What Is Redundancy Dismissal and When Is It Lawful?

Redundancy dismissal is a form of termination of employment that occurs when an employer needs to reduce their workforce because a job or role is no longer required. It is recognised in UK employment law as a potentially fair reason for dismissal under the Employment Rights Act 1996.

However, redundancy is only lawful if it is genuine and handled through a fair process. Employment tribunals frequently examine whether redundancy has been properly established or whether it has been used as a disguised form of unfair dismissal.

This article explains what redundancy dismissal means, when it is lawful, and how employers must carry out a fair redundancy process in England and Wales.

Legal Definition of Redundancy

Redundancy is defined in section 139 of the Employment Rights Act 1996. A dismissal is a redundancy if it arises because:

• The employer ceases or intends to cease carrying on the business in which the employee works
• The employer ceases or intends to cease carrying on business at the employee's workplace
• The requirements of the business for employees to carry out work of a particular kind have ceased or diminished

In practical terms, redundancy occurs where there is a reduced need for a role rather than a failure of performance or conduct.

When Redundancy Dismissal Is Lawful

A redundancy dismissal is lawful only if both conditions are met:

1. There is a genuine redundancy situation
2. The employer follows a fair procedure

Employment tribunals assess both the reason and the process. Even a genuine redundancy can still be unfair if handled improperly.

1. Genuine Redundancy Situation

A redundancy must reflect a real business need. Common lawful scenarios include:

Business closure

• The entire organisation shuts down
• A specific site or branch closes

Reduced workload

• Fewer contracts or customers
• Decline in demand for certain services

Organisational restructuring

• Departments are merged or reorganised
• Roles are redesigned or eliminated

Technological change

• Automation reduces the need for manual roles
• Systems or processes replace certain job functions

Tribunals will look at whether the job genuinely disappeared or whether the employee was selected unfairly.

2. Fair Redundancy Procedure

Even where redundancy is genuine, employers must follow a fair process. This typically includes:

Meaningful consultation

Employers must consult employees individually and, in larger redundancies, collectively.

Consultation should cover:

• Reasons for redundancy
• Alternative roles or redeployment options
• Selection criteria
• Timing and process

Consultation must take place before final decisions are made.

Fair selection process

Where fewer employees are needed, employers must use fair and objective criteria.

Common selection methods include:

• Skills and qualifications
• Performance records
• Attendance history
• Experience and flexibility

Selection must not be based on discriminatory factors or personal bias.

Consideration of alternative employment

Employers are expected to explore whether employees can be:

• Redeployed to other roles
• Offered suitable alternative positions
• Provided retraining opportunities

Failure to consider alternatives is a common basis for unfair dismissal claims.

Notice and redundancy pay

Employees are generally entitled to:

• Statutory or contractual notice
• Statutory redundancy pay (if eligible)
• Any accrued holiday pay

Length of service usually affects entitlement to redundancy pay.

Legal Tests Applied by Employment Tribunals

Tribunals assess redundancy dismissals using established legal principles, including:

Was there a genuine redundancy?

The tribunal examines whether the role genuinely ceased or reduced.

Was the selection fair?

Tribunals assess whether objective criteria were used and fairly applied.

Was the process reasonable?

This includes consultation, warnings, and consideration of alternatives.

Was the dismissal within the range of reasonable responses?

Employers are given discretion, but decisions must still be reasonable.

Common Unlawful Redundancy Practices

Redundancy dismissals are often found to be unfair where:

• The employer predetermines the outcome without consultation
• Selection criteria are subjective or inconsistently applied
• Only one employee is placed at risk without justification
• The redundancy is used to remove a specific individual
• No attempt is made to find alternative roles
• Consultation is superficial or conducted too late

In such cases, tribunals may find the redundancy is not genuine or the process is unfair.

Redundancy vs Other Types of Dismissal

It is important to distinguish redundancy from other dismissal types:

• Redundancy: Role disappears or need for work reduces
• Capability dismissal: Employee cannot perform job to required standard
• Conduct dismissal: Employee behaviour leads to termination
• SOSR dismissal: Some other substantial reason, such as business reorganisation not amounting to redundancy

Misclassifying dismissal can lead to unfair dismissal findings.

Collective Redundancies

Where an employer proposes to dismiss 20 or more employees within 90 days at one establishment, additional legal obligations apply, including:

• Collective consultation with employee representatives
• Notification to the government (via HR1 form)
• Minimum consultation periods

Failure to comply can lead to protective awards and tribunal claims.

Employee Rights in Redundancy Situations

Employees may be entitled to:

• Statutory redundancy pay (subject to qualifying service)
• Paid notice period
• Time off to look for new employment
• Consultation and fair treatment
• Access to appeal procedures

These rights apply in addition to protection from unfair dismissal.

Time Limits for Redundancy Claims

If an employee believes redundancy dismissal is unfair:

• A claim must usually be submitted within 3 months less 1 day of dismissal
• ACAS Early Conciliation must be completed before filing

Strict time limits apply regardless of the strength of the case.

Remedies for Unfair Redundancy

If a tribunal finds redundancy dismissal unfair, possible remedies include:

Financial compensation

• Basic award (based on age, pay, and length of service)
• Compensatory award for loss of earnings and benefits

Reinstatement or re-engagement

• Return to the original job or a similar role

Tribunals may adjust compensation if the employee contributed to their dismissal or failed to mitigate losses.

Key Takeaways

Redundancy dismissal is lawful under UK employment law only when there is a genuine reduction in the need for work and the employer follows a fair process. This includes consultation, objective selection, and consideration of alternative employment. Employment tribunals carefully examine whether redundancy is genuine or used as a justification for removing employees unfairly. Even valid redundancy situations can result in unfair dismissal findings if procedures are not properly followed.