Redundancy

Redundancy is a form of dismissal and often happens when employers need to reduce their workforce.

If you are being made redundant, you might be entitled to:

  • Redundancy pay
  • A notice period
  • A consultation with your employer
  • The option to move to a different job
  • Time off work to find a new job

Your selection for redundancy must be carried out fairly and based for example, on your experience or capability to do the job. You should not be selected because of your age, gender, or because you are disabled or pregnant for example. If you are, this could be an unfair dismissal.

If you are offered a severance package known as a Compromise or Settlement Agreement, you must take legal advice before signing it.

Being selected for redundancy

Your employer should use fair and objective selection criteria. Common methods include:

  • ‘Last in, first out’ (although this can discriminate against younger employees)
  • Considering staff appraisals, skills, qualifications, experience and disciplinary records
  • Asking for volunteers for redundancy

Your employer might not have to follow a selection process if your job no longer exists – for example, they are closing down an entire part of the business or you are the only employee in your part of the organisation.

Your employer may offer you a different role if one is available or you might be asked to reapply for your own job, to help your employer decide who to select.

Unfair selection

Unfair reasons for selection amount to unfair dismissal – examples include:

  • Gender, marital status or sexual orientation
  • Race, disability, religion or age
  • Your membership or non-membership of a trade union
  • Working pattern (eg part-time or fixed-term employees)
  • Maternity leave, birth or pregnancy or paternity leave, parental or dependants leave
  • Exercising your statutory rights
  • ‘Whistleblowing’
  • Taking part in lawful industrial action lasting 12 weeks or less
  • Taking action on health and safety grounds

Voluntary redundancy

If you volunteer, it is up to your employer whether they actually select you for redundancy.

If your employer offers voluntary redundancy to certain age groups eligible for an early retirement package - this could be unlawful age discrimination. However, an early retirement package (for certain age groups) could be one element of a voluntary redundancy offer open to all employees.

If you are offered a Compromise or Settlement Agreement, you must take legal advice before signing it.

Redundancy pay

If you have been working for your employer for 2 years or more, you will normally be entitled to statutory redundancy pay . This is the minimum amount your employer has to pay by law and it is calculated based on your age, length of service and weekly pay (subject to caps which are reviewed annually). Some employers offer more generous redundancy payments but they cannot pay less than the statutory minimum.

Redundancy pay (including any severance pay) under £30,000 is not normally taxable.

You are not entitled to statutory redundancy pay if your employer offers to keep you on in the same job or a suitable alternative role which you refuse without good reason.

Notice periods and pay

You must be given notice before your employment ends. By law, the minimum periods are:

  • At least 1 week’s notice if employed between 1 month and 2 years
  • 1 week’s notice for each year if employed between 2 and 12 years
  • 12 weeks’ notice if employed for 12 years or more

Very often, your contract will give you longer notice periods.

As well as statutory redundancy pay, your employer should either:

  • Pay you during your notice period or
  • Pay you in lieu of notice

Consultation

You are entitled to a consultation with your employer if you are being made redundant. You can make a claim to an Employment Tribunal if your employer does not consult you at all or if they fail to consult properly. The consultation requirements depend on the number of employees at risk of redundancy.

Time off for job hunting

If you will have been employed for 2 years when your notice period ends, you are allowed  time off work look for another job or to arrange training to help you find another job. The maximum amount of pay to which you are entitled for time off work is 40% of a week’s pay.

If you are worried about the threat of redundancy or you are being made redundant, please contact one of our specialists in the Employment Team, complete our online enquiry form or speak to a member of our client care team.