Contract Termination

What Is the Difference Between Redundancy and Contract Termination?

As an employer, it’s extremely important to make sure that you’re familiar with common legal jargon to ensure you’re following the correct procedures and not unknowingly breaking the law. Consulting with employment lawyers is never a bad idea, as they will be able to explain everything and direct you if you’re not quite doing things right.

A lot of inexperienced employers get confused about the differences between redundancy and standard contract termination, and they make mistakes as a result. In the rest of this article, we’ve explored both of these, as well as what each one involves and what your obligations as an employer are.

What Is Redundancy?

Redundancy refers to removing a position because it’s no longer needed. In many cases, a person will lose their job when a position is made redundant, but it won’t always happen. Redundancies occur because:

  • A person’s job has been automated or taken over by a machine of some sort.
  • A company downsizes and therefore the position isn’t required anymore.
  • A person’s job is no longer required because the work is split between other existing positions.
  • A company goes bankrupt or insolvent and can’t afford to keep the employee on.

Unfortunately, redundancies are all too common in the modern world. But, the good news is that employees who are made redundant are usually entitled to a redundancy payout which, in some cases, can be quite large.