Can I Replace Staff With AI and Make Them Redundant?

As an employer in England or Wales, you can make an employee redundant if you introduce AI software or automation technology to complete their work, but under the Employment Rights Act 1996, the process must be fair. With interest in AI reaching a fever pitch in 2025, more and more employers are carefully weighing whether to introduce innovative AI tools in the interests of efficiency and operational costs. The use of AI is regularly cited as a reason, at least in part, for the ~30% fall in the number of entry-level and graduate positions. This article, the first in a two-part series, focuses on the legal basis and best practice for employers in England and Wales when replacing staff with AI or automated systems. The second article will explore the risks and implications of using AI (such as ChatGPT) to help select staff for redundancy.

What does the law say about making staff redundant due to AI?

A member of staff can be made redundant if their employer has a reduced need for that person to perform their role. If a task can now be completed by AI or another form of automation, the role itself may become redundant, provided this is not used to disguise other motives (e.g. cost-cutting or performance management).

Section 139(1) of the Employment Rights Act 1996 states that a:

“Person who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to...the fact that the requirements of that business…for employees to carry out work of a particular kind…have ceased or diminished or are expected to cease or diminish”.

For example, if you have introduced AI software to handle some of the invoice processing currently handled by members of staff, this may be a genuine reason for considering redundancy.

The next aspect of the law to understand is that of fairness. Dismissal, including by means of redundancy, must follow a fair process in order to avoid a claim for unfair dismissal. Section 98(4), Employment Rights Act 1996 (ERA 1996) states:

“the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and (b) shall be determined in accordance with equity and the substantial merits of the case”.

Employers considering making staff redundant due to the implementation of AI must be confident that they can show that they are acting reasonably when doing so. Having determined that it is reasonable to consider redundancy, you must follow a fair process, preferably in accordance with the ACAS code.

Following the ACAS Code for redundancy fairness

ACAS advises that a fair redundancy process involves:

Crucially, you must be prepared to explain why AI is being introduced, what tasks it will cover, and how this affects the roles in question. Throughout the process of redundancy, we recommend keeping robust documentation including:

Employers considering making employees redundant must explore and, where possible, offer suitable alternative employment within the business. This can include:

Offering part-time hours if only some of the original duties remain;

Moving staff into another role that matches their skills, with appropriate training;

Restructuring roles to allow for job sharing or redeployment.

Failure to consider and offer alternative roles, including making a role part-time, can render the redundancy unfair and leave you open to legal claims. If you propose reducing a full-time job to a part-time post, you must offer this as a choice, not as a ‘fait accompli’.

Other legal implications of making staff redundant due to AI

Common mistakes when making HR decisions due to AI may include:

We recommend reviewing and updating your internal policies, staff handbook, and employment contracts to reflect changes in how technology may be adopted going forward.

Final words

While it may be possible to make staff redundant due to the use of AI within your organisation, it is important to ensure it replaces the tasks they perform and, therefore, reduces the need for that person to perform their role. In the next article, we will look at the risks and implications of using AI and tools like ChatGPT and Claude to assist HR in the redundancy process, for example, by analysing job tasks, assessing redundancy selection matrices, or drafting consultation letters. We will also explore the legal and ethical limits of using AI to make people decisions.

FAQs

1. Can I replace a role with AI and make someone redundant in the UK?

Yes, if the role itself is no longer needed and a fair redundancy process is followed.

2. Do I have to offer part-time work if only some duties remain?

Yes, if the remaining duties still constitute a viable part-time role, you must offer it as an alternative to redundancy.

3. Can I use AI to help choose who is made redundant?

Not without serious legal implications for your business. Our next article will explore this topic in detail.

4. Do I need to consult if only one role is affected by automation?

Yes. Individual consultation is always required, regardless of the number of affected roles.

5. What happens if I don’t consult or offer alternatives?

You may potentially face claims of unfair dismissal, breach of contract, or discrimination by former employees.