What is redundancy?
Redundancy is a type of dismissal from work.
It happens when employers decide to shed staff or cut costs. It can also happen when jobs no longer exist.
It seems certain that many businesses will decide to make people redundant in the weeks and months ahead.
There are two types of redundancy.
- Involuntary redundancy is when it's forced on you.
- Voluntary redundancy is when you opt for it.
There are steps businesses must take when laying off staff – and things they must avoid.
For example, employers can't lay people off because of age, gender, race, or pregnancy. This is unfair dismissal.
It's also unfair dismissal if someone is laid off because of their
- marital status
- sexual preference
- trade union membership
- part-time hours
You could choose to go to court if you think you've been unfairly dismissed.
Employers must conduct a proper process and must be fair when deciding who to lay off.
Fair ways to decide who to lay off include looking at
- staff length of service (last in, first out)
- staff skills, qualifications and experience
- whether there are any volunteers for redundancy
- staff appraisals and disciplinary records.
The ‘last in, first out' method must not discriminate. For example, young people should not be the only ones losing their jobs.
If a role or department no longer exists, people in that role or department can be made redundant without going through a selection process.
If an employer is cutting 20 or more jobs at once, there must be consultation involving a union or employee representative. It must start at least 30 days before anyone's job ends.
For 100 or more jobs, consultation is at least 45 days.
Even if a company is shutting down, there must still be a consultation.
When being laid off, you may receive
- redundancy pay
- notice period
- notice pay.
The amount of redundancy pay you will get depends on your age and how long you've worked for a company.
There is a new law to make sure people who have been furloughed receive redundancy pay based on their normal wages – not on their furlough wages. This applies to notice pay and other entitlements, too.
People who've worked for a company for less than two years, or without a contract, are not entitled to redundancy pay.
Everyone else receives at least the minimum redundancy pay required by law (statute):
- one and half weeks' pay for every full year of employment after age 41
- one week's pay for every full year of employment from age 22 to 40
- half a week's pay for every full year of employment up to age 22.
When calculating statutory redundancy pay, the maximum service considered is 20 years, and the highest weekly wage is £538.
The most statutory redundancy pay anyone can receive is £16,140.
Employers can choose to pay more. They can also choose to pay people who've worked for them for less than two years..
Redundancy pay up to £30,000 is not taxable.
Accepting a different job
If your employer offers you another job, think about it carefully.
You may lose your redundancy rights if you turn it down.
Things to consider
- Is it like your current job?
- What are the terms and conditions?
- Does it match your skills and abilities?
- What are the pay and benefits?
- Are the hours and location what you want?
You can go to an employment tribunal if the job is unsuitable and you've been told you must take it.
If there's a suitable job that hasn't been offered to you, it could be unfair dismissal .
Talk to your employer or a regulated legal adviser.
You have the right to a four-week trial if you accept another job from your employer.
If you need training, it can be longer.
Tell your boss during the trial period if the job isn't suitable. You will still get your redundancy rights. But if you don't give notice during the trial, you will lose your rights.
If you've worked for your employer for at least two years, you can take paid time off to look for another job or training when facing redundancy. The amount of time you can take off must be reasonable. You should speak to your employer to work out what pay you will receive during this period.
Most people get a notice period.
This is the time between officially finding out you're leaving and your last day of work. You are paid during your notice period.
People without a contract or on casual hours may not get a notice period.
Statutory notice periods are
- at least one week's notice if you have been employed for between one month and two years
- one week's notice for every full year between two years and 12 years
- 12 weeks' notice for 12 years or more.
Check your contract. You might be entitled to more.
Your employment can end without notice, but you must still receive any pay you are due.
If a business goes bust
- redundancy pay
- notice pay
- holiday pay.
The official receiver will explain how it affects you and what you need to do.
Transferred to a new employer?
You won't receive funding from government if you moved to a job with a new employer before your old employer went bust.
If you moved afterwards, you can apply for help.
Reapplying for your job
If your employer wants to reduce staff, you may need to reapply for your job. This could mean competing against colleagues for your job.
If you don't apply, or you don't get the job, you will be made redundant in the usual way.
You can appeal if you think you've been treated unfairly. Write to your employer explaining why.
Or you could find out more about your rights from a regulated legal adviser.