Redundancy or Hidden Dismissal? How to Spot a ‘Sham’ Process

While redundancy is a legitimate reason for dismissal, some employers use it to remove an employee for reasons unrelated to a genuine reduction in work.

A "sham redundancy" occurs where a claimed business need masks an unfair or discriminatory motive. With employment tribunals increasingly scrutinising disguised dismissals, it is important to seek advice from experienced redundancy solicitors if you suspect the process is not genuine.

In this article, Katie Ash, Head of Employment Law at Banner Jones Solicitors, explains what a genuine redundancy process should look like, the warning signs that a redundancy may actually be a hidden dismissal, and the steps employees can take to protect their position.

 

What a Genuine Redundancy Looks Like

A genuine redundancy should be based on a real business need, such as a workplace closure, a reduction in the need for employees to carry out a particular type of work, such as where there is a business reorganisation that removes certain roles, or where there is a complete business closure. Redundancy should never be used simply as a convenient way to dismiss an employee.

A fair redundancy process involves meaningful consultation. Your employer should explain the reasons for the proposed redundancy, give you an opportunity to ask questions and genuinely consider any suggestions you make to avoid dismissal. This may include reducing hours, changing duties, or exploring alternative working arrangements.

Where more than one employee performs a similar role, employers should identify a suitable selection pool and apply objective and transparent scoring criteria. They should also actively consider whether there are any suitable alternative positions available elsewhere within the organisation before bringing your employment to an end.

 

Red Flags: Signs Your Redundancy is a Hidden Dismissal

While every redundancy process is different, there are certain warning signs that may indicate the decision has little to do with genuine business needs and more to do with removing a particular employee.

One of the clearest red flags is where your role is declared redundant, only for a very similar position to be advertised shortly afterwards under a slightly different job title. Equally, if you are the only employee placed at risk despite others carrying out the same or substantially similar work, it is worth questioning how your selection was determined and the criteria used.

You should also be alert if the redundancy follows shortly after a workplace disagreement, grievance, whistleblowing complaint, pregnancy announcement, or significant personal event such as a divorce.

A sudden change in attitude from your employer, particularly where you have a history of positive performance reviews, may also suggest there are factors at play beyond redundancy.

Another common concern is where an employer appears to label the process as a redundancy in order to avoid dealing with performance or conduct issues through the appropriate disciplinary procedure based on the ACAS Code of Practice. If you have not been given a genuine opportunity to respond to concerns or challenge decisions, it may be worth seeking legal advice to establish whether the redundancy is genuinely fair and lawful.

 

Redundancy During Personal Crisis

Going through a divorce, separation or family dispute can have a significant impact on your wellbeing and concentration at work. Unfortunately, some employees find that periods of personal difficulty coincide with increased scrutiny of their performance, followed by a redundancy process that appears to target them rather than address a genuine business need.

While personal circumstances alone do not make a redundancy unfair, employers must take care not to allow assumptions about an employee's situation to influence their decision-making.

If performance concerns only arise after a major life event, or if you feel your personal circumstances are being used against you, it may be worth seeking legal advice.

Where redundancy issues overlap with a divorce, child arrangements dispute or other family law matter, obtaining support from a solicitor who understands both employment and family law considerations can be particularly valuable. Our Family Law team can provide advice on the wider impact personal circumstances may have on your legal position.

 

High Stakes in 2026: New Penalties for Employers

Employers who fail to follow the correct redundancy procedures face increasingly significant consequences. Since April 2026, the maximum protective award for failing to properly consult during a collective redundancy process involving 20 or more employees has doubled from 90 days' actual pay to 180 days' actual pay, increasing the potential cost of non-compliance.

There can also be serious financial consequences where a redundancy is found to be a sham. If an employer uses redundancy as a cover for what is effectively a disciplinary dismissal and fails to follow the ACAS Code of Practice, an Employment Tribunal may increase any compensation awarded by up to 25%.

These changes reinforce the importance of employers conducting genuine, fair and transparent redundancy processes. For employees, they also underline the value of seeking legal advice where there are concerns that redundancy is being used as a pretext for dismissal rather than a legitimate business reason.

 

Don’t Settle Too Soon

Before signing a settlement agreement, make sure the redundancy is genuinely fair and lawful. Once signed, you will usually be unable to bring any future claims against your employer.

An experienced redundancy settlement agreement solicitor can review the process, assess any potential claims, and advise whether the offer is in your best interests. If you believe your redundancy may be a hidden dismissal, our team can help.

 

We’re Here to Help at Banner Jones

For further advice, contact our Employment Law team today or read our Redundancy Guide here.