Reasons for dismissal ― redundancy and retirement

By Tolley in association with Hannah Freeman at Old Square Chambers
Reasons for dismissal ― redundancy and retirement

The following Employment Tax guidance note by Tolley in association with Hannah Freeman at Old Square Chambers provides comprehensive and up to date tax information covering:

  • Reasons for dismissal ― redundancy and retirement
  • Redundancy situations
  • The decision to create a redundancy situation
  • Whether redundancy was the reason for dismissal
  • Automatically unfair redundancy
  • Unfairness
  • Retirement

Redundancy is a potentially fair reason for dismissal. Dismissal will be by reason of redundancy where it is wholly or mainly attributable to the fact that either:

  • the employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed, or to carry on that business in the place where the employee was employed
  • the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed, have ceased or diminished or are expected to do so

ERA 1996, ss 98, 139

Redundancy situations

Situations in which the above circumstances arise are generally referred to as ‘genuine redundancy situations’. A genuine redundancy situation arises where an employer’s business closes down in its entirety or at one particular workplace, or where an employer cuts his workforce in a particular area of work by a significant number. For example, if there are 100 production workers in an employer’s factory and a decision is taken that only 50 are now required, this will clearly give rise to a genuine redundancy situation in which 50 posts are potentially redundant.

However, where, the employer’s business is reorganised but carries on after the reorganisation without any significant change in the number of employees, it may be more difficult to determine whether a redundancy situation has arisen.

Where there is doubt as to whether a situation leading to dismissal amounted to redundancy as this is defined, it is often sensible for an employer to defend an unfair dismissal claim on the basis that dismissal was either by reason of redundancy or for ‘some other substantial reason’.

Murphy v Epsom College [1983] IRLR 395

See the

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