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Redundancy for employers

In Employment Law, a redundancy arises when an employer has to reduce its workforce. It is a form of dismissal from a job, which normally arises because:

  • new technology or a new system makes a job unnecessary;
  • the job an employee was hired for no longer exists, or the need for the job has been substantially reduced;
  • the need to cut costs means staff numbers must be reduced; or
  • the business, or part of the business, is closing down or moving.

In the UK, there is a legal framework governing redundancies that seeks to protect the rights of both employers and employees. Below we provide a brief overview of the redundancy process. If you’re an employer considering making redundancies, or an employee facing the possibility of being made redundant, please contact us to see how we can help.

The Redundancy Process

If redundancies are to be made, the employer must treat employees who may be made redundant fairly, and there are certain steps they are expected to follow to achieve this. These include:

  • giving employees as much notice of a possible redundancy situation as possible;
  • making a fair selection of employees who are liable to be made redundant;
  • considering all possible alternatives to redundancy;
  • fully and properly consulting employees about the redundancy at all stages of the process; and
  • giving employees who are selected for redundancy the correct amount of notice and any redundancy pay they are entitled to.

An employer must follow the statutory minimum dismissal procedure if there are less than 20 employees being made redundant, but if there are 20 or more then the collective consultation procedure also applies.

If an employer does not carry out the redundancy procedure properly, or uses redundancy to cover up the real reason for ending an employment relationship, it may amount to unfair dismissal.

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