Guide to employee redundancy rights
Understanding your redundancy rights can help to alleviate some of the stress and uncertainty of the redundancy process.
Redundancy can be a lawful reason for dismissal, but employers have to follow the correct procedure and employees must be treated fairly throughout the process.
If your employer has failed to meet their duties, you may be able to bring a tribunal claim against them.
How much redundancy notice should I get?
In the case of redundancies, minimum notice periods are specified by law. The statutory redundancy notice periods are:
- If you have been employed for 12 years or more, then you must be given 3 months’ notice.
- If you have been employed between 2 years and 12 years, you must be given 1 week’s notice per year of employment.
- If you have been employed between 1 month and 2 years, you must be given at least 1 week’s notice.
Employers can offer more than the statutory minimum notice, but no less. Check the terms of your employment contract as you may be entitled to a longer notice period than the statutory minimum.
If you have been given notice of your redundancy, you are entitled to take paid time off work to look for a new job or for training.
How much redundancy pay am I entitled to?
Employees with two or more years’ continuous service dismissed by redundancy may be entitled to statutory redundancy pay.
The level of entitlement will be determined by the employee’s weekly gross pay, age and length of service, up to a maximum of £450 a week and 20 years’ service.
In some instances, enhanced redundancy payment could be an entitlement under the employment contract.
Your notice period will have a bearing on your redundancy pay. As well as statutory redundancy pay, your employer should either give you your basic pay through your notice period or pay you instead of giving you a notice period (‘in lieu of’ notice).
Pension contributions, private health insurance and other benefits should also be factored into the payment, usually with reference to contract terms.
Depending on the circumstances of the redundancy, consideration could be given to a settlement agreement to deal with any disagreement between the employer and employee associated with the redundancy process or dismissal, to allow for an expedited termination of contract and a clean break for both
Have I been unfairly dismissed?
If you have more than two years’ continuous service with the organisation, you have the right to be dismissed fairly. This also applies to the redundancy process.
Redundancy can be a fair reason for dismissal, but it requires the employer to act reasonably and to follow a fair and lawful process.
If you believe your employer has fallen short of these standards when making you redundant, you may be able to claim for unfair dismissal.
Take legal advice if you are concerned about the circumstances of your dismissal to ensure you understand your options and take appropriate action to safeguard and enforce your employment rights.
Is my redundancy automatically unfair?
In a number of scenarios, redundancy would be deemed automatically unfair if the decision to make you redundant was in part due to:
- Exercising or requesting to exercise one of your rights at work eg maternity leave, holiday entitlement
- Working on a part time or fixed term basis
- Reporting your employer for illegal activity, ie whistleblowing
- Taking action about health and safety related concerns
- Refusing to work in a shop on a Sunday
- Being a trade union member and/or taking part in union activities
- Taking part in jury service
Employers can make lawful redundancies where any of these scenarios apply, but these can not be the reason for the redundancy. It will be a matter of evidence to prove the unlawful basis of your selection for redundancy under an automatically unfair ground.
For example, you may be able to show that the redundancy selection comes soon after one of the above scenarios has taken effect, such as telling your employer you are pregnant.
You do not need to meet a minimum employment period to be able to bring a claim by reason of an automatically unfair dismissal.
Can you be made redundant while on maternity leave?
If you are on maternity leave, and as such are within the ‘protected period’, you have certain rights relating to redundancy.
Employers have to follow a fair redundancy procedure for all employees potentially affected by redundancy, including employees on maternity leave. You should not be selected for redundancy because of your pregnancy, maternity leave or a related reason as this would be automatically unfair dismissal and unlawful discrimination.
You also have a right to be offered, and given first refusal on, other suitable alternative vacancies with your employer, provided you have at least two years’ continuous service when your employment ends.
Redundancy pay should be set at the rate of your pre-maternity pay.
Do I have to accept alternative employment from my employer?
Your employer may offer you alternative, suitable employment, either within the organisation or an associated organisation. They have to follow the correct procedure or you could refuse the offer and claim redundancy pay instead. The offer should include enough detail for you to understand the role and responsibilities. The offer should be made before your current job ends and the role should start within 4 weeks of your current job ending.
If you do not wish to accept the role offered, you would need to ensure your decision would be considered reasonable, for example if it is for a different kind of work. An unreasonable rejection of suitable, alternative employment could result in you forfeiting your right to redundancy pay.
If you want to accept the alternative role, you should confirm this in writing and you may need to sign a new contract that reflects the terms of your new role.
Where you are offered a new role, you are able to take it on on a trial basis for up to 4 weeks. If your employer refuses to allow the trial, your redundancy could be classed as unfair dismissal.
The trial should be available for every alternative role you have been offered. It is also possible to extend the trial period by mutual agreement with your employer, for example if training is needed.
This 4 week period will include any holiday or sickness absence.
If as a result of the trial you do not wish to proceed with the role, you will need to confirm this to your employer in writing before the end of the 4 week trial period, stating your reasons and seeking confirmation that you will receive redundancy pay, if you are entitled ie you have the qualifying two year service.
What is a redundancy consultation?
Redundancy can qualify as a lawful ground for dismissal provided the employer has acted reasonably and fairly through the redundancy process.
This applies when identifying an appropriate pool for selection, consulting ‘at risk’ individuals, applying objective selection criteria to those selected and considering suitable alternative employment where appropriate, subject to a 4-week trial period.
If you have been selected for redundancy as part of a ‘pool’ of at-risk employees, you have a right to know the reasons for your selection. Employers are required to apply selection criteria objectively, consistently and fairly. They must not be discriminatory in their application of the selection criteria or when making the final decision on who will be dismissed by redundancy.
Your employer must then consult with you about any possible redundancy and give you the opportunity to ask questions and appeal any decisions.
The consultation requirements vary depending on how many employees will potentially be affected by the redundancy process.
Where there are fewer than 20 employees, consultation should be on an individual basis.
Where more than 20 employees are affected, ‘collective’ consultation is required.
In either scenario, the consultation should offer a meaningful opportunity for a two-way dialogue to discuss potential alternative courses of action such as a reduction in hours, with the aim of avoiding making redundancies if at all possible.
During the consultation, the employer should also make employees aware of any suitable alternative employment either within the same organisation or other associated organisations.
Employers are required to make reasonable, genuine efforts to identify such ‘substantially equivalent’ roles taking skills, pay, contract terms and conditions and job duties into consideration.
Note that an unreasonable refusal of a suitable offer could mean you lose your right to redundancy pay.
Should I take voluntary redundancy?
If your employer is offering voluntary redundancy, you will need to consider all of the implications in terms of your entitlement and rights.
If you take voluntary redundancy you will be entitled to the same rights as under a compulsory procedure, such as paid time off to look for a new job.
Employers may offer voluntary redundancy packages to incentivise take up, for example with redundancy payment above the statutory level. You will need to understand what you would be owed in terms of both statutory and contractual entitlements under compulsory redundancy to compare against the voluntary offer.
Do you have a question about your redundancy rights?
DavidsonMorris’ employment lawyers can help if you are facing redundancy and are unsure about your redundancy rights. We provide specialist advice in complex cases such as redundancy during maternity leave and cases where a negotiated exit and settlement may be more appropriate. Contact us for professional guidance.