Redundancy – an overview

Redundancy occurs where an employees’ dismissal is :

  • wholly or mainly attributable to the fact that the employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed, or in the place where the employee was employed; or
  • due to the fact that the requirements of the employer for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed have ceased or diminished or are expected to cease or diminish.

The crucial question therefore is whether the requirements for employees to do that type of work has ceased or diminished. So, the amount of work needed to be done might remain the same (or may even increase) but if it can be done with less people (perhaps due to the increase of the use of technology) then there is a redundancy situation.

Examples of genuine redundancies include:

  • the work the person does is no longer needed due to a downturn of business, a new line of work which requires a different skill set, or new processes or technology being introduced;
  • the employee’s job no longer exists because the work is being done by other employees;
  • the workplace has closed because the employer has ceased trading or has become insolvent; or
  • the employer’s business, or the work the person is doing, moves to another location.

Employers may try to claim that the reason for the termination of an employee’s role is redundancy but this needs to be clear on the facts/evidence.  Redundancy should not be used as an excuse to terminate the employment of an employee for other reasons.  Any redundancies based on an employee’s pregnancy, race, religion or other discriminatory factor will be automatically unfair and may also give rise to a claim of discrimination. 

Even where such genuine redundancy situations exist, employers must still follow the correct redundancy procedure or they risk the redundancy being deemed to be an unfair dismissal.

Employers will need to follow a specific redundancy procedure which shows the employer acted fairly.  This means employers will need to:

  • identify the relevant “pool” of employees which are likely to be affected by the redundancy;
  • decide upon a fair selection process and be able to clearly show how this will work;
  • enter into a period of consultation with employees where the above information is discussed and finalised;
  • undertake the selection process and hold individual consultation meetings with each employee to discuss whether or not they have been provisionally selected for redundancy. 
  • The consultation meetings for those that have been provisionally selected for redundancy should also include discussions about whether it would be possible to avoid redundancies somehow (potentially by redeploying them into suitable alternative roles internally or considering any other suggestions put forward by employees). 

Consultation periods will vary in time and there is no set time period for how long consultations should take when there are only one or two employees being made redundant.  However, the minimum time period for larger redundancies is set as follows:

  • For 20-99 proposed redundancies – 30 days minimum consultation.
  • For 100 or more proposed redundancies -45 days minimum consultation.

There is no statutory right to appeal your redundancy. However, it is good practice in accordance with the ACAS guidelines and if there is a contractual dismissal policy or a procedure set out in an employee handbook for instance not following this could mean the termination would be classed as unreasonable resulting in a finding of unfair dismissal, or in some cases could amount to a breach of contract claim.

The above is a general guideline and it may be appropriate in some circumstances to consider offering voluntary redundancies first or consider “bumping”.  Bumping occurs when an employee whose role is not at risk of redundancy is nevertheless dismissed and the vacancy left is filled by an employee whose original role was redundant. The dismissal in this scenario is still considered to be by reason of redundancy.  Employers may wish to consider a bumping redundancy as a way to retain more skilled and experienced employees within the business.  Tribunals have held that whether or not there is an obligation to consider bumping in a particular case depends on number of factors including how different the two roles are, the qualifications of the employee at risk of redundancy, and whether or not the other employee would take voluntary redundancy.

In practice, it is important to invite employees to consultation meetings in the correct way (i.e. in writing and allowing them to bring with them a trade union rep. or colleague with them should they wish).  In larger consultations, employee representatives will need to be appointed.

For more specific advice on anything to do with redundancies please contact our Head of Employment, Ilinca Mardarescu.