Redundancy situations and how to avoid legal risk

In some cases, a reduction in headcount is unavoidable — but for a redundancy to qualify as a fair reason for dismissal, it must be genuine. Employers risk claims for unfair dismissal if the underlying reason doesn't hold up or the process is poorly managed.

Whether you're planning a single redundancy or a wider reorganisation, it's essential to understand what the fair reason is — and where many businesses go wrong.

Discussions around redundancies are never easy. If you need support, our employment solicitors are here to help — contact us today for expert advice.

What is a genuine redundancy situation?

A redundancy is considered genuine when it meets the legal definition under the Employment Rights Act 1996. This includes:

• The closure of the business
• The closure of the workplace where the employee works
• A reduced need for employees to carry out work of a particular kind

The definition can apply to individual roles, departments, or entire functions, depending on the structure and needs of the business. Examples might include:

• Merging or eliminating roles as part of a restructuring
• Downsizing due to falling demand or financial pressures
• Automating tasks or adopting new systems
• Moving operations to another location
• Outsourcing specific services

The key is that the employee’s role is no longer needed, not that they are underperforming. 

What does not count as a fair redundancy?

Redundancy should not be used to sidestep other HR issues. Situations that frequently lead to legal challenges include:

• Using redundancy to remove an employee with performance concerns
• Targeting someone for redundancy after they've raised a grievance or complaint
• Dismissing staff due to pregnancy, disability or other protected characteristics
• Selecting someone unfairly based on part-time status, age, or flexible working requests

If it is not a genuine redundancy situation or the selection is based on discrimination, the dismissal will be unfair.

How to reduce the risk of legal challenge

Even where a redundancy is legitimate, employers must still make sure they follow a fair process. That is likely to include:

• Considering and identifying the pool of employees affected
• Consulting with affected employees over proposed redundancy
• Applying objective, measurable selection criteria
• Exploring alternative roles or redeployment
• Providing proper notice and redundancy pay

Mistakes in the process — or poor communication — can undermine an otherwise genuine business decision and lead to a finding of unfair dismissal in a tribunal.

Why scrutiny on employers is increasing

Redundancy claims remain one of the most common types of unfair dismissal claims. Employees are more likely to challenge decisions if they believe the process was flawed or the rationale was unclear.

That's especially true in the current climate, where restructures are often linked to digital transformation, budget realignment, or wider organisational change. Clear documentation and fair, consistent treatment are more important than ever.

Support with redundancy planning and legal risk

Our employment solicitors support employers with redundancy planning, consultation, following a fair procedure and legal risk management. Whether you're making one role redundant or implementing wider organisational change, we can help you get the structure right and avoid unnecessary disputes.

We advise clients locally and nationally from our offices in London, Brighton, East Sussex and Cumbria.