follow legal processes including consultation, fair selection, notice and redundancy pay entitlements for eligible employees. Proper planning, clear communication and compliance with statutory requirements reduce legal risk, while employees should understand their rights, keep records and engage in the consultation process. Understanding the interaction between workplace closures and redundancy law helps both sides navigate difficult changes while protecting statutory rights.