Redundancy – your rights at work
- What is meant by redundancy in the workplace?
Redundancies might arise when a role is no longer needed because a company or department is closing, the location of the workplace is changing, or fewer employees are needed to undertake a specific job or task.
- Who has redundancy rights?
Individuals who are legally classed as employees and have a minimum of two years’ continuous service with an employer on a permanent or a fixed-term contract have redundancy rights – these are not affected by the Covid-19 pandemic, even if you are on furlough.
- Is an employer obliged to explore other options before making people redundant?
The Advisory, Conciliation and Arbitration Service (Acas) – an independent public body that promotes good practice in the workplace – advises that employers should consider other options before making employees redundant, eg make use of the current government furlough arrangements, offer redundancy to volunteers first, change working hours, move employees into other roles, let go of temporary workers, limit or stop overtime or stop recruiting any new employees. Any changes in employees’ contractual terms should be subject to consultation and agreement as they do not have to accept.
- If an employer decides to go ahead with making redundancies, do they have to consult employees?
- Collective redundancies (where it is proposed to make 20 employees or more from one ‘establishment’ redundant in a 90-day period) – employers must inform and consult the recognised trade union or elected employee representatives with a view to reaching agreement if possible and before final decisions are taken by management. The consultation must cover ways of avoiding redundancies, reducing the numbers affected and mitigating the consequences. If between 20 and 99 employees are facing redundancy, the minimum period of consultation is 30 days before notice is served, but this rises to 45 days if more than 100 employees may lose their jobs.
- Regardless of how many people are potentially being made redundant, they must also be consulted on an individual basis, face to face or on a call if necessary, with someone such as a colleague or trade union representative allowed to accompany them. Issues such as why they were selected for redundancy, their notice period and leaving date, their redundancy pay and right to appeal against selection should be discussed, then put in writing.
- What selection criteria should be used for deciding who should be made redundant?
If a company or department is closing down and all employees with the same or similar roles are being made redundant, then a selection process is not required. But if some employees are to lose their jobs and others are to remain, then all those with similar roles and skills should be placed in a ‘selection pool’ and scored against a range of objective criteria. These might include performance, skills and competency, experience, qualifications and conduct for example. Employees must not be discriminated against on the grounds of gender or gender identity, marital status, race or nationality, pregnancy, disability, sexual orientation, part time working, age or religious belief.
- How is redundancy pay calculated?
Statutory redundancy pay is not very generous. For the purposes of the calculation, maximum weekly pay is currently capped at £538 per week regardless of how much you actually earn, and maximum service is 20 years no matter how long you have really worked for the company. The amount paid is also based on age and must include bonuses or commission, and regular overtime if the payment of additional hours is contractual.
To find out how much you are entitled to, Use the redundancy pay calculator on GOV.UK.
Note that when employees at risk of redundancy are on furlough, statutory redundancy pay and statutory notice pay must be based on the employee’s full normal pay, not their reduced furlough rate.
Employers can also top up the statutory redundancy payment to help mitigate the consequences of job losses.
The first £30 000 of any redundancy pay is tax-free.
- How much notice must be given?
An employer must pay statutory notice, or whatever it says in the employment contract, whichever is highest. Minimum statutory notice is as follows:
- 1 month up to 2 years’ service – 1 week
- 2 years’ service or more – 1 week for every year up to a maximum of 12 weeks’ notice
Employees can leave before their notice has expired only by agreement with their employer (or they may lose their right to redundancy pay).
- Should employees facing redundancy be offered redeployment where possible?
- Where ‘suitable alternative work’ is available this should be offered instead of redundancy. A role is suitable if the work is the same or similar, and the pay and benefits, working hours and working pattern, grade, and status are all comparable. It should also be appropriate for the individual’s circumstances.
- The law says that suitable alternative work MUST be offered to employees who are on maternity leave or shared parental leave first.
- An employer may also offer ‘alternative work’ which is not directly ‘comparable’ to the employee’s original role eg at a lower grade
- Employees have a statutory right to a trial period of four weeks to allow both the employee and employer to assess suitability.
- If the employee has a valid reason to turn down the job, they’ll still be entitled to redundancy pay.
- Training and job search
During their notice period, employees who have worked more than two years for the company are allowed reasonable amount of time off to look for another job or to undertake training. They are entitled to at least 40% of a week’s pay, but an employer can choose to pay more.
- What legal redress is there if an employer gets it wrong?
- If individual consultation is not undertaken properly, or a suitable alternative role is available but not offered, the employee can lodge an Employment Tribunal claim for unfair dismissal.
- If there is a failure to consult collectively, an Employment Tribunal could make a ‘protective award’ of up to 90 days’ pay to all employees who are at risk of redundancy, not just those who leave.
- If the selection criteria or other parts of the process are discriminatory, claims for unfair treatment can be lodged under the Equality Act.
Note that there are very strict time limits for lodging different Tribunal claims, so be sure to check what they are. There is now no charge for lodging a claim, but the Covid-19 pandemic has led to even longer delays before hearings take place.
Sources of help and information
Call the Acas helpline – open Monday to Friday, 8am to 6pm, for free, independent help in talking through your options.
Linda Gregory, WSCC candidate for Three Bridges and Pound Hill (LKA polling district)
Linda Gregory has a solid professional background in employment rights. She was a national trade union negotiator in the banking sector (focussed on pay, restructuring, pensions and employee benefits) then spent 12 years in Employee Relations first with BAA (formerly known as the British Airport Authority) and then Accenture. Linda is on the Panel of Arbitrators for ACAS.