What is redundancy? - What can I expect from my employer? - Will I get a redundancy payment? - How much notice will I get? - What about any outstanding pay I am owed? - What about other benefits? - Can I look for another job?
You are redundant if your employer ceases to undertake the business in the place where you are employed, or if they cease business for the purposes for which you are employed, or if they require fewer employees to carry out the work, either completely, or at that location.
Depending on the number of staff to be made redundant, employers are legally obliged to carry out a collective consultation exercise, which should look at ways to avoid redundancies, reduce the number of redundancies and mitigate the consequences. In addition, and in situations where the number of proposed redundancies is less than are required to legally enforce collective consultation, employers should consult with individuals who may be affected.
We would expect employers to enter into consultation with affected employees to look at options like part-time working, unpaid career breaks and sabbaticals, voluntary redundancy schemes and early retirement, as ways of ensuring that there are as few compulsory redundancies as possible. You must remember that these options are only binding if you agree to them, so you must consider all the implications of these options.
In some industries, like travel, where there is notoriously high staff turnover, recruitment freezes can be an effective way of reducing staffing levels, without drastic impact on existing staff - though we would recommend discussions with staff who are not affected by redundancy to ensure that future workloads are manageable. There may be a need to reorganise workload as a result of any redundancies.
You should bear in mind that your employer does have a legal duty to seek to find suitable alternative employment if you are facing redundancy, although there is an equal duty on the employee and it is unreasonable to expect the employer to be the only one to seek alternative roles. It is largely down to the member of staff concerned to decide if the offer is suitable in terms of hours, role, status and terms of employment. However, if your employers believe that the alternative post offered is suitable, you may jeopardise your redundancy payment if you do not accept it.
If this situation applies to you then you should seek further professional advice on the matter. If you accept a post then this guarantees continuity of employment and associated employment rights. You are also entitled to try the new job for a four-week period before you lose your right to a redundancy payment.
To qualify for a redundancy payment, you must be an employee, have over two years’ continuous service and have been dismissed for reason of redundancy. Statutory redundancy payments are made on the following basis:
It should be noted that for the purposes of calculating redundancy pay, there is a ceiling on a ’week’s pay’ of £400 (gross) per week. There is also an overall ceiling on statutory redundancy pay of £12,000 and the maximum employment period that will be taken into account in calculating the payment is 20 years.
Staff are entitled to a written statement of how their redundancy payment is calculated.
Some contracts include redundancy terms which are better than the statutory payments outlined above. If your contract includes these terms then that is what your employer must pay you on redundancy.
Your employer should give you at least one week’s notice for each completed year of service up to a maximum of 12 weeks.
If your contractual entitlements are better than the statutory scheme, then that is what you are entitled to receive. If you are paid monthly you should get at least one month’s notice, unless your contract specifically specifies some other agreement.
Your notice period will start from when you are formally advised of the date you will finish work - this advice should be in writing and addressed personally to you. If you leave during your notice period you may forfeit your redundancy payment, so check with your employer before you resign, and ask them to confirm in writing that your redundancy payment is protected.
Your employer can opt to give you pay in lieu of notice but can require you to remain in employment for its duration.
If you have more than two years continuous service at the time your notice expires then you are entitled to a reasonable period of paid time off during working hours to look for a new job. "Reasonable" is not defined, so you will need to agree that with your employer.
When employment comes to an end, employees must be paid all wages or salary up to the date on which your contract ends, together with any overtime earned. You may also be owed outstanding holiday pay depending on the terms in your contract relating to holiday pay on termination of employment.
Employees who work normally during their notice period are entitled to all their contractual benefits like company car, insurance cover and accrual of holiday entitlements.
If you leave with pay in lieu of notice which is not expressly authorised in your contract, then the pay in lieu must reflect the value of all the benefits which you are losing.
Once an employee has been issued with written notice of redundancy it is expected that they will be searching for alternative employment. It is also recognised that any prospective employer might not be willing or able to wait for them to commence employment until the termination of their notice.
The briefs in this section provide guidance and some basic details of employment rights. They do not attempt to be comprehensive, and should not be taken as an authoritative statement of the law.