Genuine Redundancy vs Unfair Dismissal

What the law says

Under the Employment Rights Act 1996, section 139, a redundancy situation exists when:

• The employer ceases to carry on the business, or the work the employee does ceases or diminishes
• The employer changes the requirements of the business for employees to do work of a particular kind, or requires them to do it in a different place or way
• The employee is placed at a disadvantage in relation to their employment

If the stated reason for dismissal is redundancy but none of these conditions genuinely apply, the dismissal may be unfair — even if the employer called it redundancy.

Signs the redundancy may not be genuine

Watch for these warning signs that suggest a redundancy may be a pretext rather than a genuine situation:

• Only one person is being made redundant — genuine redundancy typically affects a role or group of roles, not a single individual without broader context
• The role is being replaced — if the employer posts a job ad for the same role shortly after the dismissal, the redundancy may be a sham
• Other employees in the same role are kept — if colleagues doing identical work are not also at risk, the selection may be discriminatory or pretextual
• No real consultation took place — genuine redundancy requires meaningful consultation with all at-risk employees
• The employer made the decision before any consultation — if the outcome was predetermined, the process is a formality
• Certain individuals are consistently selected for criteria that suit the employer — discriminatory scoring in selection is a strong indicator of pretext

Why it matters — the financial difference

The distinction matters significantly financially:

• Statutory redundancy pay is the same whether it is genuine redundancy or unfair dismissal — both are capped at the same weekly and total limits
• But compensation for unfair dismissal can be much higher — up to 52 weeks' pay (uncapped) as a compensatory award, plus a basic award based on age and service
• You can claim both statutory redundancy pay AND unfair dismissal compensation if the situation qualifies as both
• An employment tribunal can also order re-instatement — which a genuine redundancy situation alone generally does not entitle you to

Selection process and fairness

Even in a genuine redundancy situation, the selection process must be fair and non-discriminatory. employers must apply clear, objective, and non-discriminatory criteria when selecting who to make redundant. Common selection criteria include:

• Length of service (last in, first out — LIFO)
• Disciplinary record
• Performance and appraisals
• Skills, qualifications, or experience relevant to remaining roles
• Absence due to sickness or disability

If sickness absence is used as a selection criterion, it can constitute discrimination against disabled employees under the Equality Act 2010. Similarly, using part-time status or women of child-bearing age in a biased selection can constitute sex discrimination.

What to do if you suspect sham redundancy

If you believe your redundancy is not genuine or the selection was unfair, you should:

1. Request the full selection criteria and scoring in writing from your employer
2. Request confirmation of the pool — who was considered and why
3. Document everything — keep copies of emails, notes from meetings, the consultation process
4. Seek advice from ACAS — free, confidential, and expert: 0300 123 1100
5. Submit a written grievance before signing any settlement agreement — signing a settlement agreement generally waives your right to tribunal claims
6. Apply to the employment tribunal within 3 months of the dismissal date — this deadline is strict

Important: Do not sign a settlement agreement without taking legal advice. If you are offered a settlement agreement by your employer, it is strongly recommended you speak to a solicitor — many offer free initial consultations. ACAS can also advise on whether a settlement agreement is fair.