Redundancy and Notice

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:

• to receive redundancy pay
• to serve your notice period
• to consult with your trade union or employee representatives
• to be considered for alternative employment within the business

Being selected for redundancy

Your employer must use a fair method of choosing employees for redundancy. Common methods are:

• employees who have served the shortest length of service are picked first
• ask for voluntary redundancy
• qualifications, skills and experience will be taken into consideration to inform their decision

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.

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:

• give you your job back
• find you an alternate role within the business offer you compensation

Redundancy Pay

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:

• half a week’s pay for every full year that you worked for your employer, between the ages of 16 and 22
• one week’s pay for each full year you worked over the age of 22 but younger than 41
• one and a half week’s pay for each full year over the age of 41

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.

Eligibiliy for Statutory Redunancy Pay

To receive the statutory redundancy payment, which is the minimum that you have to be paid, you should:

• have continuously worked for your employer for at least two years above the age of 16
• have not refused accept offers of alternate employment with your employer without valid reason
• are not a share fisherman, in the army or police force, a trainee, or a family member doing domestic work

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:

• you have been laid off without receiving at least half a week’s pay or any payment at all
• you were laid off for at least four weeks continuously or six weeks non-continuously within a 13 week period
• you have made your employer aware of a claim for short-term lay-off

But, you are not eligible for statutory redundancy pay if you are:

• a civil servant, police officer or member of the armed services
• a merchant seaman, former registered dock worker or share fisherman
• an apprentice
• a domestic who is a member of your employer’s immediate family

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.

Notice Periods

You must also be given the following notice periods of the end of employment:

• at least a week’s notice if you worked from a month to two years
• one week’s notice for each year of employment between two and 12 years
• 12 weeks’ notice if you were employed for at least12 years

If a notice period is not given, you are still entitled to that pay in lieu of notice. 

Alternative Employment

Your employer may offer you another job within your organisation. This job may be regarded as suitable depending on how:

• similar it is to your current job
• the terms of the job
• your skills and ability to complete the job
• the pay and other benefits

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.