Redundancy vs Dismissal

Understanding the difference between redundancy and other forms of dismissal protects your rights and entitlements.

The Basic Difference

Redundancy

The job has gone:

• Business closing
• Workplace closing
• Fewer employees needed
• Work has diminished

Other Dismissal

The employee has gone:

• Conduct issues
• Performance problems
• Incapacity
• Some other reason

Key Question

Is the role disappearing, or is the employee being removed from a continuing role?

Legal Definition of Redundancy

Statutory Definition

Under s.139 ERA 1996, redundancy occurs when dismissal is wholly or mainly because:

1. Business closure - employer has ceased/intends to cease business
2. Workplace closure - workplace has closed/will close
3. Reduced need - fewer employees needed to do work of a particular kind

What "Particular Kind of Work" Means

Looking at:

• The actual work being done
• The terms of the contract
• The function of the role

Types of Dismissal

Five Fair Reasons

Reason	What It Covers
Conduct	Behaviour, misconduct
Capability	Performance, health
Redundancy	Role disappears
Statutory restriction	Illegality
Some other substantial reason	Catch-all

Unfair Dismissal

Dismissal that doesn't fall into fair categories, or where:

• Process wasn't followed
• Decision was unreasonable

When It's Redundancy

Clear Redundancy Situations

Situation	Why It's Redundancy
Factory closes	Workplace closure
Company liquidates	Business closure
Team reduced from 10 to 5	Reduced need
Technology replaces work	Work has diminished
Contract lost, no other work	Reduced need

Requirements

Genuine redundancy requires:

• Genuine business reason
• Fair selection (if applicable)
• Consultation
• Consideration of alternatives
• Redundancy pay (if entitled)

When It's NOT Redundancy

Disguised Dismissals

Situation	Actually Is
Replaced by cheaper employee	Unfair dismissal
Role continues under new name	Not redundancy
Work redistributed but still needed	May not be redundancy
"Restructure" but same jobs	Potentially not redundancy

Red Flags

Suspect it's not genuine redundancy if:

• Your role is immediately filled
• Someone else is doing your job
• The "redundancy" targeted you specifically
• No real business reason given
• Process was rushed

Financial Differences

Redundancy Entitlements

Entitlement	Details
Statutory redundancy pay	Based on age and service (2+ years)
Notice pay	Contractual or statutory
Enhanced redundancy	If contract provides
Time off to look for work	Statutory right

Other Dismissal Entitlements

Entitlement	Details
Notice pay	Unless gross misconduct
Accrued holiday	Always
No redundancy pay	Unless unfair dismissal claim succeeds

Challenging Mislabelling

If Called Redundancy But Isn't

If you believe redundancy isn't genuine:

• Challenge at consultation
• Appeal the decision
• Claim unfair dismissal
• Tribunal will examine true reason

What Tribunal Considers

• Was there genuine diminution of work?
• Was selection fair?
• Was consultation adequate?
• Was the true reason redundancy?

If Called Dismissal But Is Redundancy

If you believe you should have received redundancy pay:

• You may be owed statutory redundancy pay
• Claim for redundancy pay
• Challenge the categorisation

Selection for Redundancy

Redundancy Selection

When redundancy affects some but not all:

• Fair selection criteria needed
• Objective, measurable factors
• No discrimination
• Proper scoring process

Selection Criteria Examples

Fair	Unfair
Skills and qualifications	Length of service alone
Performance records	Personal dislike
Attendance (with care)	Protected characteristics
Disciplinary record	Maternity/pregnancy

No Selection Needed For

• Unique role disappearing
• Whole department closing
• Business closing completely

Consultation Requirements

Individual Consultation

For redundancy:

• Inform employee of redundancy situation
• Explain selection criteria
• Discuss alternatives
• Consider employee's suggestions
• Offer suitable alternative employment

Collective Consultation

If 20+ redundancies in 90 days:

• Notify Secretary of State
• Consult with employee representatives
• Minimum consultation periods
• Protective awards if breached

Dismissal Consultation

For conduct/capability:

• Follow disciplinary procedure
• Right to be accompanied
• Right to appeal

Practical Scenarios

Scenario 1: Restructure

Company restructures:

• Some roles genuinely disappear = Redundancy
• Same work under new title = May not be redundancy
• Fewer people doing same total work = Probably redundancy

Scenario 2: Performance Then "Redundancy"

Employee has performance issues, then made "redundant":

• If role genuinely disappears = Redundancy
• If role continues = Suspicious
• Timing matters
• May be unfair dismissal in disguise

Scenario 3: One Person Selected

Only one person selected for "redundancy":

• If unique role, may be genuine
• If others do same work, need fair selection
• Single selection can be challenged
• Must show genuine business reason

Employee Rights

In Redundancy

• Statutory redundancy pay (2+ years)
• Consultation period
• Fair selection
• Alternative employment consideration
• Notice period
• Time off to look for work

In Other Dismissal

• Fair process
• Right to be accompanied
• Right to respond
• Right to appeal
• Notice (unless gross misconduct)

Tips for Employees

If Told You're Redundant

1. Ask for the business reason
2. Request selection criteria
3. Ask about alternatives
4. Note if role continues
5. Check redundancy pay calculation
6. Know your time limits

If You Suspect Mislabelling

1. Document everything
2. Challenge in consultation
3. Appeal the decision
4. Seek advice
5. Consider tribunal claim
6. Note time limits (3 months less 1 day)