HR Improve - Organisational Design: How to identify and manage redundancy programmes

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How to identify when a redundancy situation arises

  • The definition of a redundancy situation is set out in s139 Employment Rights Act 1996 and includes 3 scenarios:
    • Closure of a business
    • Closure of a particular place of work
    • Reduction in an employer’s need for employees to do work of a particular kind
  • In contrast, there is no legal definition of a restructure. Restructures tend to cover a change in working structures such as reporting lines or shift patterns
  • Restructures and redundancy situations are not mutually exclusive, so a particular set of facts might give rise to one or other or both

Why is a business case important?

  • Dismissal on grounds of redundancy is a potentially fair reason
  • However, for a dismissal to be fair, an employer must also show it acted reasonably in all the circumstances
  • This means that there needs to be a genuine redundancy situation and a fair process followed prior to any decision to dismiss being taken
  • A clear, well thought out business rationale will help to establish the genuineness of a redundancy situation

Key steps to ensure a fair process

  • Warn affected employees of the potential for redundancies as early as possible and before any final decisions have been made
  • Identify the selection pool and ensure all those doing similar work are included
  • Apply objective selection criteria with evidence to support the scores awarded
  • Consult with affected employees in a meaningful way
  • Search for suitable alternative employment
  • Confirm notice and give the right of appeal

Collective consultation

  • Remember to comply with collective consultation obligations within the specified time limits if you are proposing 20 or more redundancies at one establishment within 90 days
  • Be aware that the definition of redundancy for these purposes is wider than that set out in s139 and includes dismissal for any reason that is not connected to the individual concerned
  • Ensure all the required steps are completed:
    • Appoint employee representatives
    • Provide the required information to the representatives
    • Submit the HR1 form
    • Consult with the representatives
    • Remember that collective consultation does not negate the need to consult individually with affected employees


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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