When Does a Workplace Closure Amount to Redundancy?

Workplace closure is one of the clearest situations in which redundancy arises under UK employment law. However, not every closure automatically results in redundancy pay or a legally valid redundancy dismissal unless specific statutory conditions are met.

In England and Wales, redundancy is defined by section 139 of the Employment Rights Act 1996. A workplace closure may amount to redundancy where the employer permanently or temporarily ceases operations at a site, resulting in the termination of employees' contracts because their work is no longer required at that location.

Understanding when a closure legally qualifies as redundancy is essential for determining entitlement to redundancy pay, notice rights, and potential claims for unfair dismissal.

The legal definition of redundancy

Under section 139 of the Employment Rights Act 1996, redundancy occurs where a dismissal is wholly or mainly due to:

• the employer ceasing or intending to cease business operations, or
• the employer ceasing or intending to cease operations at a particular workplace, or
• a reduced requirement for employees to carry out work of a particular kind

A workplace closure generally falls under the second category: closure of the place of employment.

The legal focus is not on the employee personally, but on whether the employer's need for employees at that location has ceased.

What counts as a workplace closure?

A workplace closure occurs when an employer stops operating at a specific site where employees are based. This may include:

• Permanent closure of an office, shop, factory, or branch
• Closure of a single site while the business continues elsewhere
• Relocation of operations to a different geographical location
• Closure of a department operating from a specific premises

If employees cannot reasonably continue working at the same workplace and no suitable alternative location is offered, redundancy is usually engaged.

Legal commentary and guidance consistently confirm that closure of a workplace is a standalone redundancy situation, even if the wider business continues to trade elsewhere.

When workplace closure is a genuine redundancy

A closure will normally amount to redundancy where:

1. The workplace ceases to operate

The employer shuts the site completely, and no employees continue working there in the same capacity.

2. The employee's role disappears at that location

Even if similar roles exist elsewhere, redundancy applies if the requirement for work at that workplace has ended.

3. Employment contracts are terminated due to closure

If employees are dismissed because their workplace no longer exists, this typically satisfies the statutory test for redundancy under the Employment Rights Act 1996.

4. No suitable alternative employment is offered

Where no reasonable alternative roles are available, dismissal is more likely to be treated as redundancy.

Situations where a closure may NOT amount to redundancy

Not every apparent closure leads to redundancy. Key exceptions include:

1. Transfer of the business (TUPE situations)

If the business or part of it is transferred to another employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE):

• employees may transfer to the new employer
• continuity of employment is preserved
• redundancy may not occur if roles continue unchanged

A genuine TUPE transfer prevents redundancy arising purely from the closure.

2. Relocation with suitable alternative employment

If the employer closes one site but offers a reasonable alternative workplace, redundancy may not apply if:

• the alternative role is suitable
• the employee unreasonably refuses the offer

Reasonableness depends on pay, location, duties, and working conditions.

3. Temporary closure without dismissal

If a workplace closes temporarily but employment contracts remain in force, redundancy may not arise immediately.

4. Sham or mislabelled closure

Tribunals will examine whether the closure is genuine. If the “closure” is used to dismiss staff for performance or other reasons, it may not meet the statutory definition of redundancy.

Consultation obligations during workplace closure

Employers must follow proper consultation procedures when closing a workplace. These obligations include:

• meaningful individual consultation with affected employees
• collective consultation where 20 or more employees are affected within 90 days
• consideration of alternative employment within the organisation
• fair and objective selection processes if only part of a site closes

Failure to consult properly does not automatically remove redundancy status but may lead to claims for unfair dismissal or protective awards.

Employee rights when workplace closure is redundancy

Where a workplace closure is recognised as redundancy, employees may be entitled to:

Statutory redundancy pay

Available if the employee has at least two years' continuous service.

Notice pay

Statutory or contractual notice must still be given or paid in lieu.

Accrued holiday pay

Any untaken annual leave must be paid on termination.

Access to employment tribunal claims

Where procedure is unfair or redundancy is disputed, claims may include:

• unfair dismissal
• failure to pay redundancy pay
• breach of consultation obligations

Common legal disputes in workplace closure cases

Workplace closure redundancy cases often involve disputes over:

Whether the closure is genuine

Tribunals assess whether the employer has actually ceased operations at the location.

Whether alternative roles were suitable

Disputes often arise over relocation offers or downgraded roles.

Whether selection was fair

If only some employees are dismissed, selection criteria must be objective and non-discriminatory.

Whether redundancy was the real reason for dismissal

Closures may sometimes be used to disguise dismissals for unrelated reasons, such as restructuring or performance issues.

Evidence that supports a redundancy claim

Employees may rely on:

• employer announcements or closure notices
• redundancy consultation documents
• correspondence about site shutdowns
• organisational charts showing role elimination
• offers (or lack of offers) of alternative employment

Time limits for bringing claims

Employment tribunal claims must generally be brought within:

• three months less one day from the date of dismissal

Early conciliation through ACAS is required before lodging a claim. Time limits are strict and can affect entitlement to bring proceedings.

Practical steps following workplace closure

Where a closure is announced, employees commonly:

• request written confirmation of redundancy basis
• seek details of alternative employment options
• review redundancy pay calculations
• raise internal grievances if procedures appear unfair
• engage ACAS early conciliation where disputes arise

Key Takeaways

A workplace closure will usually amount to redundancy where the employer permanently or temporarily ceases operations at a specific site and employees are dismissed because their roles at that location are no longer required. The legal test focuses on the disappearance of work at the workplace, not the employee's conduct or performance.

However, redundancy may not arise where there is a TUPE transfer, suitable alternative employment, or where the closure is not genuine. Employees affected by workplace closure may be entitled to statutory redundancy pay, notice pay, and other employment rights, subject to eligibility.