What is Redundancy?
Redundancy is defined in Section 139(1) Employment Rights Act 1996. It is where there is an imminent or current;
- closure of a business
- closure of a workplace
- reduction in the need for employees
Redundancy is a potentially fair ground for dismissal [section 98 (2)(c) ERA 1996].
Redundancy Legislation
Acts of Parliament (Statutes)
The main statutes on redundancy are;
The Employment Rights Act 1996
- Section 52 – Right to time off to look for work or arrange training.
- Section 53 – Right to be paid for time off under section 52
- Section 98 – Potentially fair reasons for dismissal
- Section 105 – Fairness of a redundancy dismissal
- Section 138 – No dismissal in cases of renewal of contract or re-engagement
- Section 139 – Definition of a redundancy situation
- Section 205A – Employee Shareholders are not entitled to redundancy payments
Makes it unlawful to select a person for redundancy on the basis of any of the protected characteristics, trade union membership or the refusal of a protected shop worker to work on Sundays.
The Trade Union and Labour Relations (Consolidation) Act 1992
- Section 188 – Duty of employer to consult
- Section 188(A) – Requirements for the election of employee representatives under section 188(1B) (b) (ii)
- Section 189 – Complaining to an employment tribunal and protective awards
- Section 190 – Entitlement under a protective award
- Section 191 – Termination of employment during protected period
- Section 192 – Complaint by employee to an employment tribunal
- Section 193 – Duty of employer to notify the Secretary of State of certain redundancies
- Section 194 – Offence of failure to notify
- Section 195 – Dismissal for these purposes means redundancy
- Section 196 – Definition of employee representative
- Section 197 – Power of Secretary of State to vary S188, S189 & S193
- Section 198 – Power of the Secretary of State to adapt provisions in case of a collective agreement
- Section 199 – Issue of Codes of Practice by ACAS
European Union Directives
EU Directives are likely to change due to Brexit. The main EU Directives are;
Collective Redundancies Directive 98/59/EC
This EU Directive requires employers to consult staff representatives in the case of collective redundancies. It specifies the points which these consultations must cover and the useful information which the employer must provide during the consultations. It also establishes the procedure and practical arrangements for collective redundancies.
Information and Consultation Directive 2002/14/EC
The purpose of this Directive is to establish a general framework for improving the information and consultation rights of employees in undertakings within the European Community. There are two important principles to this;
- Practical arrangements for information and consultation must be defined and implemented in accordance with national law and industrial relations practices in individual Member States;
- When defining or implementing this framework, employers and employees’ representatives must work in a spirit of cooperation and with due regard for each other’s rights and obligations.
It applies to undertakings with at least 50 employees in a Member State or to establishments with at least 20 employees in a Member State. The choice is left to the Member States, which also establish the manner in which the number of employees is calculated.
The European Works Council Directive 94/45/EC
Applies to all companies with 1,000 or more workers, and at least 150 employees in each of two or more EU Member States. It obliges them to establish European Works Councils to bring together workers’ representatives (usually trade unionists) from all the EU Member States the company operates in, to meet with management, receive information and give their views on current strategies and decisions affecting the enterprise and its workforce.
Regulations
Most of these Regulations were made under EU Directives and may change due to Brexit. The main Regulations are;
The Information and Consultation of Employees Regulations 2004 (SI 2004/3426)
Gives employees the right to be informed about their employer’s economic situation and to be informed and consulted about their employment prospects.
The Trade Union and Labour Relations (Consolidation) Act 1992 was amended by these regulations which requires employers to consult about redundancies in circumstances where it is proposed to dismiss 20 or more employees at one establishment over a period of 90 days or less.
The Trade Union and Labour Relations (Consolidation) Act 1992 was amended by these regulations which require that consultation should be with a recognised trade union, or with other elected representatives of the affected employees where no trade union is recognised.
The Collective Redundancies (Amendment) Regulations 2006 (SI 2006/2387)
These regulations amend Section 193 Trade Union and Labour Relations (Consolidation) Act 1992 to ensure that an employer proposing collective redundancies must notify the Secretary of State at least 30 days (90 days if 100+ employees are being made redundant) before giving notice to terminate an employee’s contract of employment for redundancy.
The Agency Workers Regulations 2010 (SI 2010/93)
Schedule 2 of these regulations amend Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), such that an employer carrying out a collective redundancy consultation or pre-transfer consultation under regulation 13 of the Transfer of Undertakings (Protection of Employment) regulations 2006 (SI 2006/246) (TUPE 2006), must first give the appropriate employee representatives certain information in writing.
That information must include:
- The number of agency workers working temporarily for and under the supervision and direction of the employer.
- The parts of the undertaking in which they are working.
- The type work they are carrying out.
Maternity and Parental Leave etc. Regulations 1999
Regulation 10 says a woman on maternity leave at risk of redundancy must be offered any job that is suitable and available.
Orders
The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013
Where an employer intends to make 100 or more employees redundant within a 90-day period:
- the minimum period before the first redundancy can take effect is reduced from 90 to 45 days after consultation starts;
- employees on fixed-term contracts “which have reached their agreed termination point” are excluded from collective redundancy consultation obligations; and
- the period for lodging a form HR1 reduced from 90 to 45 days before the first redundancy takes effect.
Provisions for the Armed Forces and Civil Service
These provisions cap the redundancy payouts to civil servants at 15 months’ salary.
Armed Forces Redundancy Scheme 2006 Order 2006 (SI 2006/55)
Superannuation Act 2010 (Repeal of Limits on Compensation) Order 2010 (SI 2010/2996)
Last Updated: [01/09/2021]
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