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What is redundancy?

Redundancy is one of the ways in which an employer may lawfully terminate an employee’s employment. The employer must have a genuine need to reduce his or her workforce, which might be a result of business cost-cutting, moving premises or closing a department. In general, the employee’s job should no longer exist. It is certainly not a case of genuine redundancy if the employer immediately hires a direct replacement.

It is essential that the proper procedures for redundancy are set out and adhered to as if not, the employees who are dismissed may be able to claim that they have been unfairly dismissed and could be entitled to much higher levels of compensation.

In the situation where an employer wants to dismiss twenty or more employees from the same establishment in the space of ninety days, he or she must consult the representatives of the employees in question. If the employees are members of a trade union, this will be the representative of their trade union. Not consulting with the appropriate representative could make the employer liable to pay each redundant employee a protective award of up to ninety days’ pay.

What is unfair dismissal?

If an employee that is being dismissed has worked continuously for the employer for over a year (or two years if the employment began on or after 6th April 2012), then they could potentially bring a claim in the Employment Tribunal for Unfair Dismissal. In some circumstances, a dismissal is automatically unfair, if it is the result of discrimination relating to health and safety, race, sex, disability, religion or belief, sexual orientation, pregnancy, trade-union membership, whistle-blowing, TUPE or age.

In other circumstances, an unfair dismissal claim may result from an employee being wrongly disciplined for misconduct, capability or performance issues. A finding of unfair dismissal can have knock on effects, for example, an employee’s bonus payment may be dependent upon him or her being a “good leaver” as defined in the remuneration agreement.

In most cases, employers offer a departing employee a compensation payment rather than face the prospect of going to the Employment Tribunal and this will be recorded under the terms of a Settlement agreement.

How we can help

We can advise you on whether or not the procedure for redundancy is being correctly followed in order to avoid you having to pay unnecessary levels of compensation to your former employees. In addition, we can advise you on drawing up Settlement Agreements in which employers set down the terms of termination of employment at the start of the employment.


If you are considering making an employee, or some of your employees, redundant, or need advice about settlement agreements, please contact us for a free, initial discussion.