Three issues to consider while determining the fair reason for employee redundancy

Redundancy is one of the potentially fair reasons for dismissal, but only if the redundancy is genuine, the selection is fair and a proper procedure is followed. If any of these goes wrong, an employee may be able to bring a claim for unfair dismissal, discrimination or both.

In this article we look at three key issues for employers: whether the redundancy is genuine, how to define the selection pool, and how to choose fair selection criteria.

Issue 1: Is the redundancy genuine?

In law, a redundancy happens where an employer’s need for employees to carry out work of a particular kind has stopped or reduced, or is expected to. Common examples include:

• the business, or one workplace, closing
• the business moving to a new location
• less work of a particular kind being needed, for example because of a downturn or new processes or technology
• work being reorganised so that fewer people are needed to do it

A redundancy should not be used to remove someone because of their conduct, performance or relationships with colleagues. Those issues should be dealt with through the appropriate procedure. If a tribunal concludes that redundancy was a cover for another reason, the dismissal is likely to be unfair.

Employers should also avoid actions that undermine the redundancy, such as recruiting new staff to do the same type of work elsewhere in the business at the same time. Before making redundancies, consider alternatives such as reducing overtime, stopping agency work, redeployment or reduced hours. Our article on alternatives to redundancy sets out practical options.

Issue 2: Choosing the redundancy pool

The redundancy pool is the group of employees from whom those to be made redundant will be selected. It may be a single person, a team, everyone with a particular job title or the whole workforce. The pool should reflect the reasons for the redundancy and the type of work that is reducing.

Employers have a fair degree of discretion here, but the choice must be one a reasonable employer could make and should be thought through and recorded. Consider including employees who do similar or interchangeable work, even if their job titles are different. A pool drawn too narrowly, for example to target one individual, can make the dismissal unfair.

In some cases an employer may put all affected roles at risk and invite employees to apply for the roles in a new structure. Where this happens, the selection process for the new roles must also be fair and objective.

Issue 3: Fair selection criteria

Where some, but not all, of the employees in the pool will be made redundant, the employer needs objective selection criteria. Commonly used criteria include:

• skills, knowledge and experience
• qualifications relevant to the role
• performance, based on documented appraisals
• attendance records
• disciplinary records

Each criterion should be measurable and backed up by records such as appraisals, attendance and disciplinary records, rather than personal opinion. A manager’s dislike of an employee, or the fact that someone does not join in social events, has no place in a fair selection.

Scoring

Employers usually score everyone in the pool against each criterion, sometimes with weightings, and those with the lowest total scores are selected. It is good practice for at least two people who know the employees’ work to carry out the scoring, and for scores to be checked for consistency.

Employees should normally be shown their own scores and given a chance to comment on them during consultation. They can also make a data subject access request for information held about them. A tribunal will not find a dismissal unfair simply because an employee disagrees with their score, provided the process was fair and the scoring was carried out reasonably and consistently.

Watch out for discrimination

Some criteria can be discriminatory if applied without care:

• Length of service. A “last in, first out” approach can indirectly discriminate against younger workers. Length of service should not be the only criterion, and its use must be justified.
• Attendance. Absences related to disability should usually be discounted, and absences related to pregnancy or maternity leave must not count against an employee.
• Performance. Consider whether a disability or pregnancy has affected performance and whether reasonable adjustments are needed.

Selecting someone because of a protected characteristic, such as age, sex, race, disability, religion or belief, sexual orientation, gender reassignment, pregnancy or maternity, or marriage and civil partnership, is unlawful discrimination.

There is no minimum length of service for a discrimination claim and no upper limit on compensation, which can include an award for injury to feelings. Treating part-time or fixed-term employees less favourably in selection can also breach separate regulations that protect them.

Automatically unfair reasons for selection

Some reasons for selecting an employee for redundancy make the dismissal automatically unfair, whatever the employee’s length of service. These include selection because the employee:

• is pregnant or has taken, or asked to take, maternity, paternity, adoption, shared parental or parental leave
• has asserted a statutory right, such as the right to the minimum wage, paid holiday or flexible working
• is a trade union member, has taken part in union activities or is an employee representative
• has made a protected disclosure as a whistleblower
• has raised a genuine health and safety concern

Employers should be especially careful where an employee is selected shortly after returning from family leave, becoming a union representative or raising a complaint. Since 6 April 2024, employees who are pregnant, on maternity, adoption or shared parental leave, or within 18 months of the birth or placement of their child (subject to conditions), must also be offered any suitable alternative vacancy in priority to others at risk.

Appeals

Employees should be offered the right to appeal against their selection. If an appeal succeeds before employment ends, the employee simply continues in their job. If it succeeds after employment has ended, they would normally be reinstated on their original terms with back pay, and any redundancy payment would usually need to be repaid or offset.

If the appeal is rejected, it is sensible to review the risk of a claim and consider whether a settlement agreement is appropriate.

Claims and compensation

An employee who believes their redundancy was unfair or discriminatory may bring an employment tribunal claim. From October 2026, most claims must be brought within six months, with Acas early conciliation normally required first.

At present, an employee needs two years’ continuous service to claim ordinary unfair dismissal. From 1 January 2027 this falls to six months. No qualifying period applies to automatically unfair dismissal or discrimination.

If a tribunal finds the dismissal unfair, it can award:

• a basic award, calculated in the same way as statutory redundancy pay, so an employee who has already received statutory redundancy pay will not usually receive a further basic award
• a compensatory award for financial losses, currently capped at the lower of £123,543 or 52 weeks’ gross pay; the cap is due to be removed from 1 January 2027

The employee must also take reasonable steps to reduce their losses, for example by looking for new work.

Collective consultation

If an employer proposes to make 20 or more employees redundant at one establishment within 90 days, collective consultation is required: at least 30 days before the first dismissal for 20 to 99 employees, and 45 days for 100 or more.

The employer must also notify the government. From 6 April 2026, the maximum protective award for failing to consult has doubled from 90 to 180 days’ pay per employee. Further changes to the consultation threshold are expected in 2027.

Practical checklist for employers

• Make sure the redundancy is genuine and document the business reasons.
• Consider alternatives and look for suitable alternative roles.
• Define the pool carefully and record why you chose it.
• Use objective, measurable selection criteria and apply them consistently.
• Keep employee records, such as attendance and disciplinary records, accurate and up to date.
• Consult meaningfully with each affected employee and explain decisions at every stage.
• Offer an appeal.
• Take advice early, ideally before the process starts.

For more detail on criteria, see our guide to redundancy and selection criteria, along with our articles on fair reasons for dismissal and common mistakes employers make. If you are planning a restructure, our page on restructuring a business explains how we can help. Employees who think they have been unfairly selected can read about our unfair dismissal advice.

To discuss a redundancy process, book a free 30-minute consultation or call us on 0141 471 9166.