Redundancy

If you are facing redundancy, you should still be treated fairly by your employer and there are certain steps they would be expected to follow. You may also be entitled to a redundancy payment.

What is Redundancy?

Redundancy is a form of dismissal from a job. It can come about for several reasons. For example, if new technology or a new system has made your job unnecessary, if the job you were hired for no longer exists, the need to cut costs means that staff numbers must be reduced or the business is closing down or is relocating and you do not wish to move or the option to move is not in your contract.

What Happens Next?

In a redundancy situation, the following things should happen:

• Your employer should select you fairly
• You should be consulted about the redundancy
• You should get any redundancy pay you are due and be given the correct amount of notice
• Your employer should consider any alternatives to redundancy

How Does an Employer Select Who Will be Made Redundant?

Your employer should use fair and objective means by which to select members of staff for redundancy. It is up to your employer to decide which method to choose as long as it is fair. The most common methods are asking for volunteers (self selection), last in, first out (where the employees with the shortest service are chosen first), disciplinary records or by Staff Appraisal (markings, skills, qualifications and experience).

Sometimes an employer might use a combination of criteria to come up with some kind of points scoring system on which to base their decision. Your employer may also ask you to re-apply for your own job. If you decide not to apply, or are ‘unsuccessful’, you still have a job until your employer decides to select you for redundancy. Also, by volunteering for redundancy, it doesn’t necessarily mean that your employer is going to select you.

Unfair Selection

It is definitely unfair if you have been selected for redundancy for discriminatory reasons. Here is a list of reasons where redundancy is unfair and you may wish to take your case to an Employment Tribunal:

• If you have taken or are on maternity leave
• If you are a member (or opt out of becoming a member) of a trade union
• If you take part in industrial action lasting 12 weeks or less
• If you have to do jury service
• If you’re accused of ‘whistleblowing’, i.e. making disclosures about company wrongdoings
• If you take action on health and safety grounds

Your Rights to Consultation

Employers should always consult with their employees before making them redundant. This can either be done individually or collectively if a group is being made redundant.

If the employer is planning on making more than 20 staff members redundant within a 90 day period, the relevant trade union or employee representative must be informed firstly. The consultation should cover ways to avoid a redundancy situation and how to keep dismissals to a minimum. It should take place at least 30 days before the redundancies are due to begin or 90 days if more than 100 employees are involved. If this doesn’t happen, you can take your employer to an Employment Tribunal which can award up to 90 days’ compensation to each employee.

Your employer should also try to speak to you individually about the reasons why you’ve been selected and to discuss possible alternative options to redundancy if there are any. If this doesn’t happen, your redundancy might be deemed unfair.

Redundancy Pay

You have the right to redundancy pay if you are an employee aged between 18 and 65 and have worked continuously for your employer for the last 2 years. A redundancy payment isn’t due to you if work picks up and your employer offers to keep you on or offers you suitable alternative work which you refuse without good reason. If you leave your job for another one before the end of your notice period, your payment might also be affected. Redundancy pay can also be claimed if you have been temporarily laid off for more than 4 weeks in a row or 6 weeks in any 13 week period.

Calculating How Much You Might Receive

There may be an agreement in your contract explaining how redundancy pay will be worked out. However, if this gives you less than the statutory pay, the statutory amount applies. The first £30,000 of any termination payment is tax free.

You’ll get:

• Half a week’s pay for each complete year of continuous service between the ages of 18 and 21
• A full week’s pay for each complete year of continuous service between the ages of 22 and 40 and
• A week and a half’s pay for each complete year of continuous service between the ages of 40 and 64.

If you’re 64 or over, your payment will be reduced by one twelfth for each complete month you’re over 64 which means that if you are 65 or over, you won’t be entitled to any redundancy payment.

What if I Have Problems with Payment?

Your employer will normally pay you on the last day of your notice period, shortly afterwards or on your next pay day. If you haven’t been paid or are unhappy with the amount, try to sort things out with your employer firstly. You should do this in writing explaining why you feel there has been a shortfall in payment and your employer should respond with a written statement explaining how the payment has been calculated. If this doesn’t work, you may need to take your case to an Employment Tribunal but you should do this within 6 months, otherwise you might lose the right to payment. If the company can’t pay you because they’ve become insolvent, you may be able to get help from the Government.

If you need free, impartial advice on redundancy, you should contact your local Citizen’s Advice Bureau or ACAS.