When is redundancy an unfair dismissal?

04 March 2020

Redundancy is a difficult topic for many businesses, especially if it involves letting a long-term employee go.

But it’s still important to follow the right process. If you don’t, you can end up facing an employment tribunal claim.

To avoid such an outcome, you can contact us for redundancy legal advice or call on 0800 028 2420 for immediate advice on the redundancy process.

You can also read this guide, which explains how and why a dismissal can become unfair.

Is redundancy unfair dismissal?

No—it’s a type of dismissal and it’s fair in most cases. Making employees redundant, as unfortunate as the outcome is, for many businesses has to take place.

There are common reasons for redundancy. These include:

  • New technology making roles unnecessary.
  • A drop in revenue making it essential.
  • If a business is closing down.
  • If a business if moving address.
  • Another business buying a company.
  • In the event the role is no longer relevant.

So you may wonder if there are ever situations when redundancy is unfair dismissal. After all, a redundancy exercise does result in an individual losing their job, and with a dismissal always comes risks.

As with any dismissal, whether a redundancy is unfair will depend upon the procedure followed, and the reasons behind it.

The important thing to remember is that a redundancy situation exists in the following circumstances:

  • When you shut down a business or part of it completely, meaning no one needs to fill the roles.
  • When you shut down at a specific location, even if you are moving to a new one.
  • When your requirement for employees to do work of a particular kind has reduced or ended.

Trying to implement a redundancy in other situations, such as using it as an excuse to get rid of an employee, could give rise to a situation of unfair dismissal redundancy.

Importantly, if you replace a position then it can’t be a redundancy situation.

How Peninsula Business Services can help you

In the event you need to make redundancies, it’s important you follow a fair procedure. If you don’t, the legal consequences are sometimes costly and damaging.

We provide 24/7 small business advice with instant online support for human resources and employment law.

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Unfair dismissal redundancy case law

As an example, an employee received news of their redundancy—the business no longer had any requirements for the role.

Following their departure, the ex-employee soon happened upon a job advert from the former employer.

It was advertising a job role that was similar to the one they had left.

This ex-employee later went on to bring an unfair dismissal claim to the tribunal and won.

This was because their dismissal was not the result of a redundancy—the company had sought to get rid of an employee, not the role.

Whilst the above situation is a nice example of one issue that can arise during a redundancy process, here can be other grounds for unfair dismissal redundancy. 

In the landmark case of Polkey v AE Dayton Services Ltd, it was held that a redundancy dismissal would usually be unfair if the employer fails to warn, and consult with, the employees, does not utilise a fair selection process and fails to consider suitable alternative employment.

As with all potentially unfair dismissals, in a redundancy procedure you will need to be able to justify your reason for dismissing the employee.

It’s important to establish clear selection criteria at an early stage, to make sure you communicate this to the employee and to establish that you have considered alternative roles that they could do.

Bear in mind a situation of automatic unfair dismissal redundancy could arise if you select employees for redundancy on the grounds of pregnancy and childbirth, whistleblowing, or asserting a statutory right.

When there are at least 20 employees

Despite the danger of unfair dismissal, there’s no specific legal procedure to follow in situations where there are less than 20 employees being made redundant.

However, it does get more complicated where there are 20 or more individuals up for redundancy. Here, there are strict rules you must follow.

And you should seek further advice if you’re unsure what you need to do to avoid a situation of unfair dismissal redundancy. Acas also provides further guidance in this area.

Need our help?

If your business needs assistance with and of your employee contracts, call us right away on 0800 028 2420.

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