Defining redundancy

Here we look at how the law defines redundancy and when there may be grounds for a redundancy to be described as an unfair dismissal.

What is redundancy?

Redundancy occurs in three situations when an employee is dismissed due to:

  • the actual or intended closure of the whole business
  • the actual or intended closure of the business at a particular workplace
  • a reduction in the need for employees to carry out work of a particular kind.

Closure of the business

This may be permanent or temporary, for example, closure of a restaurant for refurbishment. The decision cannot be challenged unless it is not genuine.

Closure of the workplace

This will occur, for example, where a large employer closes down one outlet of a chain or one branch of a group of companies. Again the decision cannot be challenged unless it is not genuine.

Reduction of the workforce

This can arise where the employer reduces the workforce, as a whole or in specific areas, due to a downturn in business or to another need for rationalisation, such as technological advancement.

The test is not whether the employer needs fewer employees, but whether it needs fewer employees to do work of a particular kind. This is attributable to the state of affairs of the business. The key point to remember is that in the first place it will be the job that is effectively redundant, and not the employee. Once it has been decided that a job is redundant, the question is what should happen to the employee(s) that hold(s) that job.

Difficulties arise when the employer reorganises the way work is done so that the employee is doing the same job but in a different way, such as the introduction of a new shift pattern. Although the work remains the same, an employee dismissed in the light of such reorganisation is not necessarily redundant and the employer will have to justify the dismissal as being for some other substantial reason.

When is redundancy an unfair dismissal?

Redundancy is a potentially fair reason for dismissal. However the dismissal itself (and the procedure leading up to it) must still be fair and reasonable in all the circumstances. This means an employer must show that:

  • the employees concerned have been given as much advance warning as is practicable
  • the employees concerned have been consulted individually
  • selection for redundancy has been made against a set of fair and (wherever possible) objective criteria
  • alternative employment has been offered if possible
  • volunteers have been released wherever possible.

A dismissal for redundancy may be unfair because:

  • there was no genuine redundancy situation
  • the employer failed to consult (ie meaningfully, properly and genuinely)
  • the employee was unfairly selected
  • the employer failed to look and/or offer alternative employment.

A dismissal for redundancy will be automatically unfair where the employee is selected on one of the following grounds:

  • pregnancy or childbirth
  • raising health and safety issues
  • shop workers and betting workers who refuse Sunday work
  • being the trustee of an occupational pension scheme
  • union membership or activities
  • asserting a statutory right
  • acting as an employee representative under TUPE or collective redundancy legislation
  • taking time off to care for dependants
  • asserting flexible working rights
  • asserting working time rights
  • acting as a companion in a disciplinary/grievance hearing
  • making a public interest disclosure (whistleblowing)
  • asserting national minimum wage rights.

If an employer cannot show that the reason or principal reason for dismissal was wholly, or mainly, attributable to a redundancy situation, it will be unfair.

Further information

The law relating to redundancy is generally found in the Employment Rights Act 1996 http://www.hmso.gov.uk/acts/acts1996/1996018.htm as amended and the Trade Union and Labour Relations (Consolidation) Act 1992 http://www.hmso.gov.uk/acts/acts1992/Ukpga_19920052_en_1.htm

Marc Jones is a partner at Turbervilles

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