How redundancy works

Redundancy is one of the reasons that an employer can fairly dismiss an employee from their job. However, there are various hurdles that an employer must clear before they can do so.

Firstly, there must be a genuine reason for the employer to consider making redundancies. Genuine reasons include, a reduction in need for the current number of employees. For example if the employer loses an important customer, it may need less people to cover a reduced workload, a change of the employer’s location or the closure of all or part of the employer’s business.

It’s important to understand that redundancy involves the role you are performing no longer being needed, not the person.  If you are being dismissed for a reason related to you personally then it is not a redundancy.

Secondly, an employer must give employees as much notice as possible of any proposed redundancies and must talk to employees about the situation and consider their views. This will usually involve several meetings where the reasons for the redundancies are explained as well as why the employee has been selected. Employees should have the chance to challenge their own selection for redundancy.

An employer must not pre-judge the situation during the consultation period. Employees should be regarded as “at risk” of redundancy rather than assuming they will definitely be dismissed. If an individual puts forward a way of avoiding the redundancies, then the employer must consider this.

Dismissal must be a last resort and an employer must consider everything they can reasonably do to avoid the dismissal. Alternatives to dismissal might include changing working hours, reducing contractual benefits or re-organising work.

An employer has a duty to consider whether it has any suitable alternative employment to offer at risk employees to avoid their dismissal.  This includes looking for opportunities at associated or subsidiary companies.

Can redundancy be unfair dismissal?

Yes, if you are an employee who is eligible to claim unfair dismissal (i.e. generally, you have two years’ service). There are various ways that an employer may unfairly dismiss an employee during the redundancy process, including:

  • The reason for the dismissal is not a genuine redundancy.
  • The pool from which employees were chosen to be made redundant was unfair.
  • The employee was unfairly selected for redundancy due to discriminatory selection criteria or unfair scoring.
  • The employer did not take enough time to consult with the employees.
  • The employer pre-judged the situation and did not genuinely consider if it could avoid the redundancies.
  • Employees were not given the correct information to be able to challenge their selection.
  • The employer failed to consider whether there was any suitable alternative employment it could offer.

There is a lot that an employer can get wrong when it comes to making redundancies and employment tribunals will be particularly concerned to see that a fair procedure has been followed all the way through.

What redundancy pay am I entitled to?

You are legally entitled to redundancy pay if you are an employee (not a worker) and you have been employed for at least two years.

A formula is used to work out how much you are entitled to based upon:

  • your weekly pay before tax
  • the completed years you’ve worked for your employer
  • your age

There is a limit to the amount of redundancy pay you receive using this formula as weekly pay is capped (it goes up each year). Any pay you earn above this won’t be included in the calculation.

In addition, the maximum amount of years you can claim for is 20. Any service over this won’t be counted.

You can use the government’s online calculator to find out how much you might get on redundancy.

Some employers enhance this basic redundancy payment. Check your employment contract and staff handbook to see if it contains a redundancy payment clause or policy. Even if it is not written down in these documents, some employers may have a practice of paying more so it is always worth asking.

Find out whether you have been treated fairly

We can advise you whether your redundancy has been handled properly and whether you have a case for issuing employment tribunal proceedings. We can also negotiate a favourable exit package for you.

We can check whether your employer has followed the correct procedures and whether your redundancy is based on appropriate grounds.

Calculating what’s owed to you

Our specialist employment solicitors can help ensure that you receive the redundancy payment you are entitled to. We will make sure you receive the right payment according to your age, length of service, salary and contract.

Should there be any legal issues arising from your redundancy, we can help you claim compensation from an employment tribunal, or help negotiate a good financial exit package.

Contact us for an initial chat with our helpful team.

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