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Redundancy Test

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The House of Lords has now (hopefully) laid to rest the function v contract test for determining whether a redundancy situation exists.

This case dealt with the defintion of redundancy in the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965. This is identical to the wording of sections 98/139 of the Employment Rights Act 1996.

Following the approach in Safeway Stores v Burrell, Lord Irvine LC (giving the leading judgment) stated that previous decisions setting out the 'function' or 'contract' test missed the point. The wording of the Act was clear, and there were two questions for tribunals to consider:

(1) Did a certain economic state exist? (in this case, whether the requirements of the business for employees to carry out work of a particular kind had diminshed; and,. if so,

(2) Was the dismissal attributable, wholly or mainly, to that state of affairs (i.e. causation).