The employer may dismiss the employee for the ground of  redundancy

 In cases of justified dismissal by reason of redundancy the employee is not entitled to any compensation by the employer, but to a redundancy payment by the Redundancy Fund .The Redundancy Fund has a legal personality and it has the capacity to appear to the Industrial Disputes Court to defend its interests against any application filed against it in cases of rejection of any petition for a redundancy payment by any employee.

Preconditions for a redundancy payment.

The preconditions for a redundancy payment by the Employees Redundancy Fund according to the Law (Schedule –D- of the Law) are the following:

  • Fulfillment of any of the following grounds of redundancy :

The employer has ceased or intends to cease to operate the business;

The employer has ceased or intends to cease to operate the business at the place where the employer is employed, unless the Industrial Disputes Court decides that the change of the place of employment does not amount to redundancy because it is reasonable to be expected by the employee to continue his employment at the new place of employment ;

Modernization or any other change in the methods of production or organization that necessitates a reduction in the number of the necessary employees ;

Change in the products or to the methods of production or the expertise required by the employees ;

Abolition of specific department;

difficulties in placing goods to the market or credit difficulties;

Lack of orders or raw materials ;

Rarity of means of production ;

Contraction in the volume of work or business .


  • The applicant/employee must not have reached the retirement age in accordance with the Social Insurance Law;

  • The applicant/employee must have been continuously employed by the same employer for at least 104 weeks ;

The Law provides that the employee is not entitled to a redundancy payment:

If before the termination of employment the employer offers to the employee another suitable employment unconditionally and the employee rejects it unreasonably (a).  According to the case-law of the Industrial Disputes Court the relevant factors to be taken into account in deciding whether the new employment is suitable is the status, the required skills and other terms of employment such as wages and other benefits and personal circumstances have to be taken into account as well such as family matters, residence and other personal conditions .


If a new employer renews the contract of employment provided that the employee has no reasonable cause to be proved to the satisfaction of the Industrial Disputes Court to reject the offer for renewal of the employment contract (b); The Industrial Disputes Court has ruled that this exception applies in cases where the business is transferred to a new employer wholly or party.


If the employer is a company registered under the company law  and the employee is transferred to an associated company, either if the one is a subsidiary of the other or if both companies are subsidiaries to a third company.  According to the case law of the Industrial Disputes Court the transfer has to be in writing .

If prior to the termination of employment another employer, which is a company whose main or controlling shareholder is the previous employer, offers to the employee suitable employment.

The redundancy payment is defined in accordance with Schedule –D- of the Termination of Employment Law as follows (years of continuous employment/wages for every period of employment of 52 weeks):

             For the first 4 years ……………………………………………………….. 2 weeks’ wages;

             From the 5th year until the 10th year (included) …………….. 2,5 weeks’ wages;

             From the 11th year until the 15th year (included) …………….. 3 weeks’ wages;

             From the 16th year until the 20th year (included) ……………. 3,5 weeks’ wages;

             From the 21th year until the 25th year (included) …………….. 4 weeks’ wages;

Redundancy procedure.

The Law imposes a duty on the employer to notify the Minister of Labour and Social Security about the redundancy at least a month before the termination of employment of the employees so affected.  Such notification is made through the prescribed form and contains the following particulars:

             number of employees that will probably be made redundant;

             the section(s) of business that will be affected;

the professions and if possible the names and family obligations of the employees so affected;

             the reasons of redundancy.

Any employer who fails, without reasonable cause to notify the Minister about the intended redundancy is liable on conviction to a fine.

The employer must give in writing the relevant notice of the Law to the employee, ie, that his services will no longer be required because of redundancy.  The employee must within 3 months as from the termination of his employment file an application with the Employees Redundancy Fund for a redundancy payment.  The Fund requests from the employer to complete a certain form about the reasons of redundancy etc, that will enable it to examine the employee’s application.  If the Fund does not approve the application, then the employee may commence proceedings against the Redundancy Fund and his employer.  From the former he will be claiming redundancy payment and from the latter compensation for unfair dismissal.  That is because if redundancy is not proved, then the dismissal is considered as unfair, thus entitling the employee to claim compensation for unfair dismissal according to  the Law.

Other articles in the same series

Unfair Dismissal

Paternity Leave

Maternity Leave

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