This factsheet was last updated in August 2016.
What is redundancy?
Redundancy is a special form of dismissal, and happens when an employer needs to reduce its workforce. An employee is dismissed for redundancy if the following conditions are satisfied:
- the employer has ceased, or intends to cease, continuing the business, or
- the requirements for employees to perform work of a specific type, or to conduct it at the location in which they are employed, has ceased or diminished.
If there is a genuine redundancy, employers that follow the correct procedure will be liable for:
- a redundancy payment, and
- notice period payment.
Employers who misunderstand the law or don’t follow the correct procedure may be liable for unfair dismissal claims. Redundancy legislation is complex and is covered by statute and case law, with both determining employers’ obligations and employees’ rights.
Redundancy is one of the most traumatic events an employee may experience. Announcing redundancies can have an adverse impact on the morale, motivation and productivity of the whole workforce. The negative effects can be reduced by the employer's sensitive handling of redundant employees as well as those who are staying.
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