What is redundancy?

A redundancy situation exists where there is a reduction or disappearance in the requirement for a particular kind of work to be performed. This can either be at a particular workplace, or in the business generally. This could mean that a workplace is closing entirely, or just that the business intends to reduce headcount in a certain role as their business requirements for the work performed by that role have declined.

Frequently, redundancies are made as part of a cost-cutting exercise in response to a downturn in work. However, it is not necessary for a business to be losing money in order for a redundancy situation to exist. A redundancy situation can exist in a business which is making profit if there is a reduction in the need for a particular role.

Employers should also be aware that non-renewal of a fixed-term contract counts as a dismissal for employment law purposes and that it will normally be by reason of redundancy. Fixed-term employees with more than two years’ service may therefore be entitled to a statutory redundant payment if their fixed-term contract is not renewed, and employers should still consider how to follow a fair process in relation to the end of this contract (for example exploring with the employee whether there are any alternative vacancies which may be of interest to them).