Redundancy – What are your rights?

by | 29.03.22

If you are facing redundancy, unlike P+O ferries poor staff, you do have certain legal rights and your employers must follow the rules when making you redundant. In these uncertain times, many workers are concerned about job security, people are not leaving their jobs because the pandemic has made them feel doubtful about their future and unfortunately whilst the economy is recovering and growing well in many areas, redundancy is still rife. So exactly what are your rights?

Why would you be made redundant?

When a business needs to reduce its workforce, you can be made redundant. Your employer may want to cut back on the number of employees they have for many reasons. It could be they have lost a lot of business; it could be they have become more computerised, or it could be they just need to cut overheads. Whatever the reason for letting go you must be aware it’s not the same as getting the sack.

How are people selected for redundancy?

The choice of people to be made redundant must be done fairly. Employers may make selections based on length or service, i.e.: last in, first out, or disciplinary records. Many employers ask for volunteers and offer enhanced redundancy payments. What would not be considered fair would include you age, race, gender, sexual orientation or religious belief. It could also be considered unfair to make you redundant If you are pregnant, you have been a whistle-blower in the past, you are member of a trade union or you are on maternity leave.

Are you eligible for redundancy?

In order to be eligible for redundancy you must meet a certain criteria. You need to have been an employee of the organisation for two continuous years. If you have worked for your employer for less than two years you won’t qualify for statutory redundancy pay. However, your employer must follow a fair selection process.

Is redundancy instant?

You cannot be made redundant on the spot. The amount of notice you will be given will depend on how long you have been employed. If you have been with your employer for over one month but less than two years you have to be given at least one week’s notice. If you have been employed for between two and twelve years you have to be given one weeks’ notice for each year you have been employed. If you have been employed for over twelve years, you’re entitled to twelve weeks’ notice. Anyone being made redundant is entitled to a consultation with their employer.

The Consultation Process –what to expect?

If an employer is cutting twenty or more jobs at any one time, they must organise a collective consultation involving a Union or employee representative. This must be held at least thirty days before anyone’s job ends. If a hundred or more people are being made redundant, group meetings must start at least forty-five days before anyone’s job ends. Even if a company is insolvent and is shutting down, they still have to go through a consultation process.

What redundancy pay will you get?

If you’ve worked continuously for your employer for two years or more, you have a legal right to redundancy pay. There is a statutory minimum, but some employers are more generous. The amount you get depends on your age, length of continuous service and current salary. You will get at least half weeks’ pay for each full year worked if you are under twenty-two, a weeks pay for each full year worked when you are aged between twenty-two and forty-one and one and a half weeks pay for each full year worked when you are forty-one or over. An employer isn’t obliged to pay you any more than £16,320 though.

What extra pay could get you?

If you’re still owed holiday pay when you leave you are entitled to be paid for that as well. If your business has gone bust then your redundancy pay may be provided by the government, to clarify this you will need to speak to the Department of Employment.

Can you claim any benefits?

There are three main types of financial support you may be entitled to. The first is Universal Credit, then there is the new style job seekers allowance and finally there is the new style employment and support allowance. You may get a combination of these benefits depending on your personal circumstances.

What happens about tax?

The first £30,000 of any redundancy pay is tax-free. This amount includes any non-cash benefits that form part of your redundancy package, such as a company car or a computer. These will be given a cash value and added to your redundancy pay entitlement. Any amount over that will be taxed. At the end of the financial year, which runs from April to March, when you have been made redundant it is worth checking whether you have paid too much or too little tax. This may depend on whether you have found another job or not.

What about finding another job?

You may be allowed paid time off to look for another job. If you’ve worked continuously for your employer for at least two years you are allowed to take 40% of your working week off, so two days of a five-day week to attend interviews. Your employer has to pay you for this time. If you take more time off, they don’t have to pay you although some employers may be more generous. Anyone retraining after being made redundant may also be entitled to grants, loans and free courses.

What if you feel your redundancy is unfair?

You have the right to appeal your redundancy if you feel that if has been unfair in any way. If your employer has selected you for redundancy on the grounds of age, sex, race, disability or religious belief, this is classified as discrimination and could result in you being able to claim unfair dismissal.  If you believe one of these or any other unfair reasons applies to you the best thing you can do is talk to a Solicitor who specialises in Employment Law.

I was made redundant from my position thirty years ago and frankly it felt like my world ending, but that is not the case I can assume you. Redundancy feels horrible you feel that you are not good enough, you’re not wanted, and you have been thrown out with the rubbish. But let me tell you it could be an opportunity, look at me, I was made redundant, started my own business and have never looked back.

Good Luck

Angela Burton