the difference between redundancy (voluntary and involuntary) and dismissal (fair and unfair)

2.1 HRM – Overview

2.1.0 Purpose & Roles of HRM

Human Resource Management (HRM) is the strategic function that links an organisation’s strategic plan with its people plan. Its main purposes are to:

• Secure the right number of people with the right skills at the right time.
• Develop, motivate and retain staff to achieve organisational objectives.
• Ensure compliance with legal and ethical standards (e.g., redundancy, dismissal, equality).
• Contribute to productivity, quality, corporate social responsibility (CSR) and stakeholder satisfaction.

2.1.1 Workforce Planning

• Forecasting demand – based on market trends, product development, seasonal peaks and projected retirements.
• Measuring labour turnover – a key indicator of workforce stability.
  • Turnover rate = (Number of separations during the period ÷ Average number of employees) × 100%
  • High turnover may signal problems with recruitment, training, morale or compensation; low turnover can indicate a stable, engaged workforce but may also hide a lack of progression.
• Gap analysis – compare forecasted labour needs with current supply; identify surpluses (potential redundancies) or shortages (recruitment).
• Example: A retailer expects a 30 % sales increase over the Christmas period. Workforce planning shows a need for 150 extra part‑time assistants, so recruitment starts three months early.

2.1.2 Recruitment, Selection & Employment Contracts

Recruitment & Selection Cycle

1. Job analysis & specification – duties, qualifications, experience.
2. Advertising – internal (intranet, notice board) or external (job boards, agencies).
3. Short‑listing – objective, non‑discriminatory criteria.
4. Selection – interviews, tests, assessment centres.
5. Offer & contract – written terms, start date, probation, notice period.

Key Elements of an Employment Contract

2.1.3 Redundancy & Dismissal

Redundancy

Redundancy occurs when an employee’s role is no longer required for organisational reasons. Both voluntary and involuntary redundancy must meet statutory duties (notice, consultation, redundancy pay).

Voluntary Redundancy

• Employee chooses to leave in exchange for a redundancy package (often enhanced to encourage uptake).
• Employer still must:
  • Offer a fair selection process for any remaining posts.
  • Provide statutory notice, redundancy pay and accrued benefits.
  • Consult informally about the terms of the offer.
• Useful for reducing staff numbers while preserving goodwill.

Involuntary Redundancy

• Employer decides the role is surplus and terminates the contract.
• Selection must be based on objective, non‑discriminatory criteria (e.g., skills, performance, attendance, disciplinary record).
• Statutory duties:
  • Consultation with affected employees (minimum 30 days if ≥20 redundancies; 90 days if ≥100).
  • Consultation with recognised trade unions where applicable.
  • Written statement of reason, notice period and redundancy pay.

Dismissal

Dismissal is the termination of employment for reasons other than the role ceasing to exist. Under the Employment Rights Act 1996 a dismissal is lawful only if it is “fair”.

Fair Dismissal – Five Statutory Grounds

1. Capability or qualifications – lack of required skills or health issues that prevent work.
2. Conduct – misconduct, breach of contract or gross negligence.
3. Redundancy – the role ceases to exist (see above).
4. Statutory restriction – legal bar to work (e.g., visa expiry, loss of professional licence).
5. Some other substantial reason (SOSR) – business re‑organisation, economic downturn, closure of a branch, etc.

Unfair Dismissal

• Occurs when the dismissal does not fall within one of the five fair grounds or when the employer fails to follow a reasonable procedure.
• Reasonable procedure includes:
  • Investigation of the issue.
  • Written statement of the concerns to the employee.
  • Disciplinary hearing with the right to be accompanied.
  • Opportunity to appeal the decision.
• Employees with at least two years continuous service may bring a claim to an employment tribunal.

Procedural Steps for a Fair Dismissal

1. Identify the correct statutory reason.
2. Gather evidence and conduct an unbiased investigation.
3. Hold a meeting (with a witness) to discuss the concerns and allow the employee to respond.
4. Issue a written statement of the proposed dismissal, outlining reasons and supporting evidence.
5. Allow the employee to appeal the decision.
6. If the appeal is rejected, give final written notice and any contractual or statutory payments (notice pay, accrued holiday, etc.).

Comparison Table

2.1.4 Morale, Welfare & Equality

• Redundancy and dismissal can trigger anxiety, reduced motivation and loss of trust.
• Work‑life balance – flexible working, remote‑working options and parental leave help maintain morale during restructuring.
• Diversity & Equality – the Equality Act 2010 prohibits discrimination on the basis of age, disability, gender reassignment, marriage & civil partnership, pregnancy & maternity, race, religion or belief, sex and sexual orientation. All recruitment, selection, redundancy and dismissal processes must be non‑discriminatory.
• Good practice:
  • Clear, timely communication of business reasons.
  • Support services (counselling, out‑placement agencies, CV workshops).
  • Redeployment or retraining where possible.
  • Fair treatment of remaining staff to sustain engagement.
• Failure to manage morale can increase absenteeism, lower productivity and raise turnover.

2.1.5 Training, Development & Redeployment

• Training can prevent redundancy by up‑skilling staff to meet new role requirements.
• Redeployment – moving employees to vacant posts within the organisation, often after training.
• Examples:
  • Cross‑training retail assistants in stock‑room operations to cover seasonal peaks.
  • Providing basic IT courses to administrative staff so they can move into data‑entry roles.
• When a capability dismissal is considered, the employer must demonstrate that reasonable training was offered before termination.

2.1.6 Management‑Workforce Relations

• Trade‑union consultation is a legal duty for collective redundancies (TU Act 1992). Employers must:
  • Inform the recognised union of proposed redundancies.
  • Enter a consultation period to discuss ways of avoiding dismissals or mitigating their effects.
• Collective bargaining agreements may add extra redundancy procedures (enhanced pay, longer notice, out‑placement support).
• Good industrial relations reduce the risk of disputes and protect the organisation’s reputation.

2.2 Motivation (Brief Overview)

• Content theories – Maslow’s hierarchy of needs, Herzberg’s two‑factor theory – highlight the importance of job security, recognition and career development.
• Process theories – Vroom’s expectancy theory, equity theory – explain why fair procedures in redundancy and dismissal are crucial for perceived fairness.
• Financial motivators – redundancy pay, severance packages, performance‑related bonuses.
• Non‑financial motivators – job enrichment, flexible working, support during transition.

Key Legal References (UK)

• Employment Rights Act 1996 – sections 94‑98 (unfair dismissal) and 139‑148 (redundancy).
• Trade Union and Labour Relations (Consolidation) Act 1992 – statutory consultation duties for collective redundancies.
• Equality Act 2010 – protects against discrimination in recruitment, selection, redundancy and dismissal.