Written by Lyndsey McLaughlin – HR Manager
Redundancies are increasing in the UK and according to an Acas study, 33% of British employers said they will consider making staff redundancies by January 2027. In large organisations, the number is higher at 46%.
However, businesses should be aware that they can’t just make redundancies for the sake of it, they must have legitimate reasons or they could find themselves in trouble. These are some of the legitimate reasons for making redundancies.
Business Closure
When a business is closing down completely, redundancies are inevitable. If the business is moving to another location then redundancies will happen as most people won’t want to relocate. However, the employer should give their employees this option.
Cost Cutting
A business may experience a downturn which leads to them re-evaluating their finances. In this case, they may no longer require some roles. For example, if a business loses a high value client, they may need to reduce their headcount. Trying to reduce costs is a valid reason for making redundancies.
Business Transfer
If the business has been taken over by another company then redundancies often follow. The new business may not require certain roles or they may have their own staff that they are bringing over and do not want to duplicate roles.
Tech Changes
There are many companies that invest in tech as a way to reduce costs and this can be a valid reason for making redundancies. For instance, in the manufacturing sector, the company may invest in robots as a way of reducing head count.
When Is Redundancy Not Genuine? Key Signs to Look For
Personal Friendship
Although employers can use a selection process to determine suitability for redundancy, they cannot make employees redundant based on their personal relationship. For instance, if the business implements technology and wants to reduce the number of people in the same role, they should make a decision based on the employee’s skills, experience, attendance, work performance and length of service. If they do not use a criteria but simply make a decision based on a personal friendship, you would have reason to seek legal advice for unfair dismissal.
Avoid Disciplinary
An employer might decide that they don’t want the hassle of going through a disciplinary process with an employee so decide to make them redundant instead. This is not a fair reason to make redundancies.
Protected Characteristics
A decision on redundancy cannot be based on protected characteristics, including age, race, gender, disability, gender reassignment, religion, sexual orientation, pregnancy and maternity and marriage and civil partnership. If you believe a redundancy decision has been based on any of these characteristics, you would have a reason to consider making a legal claim.
Redundancy Procedure: What Steps Must an Employer Follow?
The employer must follow a fair process including:
- Undertaking a consultation with affected employees
- Using a selection criteria where applicable
- Providing options for alternative employment within the business, where possible.
- Giving the employee an opportunity to appeal the redundancy decision
- Providing adequate notice
Employers must also wait at least 3 months before readvertising a post where redundancy has occurred. If you are made redundant, and find the role advertised soon after, you may be able to make a legal claim.