Redundancy - the law

Basic legal rules


A redundancy situation exists where an employer closes or intends to close the workplace or reduce the number of employees doing a particular kind of work. In particular, the employer must: 


• adopt redundancy selection criteria which are not discriminatory;


• allow employees selected for redundancy time off to look for other work, provided they have at least two years’ service;


• give redundancy pay to all employees with at least two years’ service calculated using a statutory formula linked to age and length of service. A week’s gross pay is subject to a statutory maximum cap which is reviewed annually (£489 from 6 April 2017); and


• offer any suitable available vacancies. 


If at least 20 redundancies are proposed, the employer must notify the Department for Business, Energy and Industrial Strategy. It must also consult employee reps with a view to reducing the number of redundancies. There are detailed rules which must be followed. If an employer fails to consult, a union can apply for a protective award.


Key developments 


• The usual test of fairness for a redundancy dismissal applies when employees are competing with each other for a reduced number of roles further to a restructuring (case 4).


• The Employment Appeal Tribunal confirms correct tests for suitable alternative employment and unreasonable refusal of it (case 5).