Reasons For Redundancy: What’s Fair & What Isn’t?

Emilene LucasLegal Assessment Team Supervisor

Updated on 20th March 2024

Redundancy happens when a company needs to reduce its workforce. However, the process must be done fairly.

For example, employees can’t be chosen for redundancy based on certain protected characteristics, like their age, and an employer must have a real business reason for making employees redundant. 

Facing redundancy can be tough, and it’s natural to question the legitimacy or fairness of the reasons behind it. All employees under notice of redundancy have the right not to be unfairly selected for redundancy and, before making any redundancy decisions, employers should try and avoid redundancies where possible.

In this article, we’ll cover what makes a reason for redundancy fair and legal and explore your rights if you’re going through the process. 

What are the main reasons for redundancy? 

Redundancy happens when an employer doesn’t need certain employees to do their job anymore. Usually, this is because the business is: 

• Changing its activities or what it does.

• Using new methods or technology to do things differently.

• Changing location.

• Being taken over by a new owner.

• Shutting down altogether. 

What should businesses do to avoid redundancies? 

Employers should explore all other options before resorting to redundancies, especially compulsory redundancies. This could include: 

• Introducing changes to working arrangements or cutting down on overtime.

• Ending contracts with self-employed contractors or freelancers.

• Pausing recruitment.

• Filling vacant positions with existing employees.

• Implementing temporary layoffs. 

As a last resort before making compulsory redundancies, they may also ask employees to consider non-compulsory redundancy, like voluntary redundancy or early retirement. 

What makes a redundancy genuine?

For a redundancy to be considered genuine, an employer has to show that your job will no longer exist. 

For example if: 

• The business is struggling financially.

• All or some of the business stops operating due to insolvency.

• Your skills are no longer required for the job.

• Your work will be done by others due to restructuring.

• The business or your role is moving to a different location. 

• The business is taken over by another company or the owner of the business dies. 

A redundancy can also be genuine if new technology reduces the need for people to do your job. However, you shouldn’t be made redundant if new technology changes how the job is done. 

For example, if you work as a cashier in a supermarket and self-checkout machines are introduced, you could be made redundant if the machines reduce the need for cashiers. However, if the supermarket updates its inventory tracking system, this wouldn’t fly as a genuine reason to make redundancies.

What are the fair selection criteria for redundancy?

In a genuine redundancy situation, your employer needs to identify a group of employees who might be affected. Further, if your employer plans to make 20 or more of you redundant, they must conduct a collective consultation process.

When selecting employees for redundancy, your employer should consider fair and objective criteria. These may include looking at your:

• Skills, qualifications, and ability.

• Quality of work and performance evaluations. 

• Attendance records, including punctuality and absence rates.

• Disciplinary history, like warnings or sanctions. 

Your employer should consult with all individuals in the group of employees who might be at risk of redundancy. This typically involves having individual meetings with each person to discuss their situation. They should also explain why there's a risk of redundancy, who else is in the same situation, and what the next steps will be.

At this stage, you can provide suggestions to avoid redundancy, although they're not required to agree or implement them.

What methods can employers use to choose employees for redundancy?

Employers should use a fair and unbiased method to choose employees for redundancy. 

Voluntary redundancy

Voluntary redundancy is when employees can choose to leave their jobs in exchange for a redundancy package. 

However, volunteering for redundancy does not guarantee selection and employers should still use a fair and objective selection process. 

For example, your employer can’t just offer voluntary redundancy to employees who are eligible for early retirement. This could be seen as age discrimination. 

Last In, First Out

Last in, first out means employees with the shortest length of service are selected first for redundancy. However, an employer can only use this method if they can provide a valid reason.

Last in, first out as a selection criteria isn’t discriminatory in itself, but it could lead to indirect discrimination if it disproportionately affects one group of people more than another. For example, only younger employees. 

Consideration of disciplinary records 

One common method for selecting employees for redundancy is considering their disciplinary records. Your employer may consider previous disciplinary actions against you or warnings received. 

Consideration of staff appraisal markings, skills, qualifications, and experiences 

Employers may look at performance appraisals, relevant skills, qualifications, and work experience to determine which employees are best suited to remain in the company. 

Is it always necessary for my employer to establish a redundancy pool? 

It’s not always necessary for an employer to establish a redundancy pool. If your role is distinct and there are no similar positions within the company, your employer may not need to apply specific criteria for their selection. However, they must still be able to demonstrate there is a genuine need for redundancy and follow a fair process. 

Can you be made to reapply for your job in the redundancy process?

Employers can legally ask you to reapply and interview for your job if they’re considering making redundancies if they have to reduce the number of people doing similar roles. 

You don’t have to reapply for your job in this situation. However, if you choose not to, your employer might see it as a sign you’re not committed to staying, which might lead to you being let go. 

What criteria used for selecting employees for redundancy are considered unfair?

There are some reasons employers cannot use when choosing which employees to make redundant. It is against the law to select someone for redundancy based on any of the following: 

• Anything related to pregnancy, maternity leave, or time off for parental reasons.

• Family responsibilities, including parental leave, paternity leave, adoption leave, or time off for dependents.

• Representing other employees in the workplace. 

• Trade Union activity. 

• Being part-time or on a fixed-term contract.

• Protected characteristics, including age, disability, gender reassignment, marriage and civil partnership status, race, religion or belief, sex, and sexual orientation. 

• Issues related to pay, working hours, or rights under employment regulations. 

Simply, employers must choose employees for redundancy based on fair and legitimate reasons related to the needs of the business, not on any discriminatory or unfair grounds. 

Examples of a non-genuine redundancy

Depending on your circumstances, you might wonder whether a redundancy is genuine or not. While it’s unpleasant to think about, sometimes businesses use the redundancy process to mask other reasons for dismissing one or a group of employees. 

If your employer claims your position is being made redundant, but the reasons don't seem genuine, like the business closing down or your role no longer being needed, it might not be a real redundancy. In such cases, you could have grounds for unfair dismissal or workplace discrimination against your employer.

Here are some real-life examples of non-genuine redundancy in action:

Redundancy alongside recent hiring activity

Sarah, a sales assistant at a retail store, is told she is being made redundant. However, shortly after she notices that the company has hired a new sales assistant in the same department, to perform similar tasks.

This recent hire suggests that the redundancy might not be legitimate as the company is still recruiting for similar roles. 

Redundancy following a recent dispute or disagreement

John, an IT technician, argued with his manager a few months ago. Despite his satisfactory performance, John is suddenly told he is being made redundant.

His strained relationship with his manager may raise doubts about the genuineness of the redundancy, as personal conflicts may have influenced the decision. 

Redundancy after being singled out or treated differently 

Emma, a marketing executive, notices that she is consistently signed out for criticism and excluded from team meetings after raising concerns about workplace practices. Shortly after, she is informed of her redundancy while her colleagues with similar performance levels are unaffected. 

This treatment may indicate Emma is being bullied in the workplace and that her redundancy may not be genuine. 

Discrimination 

David, a warehouse worker, tells his employer he intends to take paternity leave. Shortly after, he is informed of his redundancy. The timing of his redundancy following his announcement of taking paternity leave raises suspicions of discriminatory motives. 

Redundancy as retaliation

Sophie, a customer service representative, had previously raised concerns about inadequate health and safety measures in the workplace. Subsequently, she is told of her redundancy, with her employer citing a downturn in business. The timing of her redundancy shortly after lodging health and safety complaints suggests a possible retaliatory motive. 

Can an apprentice be made redundant? 

In England and Wales, apprentices are usually managed under an apprenticeship agreement. Under this agreement, an apprentice can be made redundant. 

It is also possible if an apprentice has less than a year left of their apprenticeship, they can be made redundant and then brought back under a new apprenticeship agreement in the same company - as long as the training and work they do is similar to what they were doing before.

If you are an apprentice facing redundancy, it may be possible for your training provider or the Apprenticeship service to help you find another employer to complete your apprenticeship through.

What should you do if you don’t think your redundancy is genuine? 

If you are at risk of being made redundant or you have been made redundant and you don’t think your employer has a genuine need to make redundancies, you can challenge it. Similarly, you can challenge your redundancy if you think the reasons you were chosen for redundancy were unfair. 

In the first instance, you can do this by talking to your employer informally or raising a formal grievance or appeal. 

If this doesn’t work and you believe your redundancy is unfair or discriminatory, you may have grounds for legal action.

Typically, you can only claim unfair dismissal if you’ve been in your job for at least two years when you’re made redundant. But, there are exceptions to this rule. For example, if your dismissal was due to discrimination or falls under an ‘automatically unfair’ reason.

Further, if you believe your dismissal was due to discrimination based on protected characteristics, you may be able to claim unfair dismissal regardless of your length of service. 

An employment lawyer can advise you on the best action to take. 

How can Lawhive help? 

At Lawhive, our network of employment lawyers is on hand to provide legal advice and help you understand if the redundancy situation you are facing is genuine and the reasons for your selection are grounded in fairness.

They can assess your situation, advise on your options, and help you determine if you have grounds for an unfair dismissal or employment tribunal claim. 

To find out more, contact us today.