What is a redundancy?

In employment law, redundancy is defined as the termination of employment because of either:

  1. The closure of a business;
  2. The movement of a business to another location; or
  3. The reduced requirement for employees to carry out work of a particular kind.

Redundancy is important because it is a potentially fair reason for dismissal and can give rise to an entitlement to a statutory redundancy payment and possibly a company redundancy entitlement.

The most common redundancy situation is point (iii) above; it includes a situation where fewer employees are required for the existing work and where the existing work is reduced and therefore fewer employees are required. These situations can arise where:

  • Work has been reorganised and fewer employees are required to do the same work.
  • Labour saving devices or more efficient work patterns have been introduced.
  • Changes have been made to the nature of the work that mean a different skill set is required.