Being made redundant can be a worrying and stressful time for many people. We understand how this can impact individuals and their daily lives, which is why we may be able to help you.
What is redundancy?
Redundancy is a type of employment dismissal. There may be confusion about what actually constitutes redundancy. For many employees, there could be instances where their employer has made them redundant, but they’ve actually been unfairly dismissed. Or, the redundancy hasn’t been assessed properly in line with legal regulations.
Why would a company need to make employees redundant?
There are several reasons why businesses would need to make some of its workforce redundant:
- Going into administration/closing down – if the business closes for good, every employee working there would face redundancy
- Facing financial difficulties – this can be common if the wider economy is affected, or if the industry the business belongs to is targeted by negative press. Global pandemics are high on the list of causes of financial strains too, and it may be that businesses need to reduce their workforce in order to survive
- Diminishing need for employees – sometimes, businesses will restructure part of their offerings which can lead to less people being needed to carry out certain tasks. This could mean redundancy for employees whose roles are no longer required.
How does redundancy work?
If you are made redundant, this does not mean you have been sacked. Redundancy is normally a situation that occurs through the actions of a business, and has nothing to do with you, personally, as an employee.
You should be given time to find new employment (see the process further below) and also you should be paid redundancy pay. You are entitled to redundancy pay, but only if you’ve been working for your employer for at least two years. In terms of your length of service, according to GOV.UK, you’ll get:
- Half a week’s pay for each full year you were under the age of 22
- One week’s pay for each full year you were over the age of 22, but under the age of 41
- One and a half week’s pay for each year that you were over the age of 41
Please note: length of service is capped at 20 years.
When should I receive my redundancy payment?
Your employer has a duty to pay you your redundancy payment on your final day of employment. By law you should receive a statement that details how your payment was calculated.
You and your employer can also agree a payment date soon after your final day of employment, if you wish.
If you feel that your employer has miscalculated your redundancy pay or hasn’t paid you correctly during your notice, you may wish to raise this with them. It may be an innocent oversight that can be corrected, or if they refuse to pay you what you’re owed, you may wish to take legal action.
Employment redundancy legal advice
Your employer is legally permitted to make you redundant, if they follow the correct procedures.
We’ve broken down the process below:
- Don’t make decisions too quickly – all employers who are considering making employees redundant have a duty to make early plans, but still consider alternatives before making any final decisions
- Ask for volunteers first – your employer should make the need for redundancies known throughout the business, and before selecting people should offer the chance for them to volunteer for redundancy
- Consider alternatives – before making anyone redundant, your employer should have considered alternatives first. Could they move you to a different team? Could they create a new role for you in a different line of work at the same company? Could your hours of work be reduced? Could the company look at not paying overtime?
- Use criteria – when selecting employees for redundancy, it’s important that your employer considers a set of criteria to measure each potentially redundant employee against, which should include length of service. It is important that the criteria used is fair and that it is not discriminatory.
- Listen to employees – employees have the right to make suggestions when faced with redundancy, and should be allowed time off to seek other employment if they have received notice that they are being dismissed. They should have at least two years’ service, and the time off is to look for new employment or make arrangements for training for future employment.
- Make it clear they can appeal – it is advisable that employers allow an appeal process, as not doing so may provide an employee with a stronger claim to show the process was unfair. There is actually no statutory right or obligation to allow an employee to make an appeal.
- Put it in writing – Writing should be used to inform people when they are made redundant and to confirm the outcome of an appeal, if there is one.
- Consultations – if 20 or more employees are being made redundant, the employer is under a duty to collectively consult with each individual.
Do I have to work my redundancy notice period?
Being made redundant doesn’t mean you leave straight away. You can still work your notice period. You may be offered “pay in lieu of notice”, where your employer pays you instead of you working your notice. You must work your normal hours during your notice period to receive your normal pay, and your redundancy pay when you leave.
Note: regarding the COVID-19 pandemic and furlough, an employee can remain on furlough and receive payment under the Job Retention Scheme while working a notice period, if the notice is one week more than their statutory entitlement.
How much is redundancy pay?
Your redundancy pay will be calculated based on your length of service (see previous). But, there are caps in place as detailed by GOV.UK:
If you were made redundant on or after 6th April 2020, your weekly pay would be capped at £538. The maximum statutory redundancy pay you could get would be £16,140. If you were made redundant before 6th April 2020, your payment amounts would be lower.
What is voluntary redundancy?
Simply put, this is where an employee chooses redundancy for whatever reason. Your employer can ask if anyone wishes to take voluntary redundancy before selecting people.
It is up to your employer whether or not they accept your offer of voluntary redundancy.
If you’re considering taking voluntary redundancy, you may wish to consider the following:
- What is the package that’s on offer? Note: taking voluntary redundancy does not mean you forfeit your statutory redundancy rights
- What will you do after taking redundancy?
- Will taking voluntary redundancy affect your mortgage?
Can I get redundancy pay if I am over 65?
Yes, you can. You’re entitled to a week and a half’s pay for each year of employment (working for your current employer) that you’ve worked over the age of 41.
Many people in the older age brackets feel as though they are disregarded or discriminated against because of their age, and worry that they may be made redundant as a result. This is unlawful, and would be classed as age discrimination.
Unfortunately, you will need to pay tax on your redundancy pay if your final payment exceeds £30,000.
Contact our redundancy solicitors
Being made redundant may or may not have been your choice. In any case, you are still entitled to the correct pay if you work your notice, and (if you’ve served for longer than two years) a redundancy payment that is calculated properly. Your employer should also have gone through the process with you in line with regulations.
If you feel as though your employer hasn’t followed protocol with your redundancy, or you’ve been underpaid and haven’t been able to get what’s owed to you, we might be able to help with a redundancy claim. We recommend speaking with our employment solicitors in the first instance, who can advise on the next steps within this process. You would need to liaise with ACAS following that, as they would try and achieve early conciliation with your employer. If this fails, you may wish to continue seeking legal advice.