Redundancy in insolvency—the basics
Redundancy in insolvency—the basics

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Redundancy in insolvency—the basics
  • The redundancy payment
  • Fair selection
  • Unfair redundancy
  • Statutory consultation obligations
  • Bumping
  • Time off to look for other work
  • Renewal of contract, re-engagement and trial periods
  • Payment for lay-offs and short time
  • Effect of death of an employer or an employee
  • more

For the purposes of entitlement to a redundancy payment, an employee is dismissed by reason of redundancy if the reason for dismissal is:

  1. the employer ceases carrying on the business in which the employee worked

  2. the employer ceases carrying on the business in the place in which the employee worked, or

  3. the business needed fewer people carrying out work of the kind which the employee performed

A much wider definition of redundancy applies (solely) in the context of consultation: there, 'dismiss as redundant' means a dismissal for any reason or reasons not related to the individual concerned.

In general, employees dismissed by reason of redundancy have rights to:

  1. a redundancy payment

  2. fair selection for redundancy

  3. proper consultation before dismissal

  4. take reasonable time off to look for alternative employment

For more information, see Definition of redundancy and Redundancy—collective consultation checklist for employers within the Lexis®PSL Employment module (with subscription).

The redundancy payment

Redundancy payments are made to compensate employees for losing their jobs. A redundancy payment is payable when an employee with two years' or more continuous employment is dismissed because of redundancy. This can include where:

  1. fixed-term contracts come to an end without renewal

  2. circumstances operate to terminate the contract

  3. an employee volunteers to take redundancy

  4. the work which one employee performs has not diminished, but he is dismissed to allow his position