The Law of Redundancy

What is redundancy?

Definition of redundancy in the ERA:

Business ceases (or ceases where employee employed) or employer requires fewer employees for “work of a particular kind”.

Redundancy is a form of dismissal from your employment because your employer needs to reduce the workforce. Reasons for redundancy include:

  • new technology or a new system has made your job unnecessary
  • the job you were hired for no longer exists
  • the need to cut costs means staff numbers must be reduced
  • the business is closing down or moving

Redundancy is one of the prescribed fair reasons for a dismissal. A properly carried out redundancy should be a fair dismissal.

Collective redundancies

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:

  • there is to be closures and the business or building in which you work in is to close and your employer will need fewer employees.
  • the business is going through a reorganisation or reallocation of work which requires the taking on of new recruits for the new work or the redeployment of some of the employees who will now work under new contracts with different terms and conditions while others will be made redundant.

Individual redundancies

Even if an employer is making fewer than 20 employees redundant in one establishment certain procedures must still be followed:

  • the selection procedure must be fair
  • you should be warned and consulted about the redundancy
  • your employer should take reasonable steps to redeploy affected employees
  • you should get any redundancy pay you are due, and be given the correct amount of notice
  • your employer should consider any alternatives to redundancy

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For more information on:

  • Redundancy and unfair dismissal
  • Role of the employment tribunal
  • Selection for redundancy
  • Automatic unfairness
  • No qualifying employment needed in the above automatically unfair cases