Your Redundancy Rights, and How to Protect Your Employment Position

Hearing news of a redundancy consultation, or finding out that you will lose your job is always very tough. It often throws up a myriad of questions about when the role will cease, how much redundancy pay you’ll receive, and what happens about things like unpaid holiday leave.

Given the increase in redundancies over the past few months and the volume of enquiries we receive here at The Law Firm Group, this guide is intended to summarise some of the crucial information you need to know.

Employers may have little choice but to consider cutbacks and department closures, but at the same time, it’s essential to know what your rights are.

How To Calculate Your Redundancy Pay

The first question we’re often asked, by businesses and staff alike, is about the redundancy pay entitlement and how it is calculated.

Your redundancy payment depends on the type of role you have, how long you have been with the business, and your regular pay rate.

Note that in this article, we’ll run through the basic statutory redundancy rules. Some employers have more generous schemes, so it is strongly advisable to read your employment contract in detail to see what provisions are made.

Statutory redundancy is a matter of law, and you can get more information on the Gov.UK website.

If you’ve been told you aren’t getting any redundancy pay, please do get in touch to discuss, as if you are, you may need to move quickly to instigate a claim, particularly if your employer is closing down.

  • For every full calendar year, you have worked for the employer, under the age of 22, you are entitled to half of one week of your average pay.
  • For each full year worked between the ages of 22 and 41, you are entitled to a week’s pay.
  • Every full year worked at age 41 or older, entitles you to pay equivalent to one and a half weeks.

The weekly pay figure is based on the average of your weekly pay for the 12 weeks before the redundancy notice. If you’ve been on furlough, then the redundancy is still based on your regular income and is not reduced if you have been receiving 80% of your usual salary.

This figure is capped at £538 per week for redundancies after 6th April 2020. Your maximum statutory redundancy payment is £16,140 – although, again, do check your contract as this only applies to the statutory entitlement.

If your total redundancy pay, including any other discretionary payments or contractual obligations, is under £30,000, you will not need to pay any tax. You will need to pay tax and National Insurance on elements such as final wages, or unpaid holiday pay.

What is the Process for Making Staff Redundant?

Firstly, an employer needs to use a fair basis to decide which posts are being made redundant. They cannot select individual staff members, as it is the role within the business that is no longer required.

This basis is usually one of the following:

  • Most recent employees with the shortest service period are the first eligible candidates for redundancy.
  • Employers can ask staff to take voluntary redundancy and choose whether they wish to put themselves forward.
  • Performance such as disciplinary records, experience, skills and appraisal records can be considered.

In some cases, a selection process is not required as the company is shutting down the whole business, one department, or a particular function.

You MUST be offered an alternative post if possible. For example, if a business is closing one department but retaining another, they must offer vacancies to staff identified for redundancy.

If you feel that you have been selected for redundancy on an unfair basis, you may have a case for unfair dismissal. Do get in touch in this scenario, and we’ll be happy to work through the next steps with you.

There are also rules about the notice period:

  • If you’ve been in your role for between a month and two years, you must be given at least a week’s notice.
  • For employment between two and twelve years, you are entitled to one notice for each year of service.
  • Should you have been with the business for over 12 years, you should be given 12 weeks notices.

You can be given more notice, but cannot be given less – and should always receive your regular pay throughout the notice period, or pay in lieu of notice if the business cannot meet those timescales.

Do I Get a Say in Whether I am Made Redundant?

Redundancy can be extremely challenging for all concerned, and in some cases, an insolvent business cannot offer any alternative.

They should offer you the chance to have a consultation and participate in the process.

For example, you need to be able to ask about why you are being made redundant, and on what basis the candidates for redundancy have been selected.

You also have the right to explore alternatives to redundancy. There can be other options, such as:

  • Reducing your working hours to allow the business to retain the role, but on a lower cost and time basis.
  • Switching to another role within the business, or in a different department, within your same skill set.
  • Reorganising departments to reduce redundancies.
  • Undertaking new training to expand your skill set and limit the number of staff facing redundancy.

Larger employers or businesses making 20 or more roles redundant have to carry out a formal consultation process under the collective redundancy rules.

There aren’t specific rules for redundancies affecting fewer staff, but you still have the right to a dialogue and see if there are alternative options.

In most cases, if you are being made redundant or have received notice of redundancy, the immediate impact can be to experience anger, stress and upset – which is entirely normal and to be expected.

However, our advice would be to take the time to read through any correspondence you have received carefully, check the terms of your employment contract, and seek professional legal advice if you have any doubt about the legality or ethics involved.

Should an employer not have understood the redundancy rules, have failed to offer you the correct redundancy pay, or not have made arrangements for compensation in lieu of notice (PILON) where applicable, you can often resolve this quickly, with communication from your solicitor.

Many disputes are resolved faster, and will less of a cost impact, through amicable and reasonable discussion.

If you suspect that you have been dismissed unfairly, and your employer is unwilling to discuss the situation or reach a resolution, please contact your local The Law Firm Group offices, as you may have a claim for unfair or constructive dismissal.

Call or email us to talk about it. 0300 303 3805

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