When a business no longer needs a particular employee or group of employees, they may be dismissed because they are redundant. This may happen, for example, when the business shuts down or has it has to decrease its workforce. When 20 or more employers are dismissed at the same time, it is called a collective redundancy.
If you are made redundant, you have certain rights such as:
Your employer must use a fair method of choosing employees for redundancy. Common methods are:
A voluntary redundancy is where your employer will invite employers to volunteer for redundancy. Your employer will then choose who will be made redundant from those volunteers based on a fair and transparent selection process. Your employer should make clear that you will not automatically be made redundant just because you have volunteered.
A compulsory redundancy is where your employer will choose employees for redundancy based on a fair and transparent selection process. This may be based on the skills and qualifications required for the remaining jobs, the employee’s standard of performance so far, their attendance record or their disciplinary record. The employee does not have a choice.
Employers often use voluntary redundancy as a way of avoiding compulsory redundancy so that employees who volunteer to be made redundant can be selected first.
If you are assessed on anything other than your skills, attendance and disciplinary record, you may be able to claim for unfair dismissal. If you win, the employment tribunal may order the employer to:
There are two types of redundancy pay: statutory redundancy pay, which is the legal minimum you can receive, and employer’s own redundancy scheme, which depends on your employment contract.
The statutory redundancy pay you receive will be:
Redundancy pay is currently capped at £464 a week and it is tax-free if under £30,000.
There are redundancy calculators available online which will help you work out the minimum amount you are entitled to. Your employer is also required, if demanded, to provide you with a written statement detailing their calculations leading to the amount you received.
To receive the statutory redundancy payment, which is the minimum that you have to be paid, you should:
You are entitled to statutory redundancy pay even if you have only worked part-time, as long as you have been employed by the business for two years straight.
You can also make claim for redundancy pay up to six months after being made redundant if:
But, you are not eligible for statutory redundancy pay if you are:
You are also not entitled to redundancy pay if your employer offers to keep you on, or if your employer offers you suitable alternative work that you refuse without a good enough reason.
You must also be given the following notice periods of the end of employment:
If a notice period is not given, you are still entitled to that pay in lieu of notice.
Your employer may offer you another job within your organisation. This job may be regarded as suitable depending on how:
You have the right to a 4-week trial period for any alternative employment you are offered, which can be extended if you need training.
If you have been employed continuously for the last 2 years, by the end of your notice period you are allowed a reasonable period of time off work. This is aimed to allow you to either find another job or get help to arrange training to help you find another job.
Should you work during this period, your employer must continue to pay you.
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