How does the law define redundancy?

According to the Employment Rights Act 1996, an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to the fact that:

  • the employer ceases to carry on the business in which the employee was employed;
  • the employer ceases to carry on that business in the place where the employee was employed;
  • the needs of the business for employees to carry out work of a particular kind cease or diminish; or
  • the needs of the business for employees to carry out work of a particular kind in the place where the employee was employed cease or diminish.

This is the definition that is relevant for the purposes of determining whether or not a dismissal is fair and whether or not the employee is entitled to a redundancy payment.

For the purposes of determining whether or not the collective redundancy consultation duty applies, the definition of redundancy under the Trade Union and Labour Relations (Consolidation) Act 1992 applies. This is: a "dismissal for a reason not related to the individual concerned", which includes the situation where an employer proposes to dismiss and re-engage employees who do not agree to a proposed variation of their contract.