Redundancy- Know your rights!
There is no sugar coating it whilst Dishi Rishi’s Job Retention Scheme staved off mass unemployment during lockdown, the road ahead looks rocky for many. According to forecasts unemployment in the UK could reach 10% by the end of the year. This will be the highest unemployment rate since the recession in the early 1990s. One in seven people who are currently being furloughed are at risk of loosing their jobs completely once the scheme ends at the end of this month.
Redundancy isn’t something anyone expects to face, but in these unique times, its wise to understand how to works so that you can be in the best position financially and emotionally to weather the storm. Here are some tips:
What you should do if you think your job is at risk?
The first thing you need to do is dig out your contract of employment and check out your employers policy in relation to redundancy. If there is no policy in your contact ACAS ( Advisory, Conciliation and Arbitration Service) their number is 0300 123100 and ask what your legal rights are. If you would be agreeable to being made redundant for the right package, so be it. But if you want to avoid redundancy you need all your facts.
Is your redundancy genuine?
A genuine redundancy is one where your employer has a real business reason to make you redundant, such as your job no longer exists in the organization, your workplace is closing or your employer is struggling for business and needs fewer employees. Where your redundancy might not be genuine includes if your employer has discriminated for example, if they are making you redundant because you are pregnant or on maternity leave
Reasons that can’t be used as a basis for redundancy
There are a whole host of reasons that can’t be used to make you redundant. For instance, age, race, gender or disability as well as pregnancy. Whistleblowing or making a request for flexible working are also acceptable reasons. If you think you’ve been selected unfairly or that the procedure for selection hasn’t been fair, you can appeal. The most accepted criteria for selection is last in – first out. Always contact ACAS if you think something isn’t right they will advise you on whether you have been unfairly dismissed and whether you can make a claim to an employment tribunal.
What is the redundancy process?
Firstly there will usually be a consultation period, how long this period will be will depend on the number of staff being made redundant, but usually if there are more than 20 people being let go there will be a group consultation. If there is fewer than 20 people being made redundant then usually the consultation will be on a one-to-one basis. During the consultation you will be informed why your job is at risk. At this point be prepared to consider or suggest options. Perhaps you would consider another role in the organization or working part time in the short term. If you are competing for roles with colleagues what criteria has been used in me redundancy selection? Remember the most accepted criteria is last in – first out. If you are offered another role in the company, any reason for rejecting this must be sound, such as it being on a lower pay or a demotion, otherwise you could risk losing your redundancy package.
How much will your redundancy pay be?
If you have been employed by the company for at least two years, your employer has to pay you statutory redundancy. The amount you will get depends on three factors:
- How long you’ve been in the job, only complete and continuous years of service count
- Your current salary
- Your age. For example anyone under 22 will get half a weeks pay for each year of service, but if you are over 41 it’s a week and a half’s pay for each year
The maximum amount of statutory redundancy pay you can get is capped at £16,140 even if your actual earnings are higher. Whilst statutory redundancy pay is the minimum you can be paid by law, you may get more under the terms of your contract of employment
Can you be made redundant when you are on furlough?
If you are on furlough you can still be made redundant but you are entitled to redundancy payments based on your normal salary, not your furlough payment. You are also entitled to notice of dismissal, any wages owing and holiday pay.
Can you get any extra money?
In some instances you might be allowed to leave your job earlier then the redundancy date given. In this instance you’ll get pay in lieu of notice, which effectively is compensation from your employer for ending your contract early. This payment will be subject to income tax and NI deductions. Check out whether you have any holiday owing. If you do have holiday owed, your employer has to pay you for it or let you take it before you leave. You are also entitled to a “reasonable amount” of paid time off to look for a new job or undergo training
Will redundancy affect your pension?
Contributions to your pension will stop when you are made redundant. Its usually best to leave your pension where it is and claim it when you retire, but you can also transfer it. Please though get expert advice if you are considering doing this.
Is your redundant payout taxable?
Redundancy pay is compensation for your lost job, so it qualifies for special tax treatment. The first £30,000 is tax-free and you won’t have to pay NI on it, but holiday pay, pay in lieu of notice and any other amounts that are payment for work completed and are taxed as normal.
How much notice will you receive ?
This is decided by your length of service. If you have been employed between one month and two years, its at least one weeks notice. If you have been employed between two and twelve years its one weeks notice for each year you have been employed. If you have been employed for 12 years or more, its twelve weeks notice. The notice period starts when you’ve been formally notified that you’re being made redundant and been given a leaving date.
What if your employer has gone bust?
If your employer has gone bust hopefully they will have enough money to pay their staff all of the termination payments that they are owed, such as notice pay, redundancy pay, wages and holiday owed. If they don’t the Government Redundancy Service may cover some of what you’re owed under statutory rules, this will be the minimum that you are entitled to.
Where to go if you need advice
If you are a member of a Trade Union it will be able to help you work out if you are being paid correctly and treated fairly. Other sources of support are the Citizens Advice Bureau – their helpline number is 03444 111 444 and ACAS whose number is 0300 123 1100. If you need a Solicitor go to the website solicitors.lawsociety.org.uk, you will find a local specialist employment lawyer there. Another thing to check out is if your household insurance covers you for legal expenses. It is also worth visiting moneyadviceservice.org.uk for information on understanding your employment rights, what in- work benefits you might be entitled to and how to handle your redundancy.
How to use your payout
How you use your payout depends on how much it is. The first call on any money though will be for paying priority bills and expenses and ensuring you put aside enough for emergency funds. Ideally this will be the equivalent of at least one months salary. If you’ve received a big payout think about how you can make the money work for you. Paying into your pension or purchasing an ISA is a good idea rather than blowing the lot and not having anything to show for it.
Redundancy is an awful thing to happen to anyone and it is really important that you are aware of your rights and what you are entitled to. It is also crucial that you use it as an opportunity to move forward. Good things can happen after bad things and you never know what is around the corner waiting for you