Redundancy

Redundancy is a form of dismissal from your job. It usually happens when employers need to reduce their workforce.

Redundancy is one of five potentially fair reasons for an employer to dismiss an employee.

Just because you have been made redundant, doesn’t mean your dismissal is fair. To decide whether a redundancy is fair, you have to look at three questions:

1. Is there a genuine redundancy situation?
2. Did your employer follow a fair redundancy process?
3. Did your employer consider appropriate alternative roles before making you redundant?

There is more information on these three key issues below, as well as answers to some frequently asked questions about redundancy. 

If you are under threat or “at risk” of redundancy, please see our webpage on the practical steps you can take.

If you are concerned that your employer is not following a proper redundancy process or is unaware of their legal obligations, you can download and show them our factsheet below.

Is there a genuine redundancy situation?

A genuine redundancy happens for one of three reasons:

• your place of work closes or moves (this can be temporary or permanent)
• the type of work you do will no longer be carried out at your place of work
• fewer employees are needed to do the particular type of work that you do

If your employer is seeking to dismiss you as “redundant” and one of the three reasons above do not apply, this may not be a genuine redundancy and you may have claims for unfair dismissal or discrimination against your employer. For example, if you are returning from maternity leave and your employer says your role is being made redundant, but you find out that they are keeping your maternity cover, then your role is not genuinely being made redundant, and you are likely to have a claim against your employer. See our page on redundancy while pregnant or on maternity leave here.

Did your employer follow a fair redundancy procedure?

If there is a genuine redundancy situation, your employer has a number of legal obligations, including to follow a fair redundancy process. This usually involves identifying an appropriate group of employees for following a redundancy process. This group of employees is often referred to as a “pool”, the employer should notify the employees in the pool that they are “at risk” of redundancy and should then consult with individuals in the pool who are at risk of redundancy, before using objective selection criteria to decide who to select for redundancy. Please note that if your employer is making 20 or more employees redundant, they need to carry out a collective consultation. If they fail to collectively consult this can give rise to a protective award to affected employees.

Identifying a redundancy pool

Your employer should identify an appropriate group or “pool” of employees to consider for redundancy. For example, if you work in an office and there are 5 of you doing one type of work e.g. marketing, but there is only enough work for 2 people, all 5 of you should be placed in the “pool”. 

It will not always be necessary to identify a “pool” if your role is distinct and there are no other roles that are similar to yours. In this situation, your employer may not have to apply any criteria to your selection but still should be able to demonstrate that there is a genuine redundancy situation and follow a fair process.

Consultation

Your employer should then consult with all the individuals in the pool who may be at risk of redundancy. This will usually mean having an individual meeting with each person in the pool to let them know that their roles are at risk of redundancy. In the meeting, your employer should explain who is in the pool, why there is a risk of redundancy, and the process going forward. Your employer must consider what you have to say and any alternatives to redundancy that you can suggest. However, this does not mean that they have to agree with you.

You can ask to bring someone with you to your consultation meeting, like a colleague or a trade union representative. It is good practice for your employer to allow you to bring someone to this meeting. If your employer has concerns about this request, you can reassure them that the person is only there to take notes and offer moral support. You should also check your employer’s policies, in case they cover this. If you have a disability, being accompanied to your consultation meeting may be considered a reasonable adjustment that your employer has to make for you. Your employer is not required to allow you to bring a companion to a consultation meeting but it is good practice for them to do so.

Apply selection criteria

Your employer should then apply objective selection criteria to the individuals in the pool to assess who is selected for redundancy. The criteria should be measurable, not just based on personal opinion. The employer should decide the weight to be attributed to the different factors depending on their importance. Ideally, there should be more than one person scoring the employees who are at risk, but this might not always be possible. Potential selection criteria might include:

• Skill, knowledge and experience
• Performance records, if your employer can show how they are measuring this (for example, through annual appraisals)
• Disciplinary record
• Attendance record – where attendance is used, it is important that the reasons for poor attendance are examined. Your employer must be careful not to discriminate on the grounds of sex or disability e.g. should disregard any time away from work on family related leave.
• Length of service

If the whole business is closing, or the employer is closing down a whole section of a company, then the employer should notify and consult with all those employees in that part of the business as “at risk” of redundancy. In these circumstances, they would not need to use the selection criteria above, because they are making everyone in that part of the business redundant.

Your employer will usually give you a score based on one or more measurements, then choose the people with the lowest scores for redundancy. They should:

• notify you of the selection criteria in advance
• score everyone in the pool using the same method
• show you your scores (but they don’t have to show you everyone else’s scores)
• only choose the people with the lowest score(s) for redundancy

In certain circumstances, there may be a genuine redundancy situation, but the selection criteria used for redundancy could make a dismissal automatically unfair. For example, it is automatically unfair to select an employee for redundancy for any reason connected to pregnancy, disability or another ‘protected characteristic’. If your employer selects you for redundancy because of these reasons, you may be able to make a claim for discrimination and potentially automatic unfair dismissal.

If you are on maternity, adoption, shared parental or paternity leave and your employer is making employees redundant, you have extra protection in a redundancy situation.

Did your employer consider suitable alternative roles before making you redundant?

As part of the redundancy procedure, your employer should consider whether there is another role that you could do, with or without a reasonable period of training. This may be in a group company or another department. Your employer should carry out a sufficiently thorough search for alternative roles, but they do not have to create alternative jobs if there are none available.

Employers should provide you with sufficient information about any vacancies to allow you to take an informed view about whether the alternative job is appropriate for you.

If your employer offers you a suitable alternative role and you reject it, you will lose your right to a redundancy payment. For the role to be suitable alternative employment, your employer has to consider:

• the nature of the job offered (status, work and terms, especially pay, hours and location)
• the employee in question (whether the job is a good match for you considering your individual circumstances, your skills and experience and whether you meet the requirements of the job, and whether the new job is similar in terms of status, content, salary, responsibility, hours and location.)

If you are unsure about accepting the alternative role, you can agree to trial the role for up to 4 weeks without putting your statutory redundancy payment at risk. If you decide during the trial period that the job is not suitable, you still have a right to a statutory redundancy payment.

If your employer does not offer you a suitable alternative role even though there is one available, you could have a claim for unfair dismissal.

If there are no suitable alternative roles, and you are made redundant following a fair procedure, you will still be entitled to a statutory redundancy payment, notice pay (provided you have worked for your employer for long enough) and pay for any accrued but untaken annual leave. See the question on redundancy and notice pay below for more information.

What payment should I receive if I’m made redundant?

If you are made redundant, you may be entitled to:

1. redundancy pay
2. notice pay, or pay in lieu of notice
3. accrued annual leave not yet taken 

Whether or not you receive redundancy pay and notice pay usually depends on how long you have worked for your employer. Your contract might also give you more than the legal minimum – you should always check your contract to see what it says.

Frequently asked questions

This advice applies in England, Wales and Scotland. If you live in another part of the UK, the law may differ. Please call our helpline for more details. If you are in Northern Ireland you can visit the Labour Relations Agency or call their helpline Workplace Information Service on 03300 555 300.

If you have further questions and would like to contact our advice team please use our advice contact form below or call us.

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