Our latest fact sheet looks at redundancy. Our series of factsheets is intended to cover topics which individuals may find of particular interest or, which are universally relevant but tricky to navigate. Our aim is to give basic facts about the legal concepts involved and to debunk the technicalities, using plain English.
Am I redundant?
The law recognises that redundancy can occur in three scenarios only:
- on the closure of a business (for example, where an employer goes bust),
- on the closure of a place of work (for example where the business is moving location)
- where there is a reduction in work needing to be done (for example if a customer is lost, a process is automated 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 the label “redundancy” but the real reason is something else, such as poor performance.
What am I entitled to if I am made redundant?
If your job is genuinely redundant then you will be entitled to a statutory redundancy payment if you have been employed for at least two years. This is calculated using a formula which takes into account your age, length of service (in whole years) and weekly pay (subject to a maximum). From 6 April 2018 the most you can be paid is £15,240 (although this increases each year in line with inflation).
You may also be entitled to an enhanced contractual redundancy payment, depending upon whether your employer offers this. It will depend upon the terms of your employment contract. 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.
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 or, it might pay you in lieu of your notice. In which case it will depend on the wording of your contract as to whether your pay in lieu of notice includes the value of your benefits or just your basic pay.
During your notice period you may also be entitled to a reasonable amount of paid time off to look for alternative work or make arrangements for training.
Can I claim unfair dismissal if I am made redundant?
Yes, if you have been employed for at least two years and the reason for your dismissal is either substantively unfair, for example, because you weren’t really redundant and/or procedurally unfair because a fair procedure wasn’t followed in making you redundant.
Have I been fairly 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 which are free from the taint of discrimination of any kind such as sex, race, age or disability. So, for example, if sickness absence is a criterion then any absence for a pregnancy related reason should be disregarded. A “first in, last out” selection criterion is likely to be discriminatory on the grounds of age.
Criteria should be related to measurable factors rather than based on 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 quickly,
- consulting meaningfully with staff, including giving proper thought to any proposals they put forward. This is likely to involve at least two private meetings with each of those affected,
- explaining the selection criteria and scoring to allow staff to appeal against their selection for redundancy,
- considering whether there are any suitable alternative roles which could be offered in other parts of the business (including at other group companies), and continuing to do so up until the date of dismissal.
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. If less than 20 employees are at risk of redundancy, in any three month period, then 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 (if you are eligible).
No application fee is payable to bring a claim but you will have to pay for your own legal advice and this is unlikely to be recoverable in full (or at all). 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: https://www.gov.uk/employment-tribunals/make-a-claim
How can we help you?
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 specialists today. We’ll help you figure out the best way forward for you.
The content of this fact sheet is for information only and does not constitute legal advice. You should take specific professional advice in respect of your particular circumstances before acting on any of the information given.