11. REDUNDANCY

What is 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 322, 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.

If either of these conditions are met, there will be a “genuine redundancy situation”.

Only employees can claim a redundancy payment. Agency workers cannot claim, unless they are direct employees of the employment agency.

Typical redundancy situations include:

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

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

• the loss of a production line or order.

Whether there is a redundancy situation is a question of fact for a tribunal to decide, after looking at all the surrounding circumstances and applying the statutory test (section 139 ERA 96).

There can still be a reduction in the need for employees to carry out “work of a particular kind” even if, under the employment contract, those employees can be required to perform other tasks for which there is still a need: