Redundancy is one of five statutory fair reasons for dismissing an employee, and is used most often when a business is going through a difficult time. Affected employees are usually entitled to a statutory payment and they may be able to challenge the termination of their employment if a fair process is not followed.
Redundancy is often an unpleasant situation, and it is important that you are fully informed of your rights throughout the process. It is important to seek specialist advice tailored to your situation if necessary, however we have summarised some important considerations:
Redundancy should only be used in certain situations that are ‘wholly or partly attributable’ to one of three situations
If the situation does not fit within these scenarios, then specific advice should be sought to consider the next steps.
Your employer must consult with you at least once before making you redundant.
Where 20 or more employees are being made redundant over a period of 90 days or less, special rules apply. The employer may hold collective consultations with elected employee representatives, or your trade union if applicable.
You may be part of a ‘selection pool’ of potentially redundant employees. Your employer may use certain criteria to make a decision on who to select for redundancy.
The selection criteria must be objective and non-discriminatory and the scoring process carried out fairly. You cannot be selected for redundancy because:
If no alternative to redundancy can be found during the consultation, the employer will need to communicate their decision to make you redundant in a final meeting, which should be followed up with a letter. You have the right to appeal the decision made.
If you are made redundant, you are entitled to certain payments. If the employer does not make these payments, or pays you a lesser amount to that you are owed, you may have claims for ‘wrongful’ dismissal, unlawful deductions or breach of contract.
You will be entitled to:
Notice must be given of the leaving date. This is subject to your employment contract and the statutory minimum requirements based on your length of service:
You may be offered payment in lieu of notice or garden leave, but the right to this should be included in the contract or agreed specifically with you.
If you have worked for your employer for at least two continuous years, you will be entitled to statutory redundancy pay calculated at the following rate:
One week’s pay is subject to a cap which is currently set at £544 (April 2021).
You can use the statutory redundancy pay calculator available on the gov.uk website here.
Contractual redundancy entitlements will also apply.
The Government has announced that from 31 July 2020 employees on furlough will be entitled to receive redundancy payments at a rate of 100% of their normal pay, rather than at their reduced furlough rate. You can find the new rules here.
You will also be entitled to pay in lieu of any accrued but untaken holiday outstanding as at the date their employment ends.
One way for your employer to avoid making you redundant is to offer you suitable alternative employment that starts within four weeks of your current role ending. You are also entitled to a four-week trial period.
If you feel the alternative role is not suitable for you, you will need to tell your employer in writing. The employer may feel differently and refuse to pay your redundancy pay, in which case it is important to seek advice.
A settlement agreement is a legally binding agreement between you and your employer, usually providing a settlement payment in exchange for your agreement not to pursue any employment-related claims.
You are obliged to receive legal advice from an independent advisor on the terms of a settlement agreement before you sign. It is possible to negotiate the terms of a settlement agreement. You can find more information and book an appointment here.
If you feel that you have been treated unfairly or your employer has not followed due process, it is essential to get advice from a redundancy solicitor. Our solicitors are here to support you and ensure the best outcome for you.