Being told your job is at risk is one of the most unsettling things that can happen at work. But not every redundancy that an employer announces is handled correctly — and not every dismissal labelled as redundancy is genuinely one. Understanding the legal framework that governs redundancy is important whether you are currently going through a process, questioning the outcome, or weighing up whether to accept a settlement agreement you have been offered.
This guide explains what the law requires of employers when making redundancies, what makes a selection unfair, and when a redundancy may give rise to a discrimination or other claim. It is written for employees — plainly, and without jargon.
An important note about qualfying criteria for unfair dismissal:
- Only employees have a statutory right not to be unfairly dismissed.
- Employees must have a minimum of 2 years service to bring a claim of ordinary unfair dismissal, which is due to reduce to 5 months from 1 January 2027.
- Some reasons are deemed automatically unfair and are day 1 rights where no minimum service is required. for example dismissal because of whistleblowing.
- A dismissal by reason of redundancy might be discriminatory under the Equality Act, in which case there is no minimum service requirement for
What Is a Genuine Redundancy?
The starting point is the statutory definition. Under the Employment Rights Act 1996, a dismissal is by reason of redundancy only if it falls into one of three categories:
- Business closure. The employer has ceased, or intends to cease, carrying on the business for which the employee was employed — whether permanently or temporarily.
- Workplace closure. The employer has ceased, or intends to cease, carrying on that business at the location where the employee was employed.
- Diminished requirement for work. The requirements of the business for employees to carry out work of a particular kind — at that location or at all — have ceased or diminished, or are expected to do so.
It is the third category that most disputes turn on. The question is not whether the employee’s role exists in name — it is whether the employer’s genuine need for work of that kind has reduced. If the answer is yes, a redundancy situation exists. If the role is simply being filled by someone else doing the same work, it is not redundancy. However, a reoganisation where work is allocated amongst other existing employees may still qualify as a redundancy in law.
This distinction matters enormously in practice. A dismissal that is described as redundancy but does not meet the statutory definition is likely to be an unfair dismissal — and the fact that an employer has used the word “redundancy” does not make it one. Equally, where a settlement agreement is offered and you are asked to waive your unfair dismissal rights, understanding whether the redundancy was genuine is fundamental to assessing the value of what you are being asked to give up. Our guide to settlement agreements in a redundancy covers the specific clauses to watch in that situation.
The Requirement for a Fair Process
Even where a redundancy is genuine — the employer must still follow a fair procedure. A genuine redundancy carried out through an unfair process remains an unfair dismissal. The Employment Rights Act 1996 requires that the employer acts reasonably in all the circumstances, and tribunals assess this by reference to a range of procedural obligations.
Meaningful Consultation
Consultation is not a formality. The employer must engage with affected employees genuinely, at a stage when the outcome is still capable of being influenced, and with an open mind. Informing an employee that a decision has already been made is not consultation — it is notification, and tribunals treat the two very differently.
For collective redundancies — where 20 or more employees at one establishment are proposed to be dismissed within a 90-day period — the employer has additional statutory obligations. It must notify the Redundancy Payments Service in advance using form HR1, and must consult with elected employee representatives for a minimum period: 30 days where between 20 and 99 redundancies are proposed, and 45 days where 100 or more are proposed. Failure to comply can result in a substantial protective award.
For smaller redundancies, the ACAS guidance on redundancy sets out good practice expectations for individual consultation — including the right to be accompanied at meetings, the right to receive information about the basis for selection, and the right to put forward alternatives.
A Fair Pool for Selection
Before anyone can be selected for redundancy, the employer must identify the correct pool of employees from which the selection will be made. This is not simply a matter of choosing whoever does the job being made redundant — it requires the employer to consider all employees who perform work of the kind that is diminishing, even if they have different job titles or sit in different teams. Employees that person the same, sufficiently similar or interchangeable roles may need to be included in the at risk pool.
Artificially and unreasonably narrowing the pool — for example, by ringfencing one team while others perform similar functions, or by defining the pool in a way that makes a particular outcome inevitable, for example using a pool of one role — is a common and frequently litigated procedural failing. If you were placed in a pool that excluded colleagues who did comparable work, that is worth examining carefully.
Where an employer elects to use a pool of one, and there is no consultation about that before the decision is made, that of itself points to a failure to meaningfully consult.
But generally speaking, provided an employer has genuinely addressed its mind who should be in the at risk of redundancy pool, it should arrive a reasonable pool. The test is whether the employer’s decision was within the range of reasonable approaches open to a reasonable employer. That gives an employer lattitude, with only perverse or irrational decisions likely to lead to a finding of unfair dismissal.
Objective Selection Criteria
The criteria used to select employees within the pool must be reaonably objective, measurable, and applied consistently. Common examples include skills assessments, performance records, attendance history, and qualifications relevant to the role. Criteria that are vague, undefined, or applied differently to different employees are vulnerable to challenges of unfairness.
Subjective criteria — such as “attitude”, “team fit”, or “potential” scored without any objective basis — are a frequent source of disputes, particularly where the employee being scored has a protected characteristic or has recently raised a grievance. If you were not given sight of your scores, or if the scoring was not sufficiently clear, that is procedurally significant.
Consideration of Suitable Alternative Employment
Before dismissing an employee by reason of redundancy, the employer must take reasonable steps to identify and offer any suitable alternative roles within the organisation — and within any associated group companies. This obligation applies throughout the redundancy process, including any notice period.
Whether a role is “suitable” depends on the facts — it need not be identical to the employee’s existing role, but it must be reasonably comparable in terms of status, remuneration, and skill level. If a suitable alternative was available and was not offered to you, the redundancy may be unfair. If you were offered an alternative and unreasonably refused it, the employer may be entitled to withhold your statutory redundancy pay — though a refusal is not unreasonable if the role was genuinely unsuitable. You can check your statutory entitlement to redundancy pay using our redundancy calculator.
A Right of Appeal
While arguably a lack of an appeal in a redundancy does not make an otherwise fair redundancy unfair, most employers give employees a right of appeal. The appeal should usually be heard by someone not previously involved in the decision, and it should be a genuine reconsideration rather than a rubber-stamping exercise. An appeal that is procedurally hollow — will weigh against the employer in any tribunal assessment of fairness.
Automatic Unfair Redundancy
In some circumstances, a redundancy selection is automatically unfair — regardless of whether the process was otherwise correctly followed, and regardless of the employee’s length of service. These are situations where the law treats the reason for selection as so fundamentally unacceptable that no amount of procedural correctness can save it.
Under section 105 of the Employment Rights Act 1996, a redundancy dismissal is automatically unfair where the reason — or principal reason — for selecting that employee was one of the following:
- Pregnancy, maternity leave, or any other form of family leave — including paternity, adoption, shared parental, or parental bereavement leave.
- Making a protected disclosure — commonly known as whistleblowing — under the Public Interest Disclosure Act 1998.
- Asserting a statutory right, such as the right to a written statement of terms, the right to itemised pay statements, or the right to be accompanied at a disciplinary or grievance hearing.
- Trade union membership, activities, or the use of trade union services.
- Taking part in protected industrial action, in defined circumstances.
- Requesting flexible working.
- Being a part-time worker or fixed-term employee and having exercised rights under the relevant regulations.
- Health and safety activities, including raising concerns about a workplace health and safety issue.
Where selection falls into any of these categories, the dismissal is automatically unfair from day one of employment — there is no qualifying period of two years’ service required. If you believe the real reason you were selected relates to any of these grounds, the financial value of a potential claim may be considerably higher than a standard unfair dismissal award, and the settlement payment being offered should reflect that.
Discrimination in a Redundancy
A redundancy process can give rise to a discrimination claim under the Equality Act 2010 where the selection criteria, or the way they are applied, place employees with a protected characteristic at a particular disadvantage — and where the employer cannot justify that disadvantage as a proportionate means of achieving a legitimate aim.
The protected characteristics under the Equality Act are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. Discrimination in a redundancy context most commonly arises in relation to age, disability, and sex — but any characteristic can be engaged depending on the facts.
Direct Discrimination
Direct discrimination occurs where an employee is selected for redundancy because of a protected characteristic. An obvious example would be selecting an employee because they are pregnant or because they are older. Direct discrimination cannot be justified — if it is established, the claim succeeds.
Indirect Discrimination
Indirect discrimination is more common and more subtle. It arises where a selection criterion that appears neutral on its face in fact puts employees with a particular characteristic at a disproportionate disadvantage. A length-of-service criterion, for example, may indirectly discriminate against women if they are statistically less likely to have long service because of career breaks taken for childcare. A criterion based on full-time hours may disadvantage part-time workers, who may be disproportionately female.
Indirect discrimination can potentially be justified — but only if the employer can show that the criterion was a proportionate means of achieving a legitimate business aim. The burden of demonstrating justification rests on the employer, and tribunals scrutinise it carefully.
Disability Discrimination
Where an employee has a disability within the meaning of the Equality Act — a physical or mental impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities — there are additional protections. An employer is required to make reasonable adjustments to remove or reduce disadvantage caused by the employer’s criteria or practices. In a redundancy context, this may mean adjusting the scoring criteria, discounting disability-related absence from attendance records, or giving priority consideration for suitable alternative roles.
Selecting an employee for redundancy because of something arising in consequence of their disability — for example, a higher level of sickness absence — is also unlawful unless the employer can demonstrate objective justification.
Why Discrimination Claims Matter in a Settlement Context
Compensation for discrimination is uncapped. There is no statutory ceiling on what a tribunal can award where discrimination is established. This is one of the most important reasons to understand whether a discrimination claim exists before accepting a settlement. If the redundancy process engaged your protected characteristics in any of the ways described above, the value of your potential claim — and therefore the appropriate level of settlement — may be considerably higher than a straightforward redundancy payment would suggest. Of course proving discrimination is another matter, and weighing up the risk, delays, stress and costs assocaited with bringing a claim versus to certainty and speed and ease of a settlement is important. Use our settlement agreement calculator as a starting point for understanding the financial landscape.
What to Do If You Think Your Redundancy Was Unfair
If any of the issues covered in this guide resonate with your situation — a process that felt predetermined, selection criteria that were never explained, a pool that seemed artificially constructed, or a timing that coincides with grievance, whistleblowing or a protected characteristic — you should seek legal advice without delay.
Thinking of accepting a redundancy settlement agreement offer?
If you are minded to accept a settlement agreement offer in a redundancy context, our guide to settlement agreements in a redundancy covers the specific clauses to examine — from statutory redundancy pay and PILON through to share options, bonus entitlements, tax risks, and pension considerations. If you are ready to explore the numbers, our settlement agreement calculator and redundancy calculator are useful starting points. To find out how we work and what our advice costs, visit our cost promise page.
Redundancy can be handled well or badly. Knowing the difference — and understanding your rights — puts you in a much stronger position, whether that means negotiating a better settlement or deciding to pursue a claim.
Legal Disclaimer
The contents of this article are intended to be for general information purposes only and do not amount to (nor are they intended to be) legal, tax or financial advice or a complete or authoritative statement of the law nor should they be treated as such. No warranty or promise is given, express or implied, as to accuracy of the information on this page and no liability is accepted for any error or omission. You should instruct a specialist employment solicitor to advise you on your particular situation and not act or rely on the information on this page.
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