Definition of redundancy in the ERA:
Redundancy is a form of dismissal from your employment because your employer needs to reduce the workforce. Reasons for redundancy include:
Redundancy is one of the prescribed fair reasons for a dismissal. A properly carried out redundancy should be a fair dismissal.
If an employer is making more than twenty employees redundant in one establishment within a 90 day period, this is known as a collective redundancy.
If an employer is considering collective redundancies, there is a duty to consult with the representatives of the employees who may be affected. The representatives would be the employees’ trade union official. If there is no trade union official, the employer should arrange for the employees to elect their own representatives.
If an employer fails to consult the representatives then a claim can be made to an Employment Tribunal for a protective award. This is a monetary award of up to 90 days pay.
Collective redundancies generally occur where:
Even if an employer is making fewer than 20 employees redundant in one establishment certain procedures must still be followed:
If an employer uses redundancy to cover up the real reason for ending a person’s employment, or if they do not carry out the redundancy procedure properly, it may amount to an unfair dismissal. The rights to redundancy payments and collective consultation are claimed separately from unfair dismissal.
Redundancies fall to be judged under the law of unfair dismissal (ERA, s.94 – the right not to be unfairly dismissed)
As with other dismissals the two-stage test in the ERA: a fair reason, s98(1)-(3), and reasonableness, s98(4), both apply to dismissal because of the need for redundancies.
Redundancy is one of the possible fair reasons for a dismissal. Thus, a redundancy is likely to be a fair dismissal, when carried out correctly.
It is not the role of the employment tribunal to decide whether redundancy was the correct managerial response to a situation. Its role is simply to decide whether or not the dismissal was a redundancy. Thus, as long as redundancy is the genuine reason for the dismissal, the employment tribunal cannot challenge it.
Thus, redundancy is a managerial prerogative - it is within management’s discretion as long as it is genuine (Moon v Homeworthy).
Unless the selection is automatically unfair then the test of reasonableness applies.
Redundancy is automatically unfair dismissal if selection is for any of the following reasons:
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