Businesses operate in a dynamic and competitive market. Workers can lose their job through redundancy if the business suffers a fall in sales. Falling sales means that a business needs fewer staff and some posts are no longer required. Also, low revenues may lead a company to try to cut staffing costs.

Redundancy procedures must be fair, for example firms can use a last-in-first-out method to shed staff. Redundant workers receive compensation according to the number of years with the firm.