LWM14 Employment Law

Sample Answer

The Concept and Interpretation of Redundancy under UK Employment Law

Introduction

Employment law in the United Kingdom has developed significantly over the last few decades, particularly in how it handles redundancy and job security. Redundancy is one of the most complex areas of employment termination, as it involves balancing employer flexibility with employee protection. The Redundancy Payments Act 1965 was introduced with the intention of supporting employees during job losses, but as scholars like Fryer (1973) argue, the legislation was more aligned with promoting labour mobility and protecting managerial interests. This essay examines the policy behind redundancy legislation, how redundancy is legally defined, and how the courts have interpreted this definition through various cases. It will also consider whether the legislation truly serves its original purpose or simply reinforces employer control.

Policy Behind the Redundancy Payments Act 1965

The Redundancy Payments Act 1965 was introduced during a time of industrial transformation in the UK. Automation and technological innovation were changing the nature of work, and employers needed flexibility to restructure their workforce without facing widespread resistance. According to Fryer (1973), the Act was designed less to protect workers and more to promote labour mobility, reducing employee opposition to redundancies.

The Act was intended to achieve several goals, which Fryer described as “myths”: that it provided job security, job property rights, managerial restrictions, compensation for job loss, disincentives to re-employment, and overall job protection. However, in practice, these outcomes were limited. Instead of enhancing employee rights, the Act gave employers a structured and legally supported way to dismiss workers without major industrial disruption (Deakin and Morris, 2020).

While redundancy payments do offer short-term financial relief, they do not guarantee long-term job security. In fact, the Act arguably made dismissals easier because it clarified the procedures and reduced ambiguity around employer liability. As Davies and Freedland (2011) suggest, the Act effectively formalised the dismissal process while maintaining managerial discretion.

The Economic and Legal Impact of the Act

From an economic perspective, the Redundancy Payments Act failed to achieve sustained labour market mobility. Instead, it contributed to a cycle where displaced workers often exited the workforce altogether, as Fryer observed. The payments were not sufficient to retrain or reposition employees in a changing economy, which meant that the Act indirectly encouraged unemployment rather than re-employment.

Legally, the Act also strengthened managerial control. Courts consistently interpreted the provisions of the Act in ways that favoured employers’ ability to restructure. For instance, redundancy procedures became tied to the employer’s assessment of business needs, meaning workers had little power to challenge a redundancy decision unless procedural fairness was breached.

The later Employment Rights Act 1996 (ERA 1996), which consolidated redundancy provisions, preserved this general balance. While it formalised redundancy rights and selection procedures, such as fair selection and consultation requirements, it did not challenge the underlying managerial authority to determine redundancy situations.

Defining Redundancy under the Employment Rights Act 1996

Section 139 of the ERA 1996 defines redundancy in two main situations. First, when an employer ceases or intends to cease operating the business, either completely or at a specific location. Second, when the requirements of the business for employees to carry out work of a particular kind have ceased or diminished, or are expected to do so.

This definition is factual and not concerned with the underlying reasons that caused the redundancy. For example, dismissals resulting from over-recruitment do not qualify as redundancy, because there has been no prior reduction in business need. The law focuses strictly on whether there has been a cessation or diminution in the requirement for specific kinds of work.

This approach can be seen in O’Hare v Rotaprint [1980] IRLR 47, where the employer dismissed workers due to overmanning caused by over-optimistic business projections. The tribunal held that this was not redundancy, as there was no reduction in the need for employees to carry out the work , those needs had never actually existed.

Similarly, in Johnson v Peabody Trust [1996] IRLR 387, the court ruled that the existence of a flexibility clause in the employee’s contract did not prevent redundancy. Even though the employee could have been moved to other work, the employer’s need for roofing work had diminished, satisfying the statutory test for redundancy.