Redundancy law

REDUNDANCY LAW: WHAT YOU NEED TO KNOW

When employers need to reduce their workforce (whether this is due to them needing to cut costs, or because a particular job becomes unnecessary), they may make various employees redundant. But what do you need to know if this happens to you?

Step 1: Reasons for Making You Redundant

Your employer must have a genuine reason for making you redundant. If they are making individual people redundant (this is where redundancy affects less than 20 people in the company), then they must use fair criteria when selecting who will be made redundant. This could include factors such as skills and competence levels, your disciplinary records or your experience. However, it is important to note that it is illegal for employers to base their decision on unfair selection criteria, such as race, gender, age, religion, marital status, trade union membership or whether you have a disability.

Step 2: Your Right to Consultation

Before making you redundant, your employer should always consult with you first. The consultation process should include discussions covering ideas on how to reduce the number of people being made redundant, but should also focus on giving you plenty of notice that you may be made redundant. It is important that your employer explain to you why the redundancies are happening and how many people will be affected. During this process you should contribute to the discussions. If your employer is making fewer than 100 people redundant, they should begin consultations at least 30 days before the first person is due to be dismissed. If 100 or more employees are being dismissed, the consultation process should take place over a 90 day period minimum. Failure by your employer to comply with this process could give you grounds to apply to an employment tribunal for a protective award. This may mean your employer will have to pay you the equivalent of up to 90 days wages.

Step 3: Redundancy Pay

If you have worked for your employer for at least two years, you are entitled by law to receive statutory redundancy pay. This figure will be based on your weekly pay, age and continuous employment with your employer. This should be paid automatically to you. If they have failed to do this, you should ask for your payment in writing. If they still refuse to pay then you could make an appeal to an employment tribunal. Please note that you are not entitled to this payment if your employer has offered you suitable alternative work which you have refused without good reason.

You need to also check your employment contract/handbook, as some companies may make their own provisions for redundancy.

How to Calculate Your Redundancy Pay

The simplest way to calculate your statutory redundancy entitlement is online. This can be done at http://www.direct.gov.uk/redundancy.dsb.

Step 4: Redundancy Notice

As well as receiving your statutory redundancy pay, your employer must also pay you during your notice period.  During this period, your employer must allow you to take time off (if you so desire), to look for another job. If you choose to do this, you will still be entitled to two fifths of your usual pay.

If you have had your job for more than two years then for each year that you have worked in that company you will be entitled to a week’s notice pay. If you have worked for your employer for less than two years (but for at least a month), then you are entitled to at least one week’s notice pay.

Do bear in mind that if you take industrial action during your notice period, and fail to work the extra days you took off, or if you accept and start another job during that notice period, your statutory redundancy pay could be reduced.

Step 5: Redundancy Appeals

If you wish to appeal against your employer’s decision to make you redundant, it is worth seeking advice from an employment lawyer. Your employer should have a procedure in place to enable you to carry out this process. Informing your employer that you wish to appeal against their decision should be done in writing, and your employer should give you a deadline for when this should be carried out.

Failure to Comply with the Correct Redundancy Rules

If your employer has failed to comply with the correct redundancy procedure, it may be possible to make an employment tribunal claim against them.