Read our redundancy advice fact sheet for all the employment law basics relating to redundancy, brought up to date for the Covid-19 pandemic. We provide accurate information, and debunk the technicalities in plain English.
Am I redundant?
Legally, you can only be made redundant in three situations:
- on the closure of your business (for example, because it goes bust),
- on the closure of your place of work (for example where the business is moving location)
- where there is a reduction in the amount of work that needs to be done (for example if business dips or a restructuring occurs).
It is not the person but the role which is redundant. Therefore if your employer is proposing to bring someone else in to do your job, you are not redundant.
Sometimes an employer finds it easier to use ‘redundancy’ as a label, when the real reason is something else, e.g. because you have had time off sick, or raised issues about the safety of your working conditions.
What am I entitled to financially if I am made redundant?
Statutory redundancy payment
If your job is genuinely redundant then you will be entitled to a statutory redundancy payment if you have been employed for at least 2 years.
The payment is calculated using a formula which takes into account your age, length of service (in whole years) and weekly pay (subject to a maximum). Currently, you receive:
- 0.5 weeks’ pay for each full year of employment up to the age of 22,
- 1.5 weeks’ pay for each full year after the age of 41,
- 1 weeks’ pay for the years in-between.
Until April 2021 there is a cap of £538 on a week’s pay and the most you can be paid is £16,140. This increases each year in line with inflation. Use this redundancy calculator on the gov.uk website to work out what you would be entitled to.
Contractual redundancy payment
You may also be entitled to a better payment under your contract of employment. Ideally this will be written into your employment contract. You may also find details in your staff handbook. However, even if there is nothing written in your contract or staff handbook about this, if there has been a regular course of making enhanced payments to staff on redundancy, you may be entitled to such a payment, particularly if this was known to you when you joined.
Even if you are not entitled to a statutory or contractual redundancy payment, you will be entitled to notice of dismissal.
Your employer may ask you to work during your notice period, in which case you will be paid as usual and continue to receive all your usual benefits. However, they could decide to pay you in lieu of your notice.
Your notice period will usually be written into your contract. There is a statutory minimum:
- one week if you have been employed for fewer than 2 years,
- an extra week for each additional year worked, up to a maximum of 12 years.
During your notice period you may be entitled to a reasonable amount of paid time off to look for alternative work or make arrangements for training. This right kicks in so long as you have 2 years’ continuous employment and there is a maximum of 2 days’ pay or part-time equivalent.
Can I claim unfair dismissal if I am made redundant?
You may be able to claim unfair dismissal if you have been employed for at least 2 years and the reason for your dismissal is either or both:
- ‘substantively’ unfair, e.g. you weren’t really redundant;
- ‘procedurally’ unfair, i.e. a fair procedure wasn’t followed in making you redundant.
Was I really ‘made redundant’?
If you are concerned about the fairness of your redundancy, the best place to start is to consider whether the real reason was redundancy. You can apply the three legal reasons set out above to help you find out. If the real reason for your dismissal was not redundancy, you could may have been unfairly dismissed and could claim compensation.
Have I been unfairly selected for redundancy?
If the reason for redundancy is a reduction in work then, unless a whole team or division is being made redundant, it will usually be necessary for employees to be selected for dismissal. This must be done fairly, using objective selection criteria.
The selection should be free from discrimination of any kind such as sex, race, age or disability.
For example: if sickness absence is a criterion then any absence for a disability related reason should be disregarded.
If someone is selected because they have a poor attendance record, but this was related to shielding, there is likely to be an underlying disability. This would constitute indirect discrimination.
Criteria should be related to measurable factors rather than subjective concepts such as ‘enthusiasm’ or ‘attitude’. Scores should ideally be moderated by more than one manager and it should be possible to challenge any obvious mistakes.
What is a ‘fair procedure’ for a redundancy dismissal?
There is no specific legal procedure but ACAS does give best practice guidelines which employers are advised to follow. No two situations will be exactly the same but, very broadly, the ingredients of a fair procedure will include an employer:
- giving due consideration to ways to avoid the redundancies such as:
- reducing overtime, laying off temporarily, agreeing new terms and conditions, offering voluntary redundancy;
- giving staff as much notice as possible of proposed redundancies and not rushing through the process unduly;
- consulting meaningfully with staff:
- This includes giving proper thought to any proposals put forward.
- The process of consultation is likely to involve at least two private meetings with all those affected.
- explaining the selection criteria and scoring;
- allowing staff to appeal against their selection for redundancy;
- considering whether there are any suitable alternative roles which could be offered and continuing to do so up to the date of dismissal.
If this process is not followed and you have over 2 years’ employment you could have a claim for unfair dismissal.
Be aware: although your dismissal may be unfair, your compensation may be limited if your employer can show that you would have been dismissed anyway, notwithstanding the procedural error.
Does my employer have to consult collectively about my redundancy?
Employers only have to consult collectively – that is with employee representatives – in the event of proposals to dismiss 20 or more employees at a single place of work.
If fewer than 20 employees are at risk of redundancy in any three month period, only individual consultation is necessary.
How can I bring a claim?
You can bring a claim in an employment tribunal for an unpaid redundancy payment or for unfair dismissal, provided you have more than 2 years’ service.
No application fee is payable to bring a claim, but you will have to pay for your own legal advice. This is unlikely to be recoverable.
If you have home or other insurance you should check with your insurer as your policy may cover you for legal fees.
Claims can be made online or claim forms can be downloaded from the government’s online portal.
Redundancy advice from experts
If your job is at risk and you would like to know more about your employment rights in relation to redundancy, talk to our employment law solicitors today. We can provide redundancy advice that will help you figure out the best way forward.
The content of this redundancy advice fact sheet is for information only. It does not constitute legal advice. You should consult with a professional about your particular circumstances before acting on any of the information given.