Definition of redundancy

The following Employment practice note provides comprehensive and up to date legal information covering:

  • Definition of redundancy
  • Redundancy payment entitlement, and fair reason for dismissal (ERA 1996)
  • Meaning of ‘business’
  • Where the employer has several businesses
  • Private households
  • Associated employers and LEAs
  • Applying the definition
  • Temporary recession
  • Example: temporary, part-time teachers
  • Payments for lay-off or short time and guarantee payments
  • More...

Definition of redundancy

This Practice Note examines the two different statutory definitions of 'redundancy'.

The first is found in the Employment Rights Act 1996 (ERA 1996). Whether or not it is satisfied determines:

  1. whether an employee may be entitled to a statutory redundancy payment (see Practice Note: Entitlement to statutory redundancy payment)

  2. whether, in the context of an unfair dismissal claim, the reason for dismissal is redundancy (which is one of the potentially fair reasons for dismissal—see Practice Note: Reason for dismissal—redundancy)

For further information regarding this first definition, see: Redundancy payment entitlement, and fair reason for dismissal, below.

The second is found in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992), and is relevant in collective redundancy situations. This definition must be satisfied (as well as other criteria) before the obligation to inform and consult appropriate representatives will arise (see Practice Note: Collective redundancy—the triggers for the statutory consultation obligations).

For further information regarding this second definition, see: Definition of redundancy for collective redundancy consultation, below.

In many redundancy situations, whether the dismissal satisfies the requirements of the relevant statutory definitions will not be disputed or challenged. This is because:

  1. in most cases, it will be fairly clear that there is a redundancy situation for the purposes of the statutory payment and a fair reason for dismissal, and an employer will not usually resist the payment

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