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What’s the difference between unfair dismissal, redundancy and termination?
What’s the difference between unfair dismissal, redundancy and termination?

Our Which? Legal experts explain the meaning behind common terms surrounding termination.

Termination refers to when an employment contract is brought to an end, and both unfair dismissal and redundancy are types of termination. Either the employer or the employee can terminate an employment contract, usually by giving notice to the other. Sometimes an employment contract is brought to an end by both the employer and employee. This is what’s called a ‘mutual termination’.

Unfair dismissal

Sack’, ‘fire’, ‘let go’ are all terms for the same thing: dismissal. Dismissal is when your employer terminates your contract. In some instances, you may feel you’ve been subject to ‘unfair dismissal’. This is when either the reason you’ve been given for your dismissal is not a genuine or acceptable one and/or your employer hasn’t followed a proper procedure. Employment legislation sets out the rules under which a dismissal can be classed as fair. 

If you choose to terminate your contract, it’s classed as a resignation, not a dismissal.


Redundancy is on the list of potentially ‘fair’ dismissals. This is when your employer terminates your employment contract because it no longer needs you and your job will cease to exist.

Usually redundancies come about when a company wants to save money, change the way it’s doing things or move location. Occasionally, the workplace may be closing down completely. In most cases, dismissal through redundancy will be fair if the reasoning is genuine and a proper procedure has been followed.

However, there are occasions when redundancy isn’t fair. For example, if your employer is reducing its headcount but does not go through a fair selection process to decide who will stay and who will go. 

Your legal rights on unfair dismissal and redundancy

If you’ve worked continuously for your employer for two years or more and you’re dismissed, you may have a claim for unfair dismissal. Sometimes, even with fewer than two years of employment, you can have a claim. For example, if you were sacked because you’re pregnant or if you have a discrimination claim against your employer. There’s no minimum length of employment before you can bring claims of this nature.

If you’re made redundant, whether fairly or not, the law gives you the right to be paid an amount of money based on your length of employment, age and salary, as part of your redundancy package. This is in addition to any notice pay you’re entitled to under your contract. Unless your employer has a particularly generous redundancy scheme, you won’t qualify to receive any redundancy pay if you’ve been employed for fewer than two years.

As well as notice pay and, if you’re made redundant, redundancy pay, there are other payments you may be entitled to if you’re dismissed, regardless of how long you’ve been in the job or how fairly it’s been handled. These include holiday pay (if you haven’t taken all the annual leave you have owing to you), and any outstanding commission, bonuses and pension payments (if these are provided for in your contract). 

Situations when you may have a claim

If you’re not paid all the amounts you’re due, you may have grounds for a breach of contract claim, a statutory holiday pay claim and/or an unauthorised deduction from wages claim. Again, there’s no minimum period of continuous employment needed to bring these types of claims. It will generally come down to what your contract says you’re entitled to.                                                                                      

If you’re part of a large group of people who are made redundant at the same time, there are statutory rules that mean your employer has to inform and consult in a set way. If they don’t do this correctly, you may have a claim for an additional financial award.

Before starting any legal claim, it’s a good idea to seek advice from an employment lawyer or specialist adviser. For expert employment law advice contact Which? Legal today.


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