Justification and Avoidance of Redundancy

Justifying and Avoiding Redundancy


Financial difficulties or changing business circumstances may mean that you have to make employees redundant. In this event, all employees have the right to be consulted about any redundancy proposal and to be given a certain period of notice to terminate employment. Employees with more than two years service also have rights to redundancy compensation. It is also not uncommon in these circumstances for an employer to be more generous and improve on minimum statutory entitlements, either by means of a term in the employment contract or by making an extra payment on an ex-gratia basis. 

When an employee may be redundant: An employee is considered to be redundant in law if you as the employer have ceased, or intend to cease, to carry on the relevant business at or reasonably near the place where the employee is employed; or the requirement for work of that kind has ceased or diminished or is expected to do so.

Considering Alternatives: Faced with a possible redundancy situation, and where only part of your operation is affected, you should consider if there are practicable alternatives. These alternatives may include over time reductions, work sharing, short time working, lay-offs etc. If your business is sufficiently large, you should consider redeployment.

Whether measures to avoid or reduce redundancies can be considered practicable will generally depend on the individual circumstances of your business - generally the smaller it is, the less you would normally be expected to consider such options.

Redundancy is potentially a "fair" reason for dismissal but non-compliance with fair redundancy procedures could lay you open to a successful action for unfair dismissal. If possible try to achieve a Settlement Agreement (formerly known as a Compromise Agreement).

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