In UK law, redundancy is a specific form of dismissal and must fall within the statutory definition. A redundancy situation arises where the employer ceases or intends to cease the business, closes the workplace, or has a reduced requirement for employees to carry out work of a particular kind. It is not enough for an employer to label a dismissal as redundancy; the underlying reason must fit this definition. Even where a genuine redundancy situation exists, the employer must still act reasonably in treating redundancy as the reason for dismissal. This includes following a fair procedure, applying objective selection criteria, and avoiding unlawful discrimination.
The redundancy process and consultation
Employees have a right to be consulted before any final decision is made, but the scope of that obligation depends on the circumstances. In all cases, there should be meaningful individual consultation, which involves explaining the business rationale, identifying the selection pool, applying and discussing selection criteria, and considering alternatives to redundancy such as redeployment. There is no general statutory right to be accompanied at redundancy consultation meetings, although many employers permit it as a matter of policy.
Where an employer proposes 20 or more redundancies at one establishment within a 90-day period, collective consultation obligations arise under the Trade Union and Labour Relations (Consolidation) Act 1992. This requires consultation with appropriate employee representatives for a minimum period of 30 days (or 45 days where 100 or more redundancies are proposed) before the first dismissal takes effect. Failure to comply can result in a protective award of up to 90 days’ gross pay per affected employee.
A fair process also requires proper identification of the selection pool and the use of objective, consistently applied criteria. Employers must consider suitable alternative employment within the organisation and, where offered, employees are entitled to a statutory four-week trial period to assess suitability.
Redundancy pay, notice, and other entitlements
Employees with at least two years’ continuous service are entitled to statutory redundancy pay. This is calculated based on age, length of service (capped at 20 years), and a week’s pay (subject to a statutory cap, which is updated annually). Employers may offer enhanced redundancy terms, but these are contractual rather than statutory.
Employees are also entitled to notice of dismissal. This may be contractual or, if greater, the statutory minimum (one week per year of service up to a maximum of 12 weeks). Employers may make a payment in lieu of notice if the contract permits. In addition, employees are entitled to payment for accrued but untaken holiday.
Employees with at least two years’ service are entitled to a reasonable amount of paid time off during their notice period to look for alternative work or arrange training.
Challenging redundancy
A redundancy dismissal may be unfair if the employer has not established a genuine redundancy situation or has failed to follow a fair procedure. This includes failures in consultation, inappropriate selection pools, the use of subjective or discriminatory criteria, or a failure to consider suitable alternative roles. Employees generally require two years’ service to bring a claim for ordinary unfair dismissal, although this qualifying period does not apply where the dismissal is discriminatory or automatically unfair.
Certain employees have enhanced protections. For example, employees on maternity leave have priority for suitable alternative vacancies. Redundancy processes must also comply with equality legislation, and any discriminatory treatment can be challenged regardless of length of service.
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