Is Your Redundancy Genuine or a "Sham"? A Complete Guide for Employees

Being told your role is at risk of redundancy is a deeply unsettling experience. Employers often frame it as a strict business necessity, leaving you feeling as though you have no power to challenge the decision.

However, "redundancy" is a specific legal term, not a convenient excuse to let someone go. If an employer uses redundancy to mask the real reason for your dismissal—such as a personality clash, a health issue, or a desire to hire someone cheaper—the dismissal is a "sham" and likely illegal.

This guide explains the legal definition of redundancy, the warning signs of a sham process, and what you can do to protect your career and your finances.

1. What is a "Genuine" Redundancy?

Under UK employment law, a redundancy is only legally genuine if it falls into one of three distinct categories:

1. Business Closure: Your employer ceases operating the business entirely.

2. Workplace Closure: The specific location or branch where you work is shutting down, even if the wider business continues.

3. Reduced Requirement for Employees: The business needs fewer people to carry out a particular kind of work. This might be due to automation, a drop in sales, or a genuine restructure that merges multiple roles into one.

If your situation does not fit clearly into one of these three boxes, your employer may be on shaky legal ground.

2. Warning Signs of a "Sham" Redundancy

A sham redundancy occurs when an employer wants to dismiss an employee for an entirely different reason (like poor performance or a disagreement) but does not want to go through the proper, time-consuming disciplinary or performance management process.

Here are the classic red flags that your redundancy might not be genuine:

• You are immediately replaced: If you are made redundant and your employer promptly hires someone else to do the exact same job (perhaps with a slightly tweaked job title), the role was not actually redundant.

• The "Targeted" Redundancy: You are the only person put at risk, shortly after returning from maternity leave, raising a formal grievance, or requesting flexible working.

• Performance Issues in Disguise: Your manager has recently criticised your work, but rather than putting you on a Performance Improvement Plan (PIP), they suddenly announce your role is redundant.

• Manufactured Selection Criteria: If you are placed in a pool of employees at risk, the employer must score you against objective criteria. If the scoring relies heavily on vague, subjective measures like "attitude" or "cultural fit," it is often a sign they are trying to engineer your exit.

3. The Importance of a Fair Process

Even if the business case for redundancy is completely genuine, your dismissal will still be classed as an unfair dismissal if your employer fails to follow a fair and objective procedure.

A legally compliant process must include the following steps:

Meaningful Consultation Your employer must warn you that you are at risk and consult with you before any final decisions are made. Consultation is not just a box-ticking exercise; it is an opportunity for you to suggest ways to avoid the redundancy, such as reducing your hours, job-sharing, or taking a temporary pay cut.

• Note on Collective Consultation: If your employer is making 20 or more employees redundant at a single establishment within a 90-day period, strict "collective consultation" rules apply. They must consult with trade union or employee representatives for at least 30 days (or 45 days if 100+ redundancies are proposed).

A Fair Selection Pool If your role is identical or very similar to others in the business, you should all be grouped into a "selection pool". The employer must then score everyone objectively (e.g., using attendance records, disciplinary history, or measurable skills) to decide who stays and who goes.

The Search for Alternative Employment Your employer has a strict legal duty to look for suitable alternative roles for you within the company (or any group companies) before dismissing you. If a suitable role exists and they fail to offer it to you, your redundancy will likely be unfair.

4. Modern Commentary: The "Restructure" Loophole

In our practice, we frequently see companies attempting to disguise poor management through endless "restructures". Often, an employer will carve up an employee's duties, distribute them among the remaining team, and declare the original role redundant.

Our Insight: Tribunals are increasingly wise to this tactic. An employer cannot simply shuffle tasks around an office to force out an out-of-favour employee. If the core functions of your job still exist and require roughly the same amount of time to complete, the requirement for your work has not diminished. Do not be afraid to challenge the commercial logic behind a restructure if it feels entirely manufactured.

5. Your Financial Entitlements

If you are made redundant, you must check that your financial package is legally compliant.

Statutory Redundancy Pay (SRP) If you have at least two years of continuous service, you are legally entitled to SRP. This is a minimum legal safety net calculated using your age, weekly pay (capped at a statutory limit), and length of service.

Notice Pay and Holiday You are entitled to work your notice period or receive payment in lieu of notice (PILON). You must also be paid for any holiday you have accrued but not taken up to your final day.

Enhanced Redundancy Pay Always check your employment contract, staff handbook, or company policies. Many employers offer enhanced, contractual redundancy packages that are significantly more generous than the statutory minimum.

6. Practical Steps: What to Do Next

If you suspect your redundancy is a sham, or the process is flawed, you need to act strategically:

1. Ask Written Questions: During the consultation period, ask for the commercial rationale behind the decision. Ask who else is in your selection pool and how the scoring criteria were chosen. Get their answers in writing.

2. Suggest Alternatives: Formally propose alternative roles or working arrangements. Put the burden on the employer to explain why these are not viable.

3. Appeal the Decision: If you are dismissed, you must use the company's internal appeal procedure. Outline exactly why you believe the redundancy is not genuine or the process was unfair.

4. Consider a Settlement Agreement: If the relationship has broken down but you have a strong case for unfair dismissal, your employer may offer you a Settlement Agreement. This is a legally binding contract where you agree not to take them to a tribunal in exchange for a tax-efficient lump sum payment.

How We Can Help

Navigating a redundancy process is daunting, especially when your livelihood is on the line. We can cut through the corporate jargon and assess the true legal strength of your employer's actions.

Whether you need us to help you challenge a rigged selection process behind the scenes, negotiate a highly favourable Settlement Agreement, or represent you robustly in an Employment Tribunal, we offer clear, strategic advice to protect your position.

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