11. Redundancy

Not every situation in which employees lose their job through no fault of their own is covered by redundancy law and confusingly, “redundancy” has two different meanings. One is used to establish an individual’s right to a redundancy payment and to be fairly dismissed, and the other, explained on page 335, is used for the purposes of collective consultation.

The right not to be unfairly dismissed for redundancy and to be paid a redundancy payment is governed by section 139 of the Employment Rights Act 1996 (ERA 96). This says that an employee is dismissed for redundancy if the dismissal is wholly or mainly because:

• the employer has ceased, or intends to cease, to carry on the business for which the employee was employed, or to carry on that business in the place where the employee was employed; or

• the requirements of the business for employees to carry out work of a particular kind, or to carry it out in the place where they are employed, have ceased or diminished, or are expected to cease or diminish.

This is the basic test for a redundancy. If either of these conditions is met, there will be what tribunals describe as a “genuine redundancy situation”.

Only employees can claim a redundancy payment.

Typical redundancy situations include:

• closure of the whole or part of a business, or relocation to another site;

• introduction of new technology, leading to the need for fewer employees; and

• loss of a production line or order, leading to a fall in work.

Employment tribunals decide whether or not there is a redundancy situation by looking at all the surrounding facts and evidence and applying the statutory test in section 139 ERA 96.

There can still be a “redundancy situation” even if those targeted for redundancy could have been required under their contracts of employment to perform other tasks that are still needed by the employer. What matters is that there is a reduction in the need for the work they are in fact carrying out. For example: