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Ask an Expert – Redundancy Rights

Howells Solicitors

29 Oct, 2020

“My employer has told me I’m at risk of redundancy.. can you explain why this is happening and what my rights are?”


What is redundancy?

Redundancy is a form of dismissal from your job. It happens when employers need to reduce their workforce.

A redundancy situation can arise in a number of circumstances including when:

  1. Your workplace closes down;
  2. The work you do is no longer needed by your employer for example if they stop carrying out a particular kind of work;
  3. Your employer has a reduction in the need for the work you do for example due to a downtown in business and does not therefore need the same number of employees to carry out that work as they previously required; or
  4. Your employer implements a restructure and your duties are absorbed into another role so that your role is no longer required.

Facing redundancy is stressful and an uncertain time. It is important to know what your rights and entitlements are.

When is redundancy unfair dismissal?

A dismissal on the grounds of redundancy may be unfair if:

  1. There is no genuine redundancy situation for example, if you are made redundant and your employer hires someone else to carry out your role;
  2. If your employer does not follow a fair process in selecting you for redundancy for example by scoring you unfairly in a selection process or by failing to include the correct employees in the pool for selection;
  3. If there is a suitable alternative role available but your employer does not offer this to you or give you an opportunity to apply for the role in circumstances where there are a number of employees at risk of redundancy; or
  4. If you are selected for redundancy because of a protected characteristic such as your age, disability, gender, gender reassignment, pregnancy and maternity, race, religion or belief, sex or sexual orientation.

If you are selected for redundancy for one of these reasons then this would also amount to an act of discrimination.

What are my rights when redundancy happens?

Your employer should consult with you throughout the redundancy process and fully explore whether there are ways to avoid redundancy including if there are other roles available as an alternative. If they fail to do so then your redundancy may be unfair.

“If your employer offers you another role which you turn down then you may lose your right to a redundancy payment”

If your employer offers you another role which you turn down then you may lose your right to a redundancy payment unless it is not a suitable alternative role or it is reasonable for you to reject the role in the circumstances. Whether a role is considered to be a suitable alternative will depend upon a number of factors including pay, status, hours and location.

If you turn down an alternative role then, when considering whether it was reasonable for you to do so, an Employment Tribunal would look at whether there were any circumstances specific to you which made it reasonable for you to turn down the role even if the role itself was a suitable alternative to your previous role.

You are entitled to a four week trial period in any alternative role and you will not lose your right to a redundancy payment if you end your employment before the end of the trial period unless it is considered that the role was a suitable alternative role and that it was unreasonable for you to reject the role in the circumstances.

If you are offered a role which you do not feel is a suitable alternative or you feel unable to accept for any reason then it is strongly recommended that you seek advice regarding any risk of losing your entitlement to a redundancy payment before rejecting the role.

If you are at risk of redundancy or have been made redundant recently and feel that your employer has acted unfairly contact a Solicitor to advise you on your rights and options. You will have three months less one day from the date when your employment ends to pursue a claim for unfair dismissal and it is therefore important that you seek advice without delay.

Redundancy payment

If you are made redundant and have you have worked for your employer for more than two years you will be entitled to a statutory redundancy payment. This is currently:

  • 0.5 weeks’ pay for each complete year you worked for your employer aged 21 and under;
  • 1 weeks’ pay for each complete year you worked for your employer aged between 22 and 40;
  • 1.5 weeks’ pay for each complete year you worked for your employer aged 41 and over.

Length of service is capped at 20 years and from 6 April 2020 a weeks’ pay is capped at £538. The first £30,000 of a redundancy payment can usually be made without deductions for tax or national insurance.

“Redundancy and notice pay should be paid at your normal rate of pay, not the amount you have been paid if you have been placed on furlough.”

You may be entitled to a higher redundancy payment under your terms and conditions of employment however and should check your contract to see if this is the case.

If you have not received a redundancy payment or you have been paid a redundancy payment which is incorrect then you will have a potential claim in respect of it and we would be happy to advise you upon this.

If you are made redundant when your employer is insolvent then you can make a claim for your redundancy payment from the Insolvency Service at the following link: https://www.gov.uk/claim-redundancy.

Redundancy and notice pay should be paid at your normal rate of pay, not the amount you have been paid if you have been placed on furlough. If you do not receive the correct payments then you will have claims in respect of this and should seek advice from a Solicitor.

Settlement agreements

If you are at risk of redundancy and your employer offers you an enhanced payment in return for signing a settlement agreement which you wish to accept then advising on the terms of such agreements is a specialist area of work at Howells and we would be happy to advise you. Your employer should pay (or at least contribute to) the legal fees for advising on the terms of a settlement agreement.

Written by Louise Brennan, Employment Law Solicitor

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