When is ‘redundancy’ a legitimate reason for dismissal?

Settlement agreements are often used in redundancy situations.

Employers are trying to make financial savings or move to a different location on a daily basis in the UK. Employees who has been dismissed for reason of redundancy however, often allege that this is not the real reason for the dismissal and that actually the Employer has had previous concerns about conduct or capability.

Would ‘redundancy’ still prove to be a fair reason for the dismissal in any proceedings for unfair dismissal brought against the business? This was exactly the question brought before the Employment Tribunal in the case of Fish v Glen Golf Club. The Employee was dismissed on grounds of redundancy however he alleged that this was not the real reason as the club had previously had concerns about his conduct and capability. Alongside this, he pointed out the rushed nature of the consultation process and the fact that the Employee’s deputy had been offered a job rather than the Claimant himself.

The Employment Tribunal found in favour of the Employer in this particular case. They relied on the fact that the Respondent Company has been making serious losses and had dismissed several other employees on the grounds of redundancy. The Claimant appealed the Tribunal's decision but, again, the Employment Appeal Tribunal found for the Employer deciding that any concerns about conduct and capability were merely background.

Redundancy was the real reason for the dismissal.

Key points:

  1. In an unfair dismissal claim the employer must show:

    • That they have a potentially fair reason for dismissal; and

    • That they acted reasonably in treating that reason as sufficient to justify dismissing the employee.

  2. The potentially fair reasons are:

    • Conduct

    • Capability or qualifications

    • Redundancy

    • Statutory restriction (e.g. breach of immigration laws or employee is a driver but loses driving licence etc)

    • Some other substantial reason

  3. When starting a redundancy dismissal there must be a genuine redundancy situation.

It remains open for employees to win unfair dismissal claims if the real reason for dismissal is not redundancy.

Employees who have been offered settlement agreements but have concerns about the real reason for dismissal should seek legal advice on the background circumstances.

A story from earlier this year.

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