Redundancy and Dismissal (Cambridge (CIE) A Level Business): Revision Note

Employees are made redundant when the job is no longer available and the business reduces the size of its workforce

• Voluntary redundancy

  • The employee chooses to leave, usually in return for a financial package

• Involuntary redundancy

  • The employer selects employees to leave due to reasons like cost-cutting, closures, or restructuring

Redundancies are common when a business is placed in administration

• Reducing the workforce size can reduce costs significantly, improving the viability of a business

• E.g. In early 2024, The Body Shop was placed into administration

  • Plans were made to close 75 retail stores, making 500 employees redundant

Dismissal (otherwise known as firing or sacking) is the termination of employment by an employer against the will of the employee

• Fair dismissal

  • For valid reasons, such as misconduct, incapability or redundancy with a fair process

• Unfair dismissal

  • When the process is flawed, discriminatory or without just cause.

Employees are usually terminated due to their misconduct (e.g. violating company policy) or poor performance

• The employer may choose to dismiss them immediately (without notice or compensation) or provide a notice period

Businesses must take care to avoid unfair dismissal

• Workers can take legal action against employers if they feel their dismissal is unfair

• E.g. An employee at Lidl’s head office in Ireland, dismissed after missing work for 69 days over a 16-month period, was awarded compensation of €16,000 when it was established that he had correctly followed the company's sickness absence policy