Redundancy - your rights

What are some examples of redundancy situations?

Examples of redundancy situations include:

• The whole organisation is being closed
• The part of the organisation which you work in is being moved
• New systems have been introduced in the workplace
• The employer wants to downsize the organisation
• The organisation is transferred to a different employer

However, this is not an exhaustive list. If you are dismissed for any other reason, such as your conduct, then it is not a redundancy situation and your redundancy rights will not apply.

If the whole organisation is being closed

The most obvious example of a redundancy situation is where the business is closing or has already closed. This closure can be permanent such as if your employer has gone insolvent, or temporary such as where refurbishment is taking place. Whether the length of the closure is enough to constitute a temporary closure is a question for the tribunal, however case law has shown that anything under a four-week closure is not significant enough.

If the organisation or the part which you work in is being moved

Another redundancy situation that might arise is where the business continues to operate but the location or sector of the business you work at moves or is closed. Often these redundancy situations involve a mobility clause in your employment contract which require you to work anywhere in the UK; however, you might not want to relocate and would rather be made redundant. Alternatively, if you are made redundant in this situation you could argue that the existence of a mobility clause means you are not redundant.

New systems being introduced in the workplace

You might also be made redundant if a new system or procedure is introduced that makes your current role unnecessary. However, you will not automatically be assumed to be redundant if a new system is introduced, this will only occur if the new system is the root cause of your role being no longer needed. If the new system does the same job but differently this might not account as a redundancy situation, and your redundancy rights may be limited.

Where the employer wants to downsize the organisation

A redundancy situation may also arise if an employer reorganises the business so that fewer employees are needed to do a particular kind of work. This could be, for example, because of a restructuring of the workplace, because there is a need to cut the costs of the business overall, or because a different strategy is being put into place. There does not need to necessarily be less work to do – although this could also be a reason – the employer may have just decided to cut costs by reducing staff and making those who remain do more work. In this situation, even if there is other work for you to do, if the work stipulated in your employment contract is no longer required then you are in a redundancy situation.

The organisation is transferred to a different employer

Commonly, when your employer’s business is bought, and the business is transferred to the new owner your employment contract is transferred over to the new business along with your existing contractual terms. If you are made redundant, by either your old or new employer, because of the transfer, your employer would need to show that a real redundancy situation exists, and the transfer was not the primary reason for your dismissal.

What are some examples of redundancy situations which are not genuine?

Generally, in a redundancy situation an employer will claim you are being made redundant because of a decrease in the work that needs to be done as part of your contractual role. However, often this is not the real reason for the dismissal as it is generally cheaper and easier to make an employee redundant than to address the real issue. Consequently, it is important to look at all the circumstances which surround a redundancy situation. Some examples which would suggest that it is not a genuine redundancy situation are:

• your employer has recently hired other employees or has plans to do so in the near future
• you have recently faced criticised about your performance and then encounter a redundancy situation
• you have been singled out or treated differently to your colleagues
• if you are being discriminated against because of one of the nine protected characteristics
• if you have a bad relationship with your employer or line manager

What are my rights in a redundancy situation?

If you are at risk of being made redundant then you may be eligible for certain legal rights (redundancy rights), including:

• The right to receive redundancy pay
• The right to work your notice period or be paid in lieu of
• The right to a reasonable period of consultation regarding your redundancy
• The right to be considered for any suitable alternative vacancies
• Time off work to try and find a new job

In addition, you also have the right to be fairly selected for redundancy and have a fair redundancy process carried out. Furthermore, the Equality Act 2010 applies in all redundancy situations, so you have the right not to be made redundant from your job because of your age, gender, disability, race, sexual orientation, gender orientation, because you are pregnant or on maternity leave, or because of your religious or philosophical belief. In the case that you are unfairly made redundant, or you believe that you have been selected for redundancy because of one of the aforementioned protected characteristics then you may have a claim for unfair dismissal or discrimination. You have certain redundancy rights and you can seek advice from an expert employment solicitor on your situation.

Fair redundancy process

If your employer is carrying out a full redundancy procedure, then the employer should generally follow these steps:

• Construct a fair pool of employees who may potentially be selected for redundancy
• Identify who will be selecting the employees who will be made redundant
• Choose reasonable selection criteria that can be objectively measured and are not discriminatory
• Consult all employee who are at risk by informing them of the situation and the subsequent procedure being carried out
• Score each employee against the selection criteria
• Consider whether there are any suitable alternative roles available
• Confirm redundancy with the choose employee/s and inform them of termination payments and other arrangements

Although all employers have an obligation to carry out a fair and objective procedure, the lengths to which a Tribunal will expect employer to go in drawing up and applying criteria will depend on the employer’s size and administrative resources.

Employers do not have the obligation to carry out a full redundancy process if your job no longer exists, for example if:

• The whole organisation is closing
• The part of the organisation or location which you worked in is closing and all employees in that workplace are being made redundant
• You are the only employee who is working in a particular workplace / organisation structure that is being closed

If your employer does not carry out the process listed above then it may be breaching your redundancy rights.

Overview of the Redundancy Process

Selection Criteria

When deciding what employees are to be made redundant employees have certain redundancy rights: your employer must be fair and objective. The employer should be able to justify the reasons for the redundancies and communicate them to the employees if needed. The following are examples of selection criteria which are commonly used by employers:

• Asking for volunteers
• Time keeping and attendance record
• The standard of work performance
• Checking each employee’s disciplinary record
• An employee’s skills or experience
• Using the last in, first out method where employees with the shortest length of service are selected first

You should note that using the last in, first out as the primary method to select for redundancy is no longer advised due to indirectly discriminating based on age. However, it is still retained for use in tie breaker situations.

Selection Pool

Unless your role is unique your employer will generally form a selection pool. While your employer has some level of flexibility, they should ensure they act reasonably when deciding who to place in the selection pool. It is advisable for an employer to discuss and agree on the selection criteria with a union representative. Some factors which are considered reasonable when deciding on a selection pool are:

• The employees selected for the pool should have similar roles but do not need to be identical
• Employees carrying out similar roles in different parts of the business or at different sites in close proximity should also be included
• Employees carrying out similar roles should only be omitted from the selection pool if it is reasonable for them to excluded
• Consider including senior and junior employees in the pool together if in reality their roles aren’t very different
• Consider whether the employee’s roles are interchangeable and whether they have carries out duties of a different role in the past

It’s important to note that any non-employees such as contractors and agency staff should not be included in the selection pool as only employees have redundancy rights. Your employer should always consider whether the number of employees being made redundant can be reduced by terminating contractors and agency staff.

If the employer fails to create a fair selection pool then there may have been a breach of your redundancy rights.

Scoring

A common method of scoring the affected employees is by creating a selection matrix under which employees are scored against a variety of criteria, including those which have been listed above. Any information used in scoring must be as objective as possible and backed up with evidence where possible. Scoring should not just be based on the subjective opinion of one person, and if it is just on the opinion of one person then there may have been a breach of your redundancy rights.

Consultation

Your employer must consult all employees who are at risk as soon as a redundancy situation is recognised. Your employer should inform them of the situation, discuss any alternatives and highlighting the subsequent implementation of the redundancy procedure. A standard consultation should include at least one meeting with each employee at risk of being made redundant. There is no statutory right for you to be accompanied to this meeting although it is generally good practise for employers to allow an employee this right. If your employer fails to properly consult you this could potentially lead to a claim of unfair dismissal.

The minimum periods of consultation which employers are required to follow are:

• For 20-99 proposed redundancies there should be at least 30 days consultation
• For 100 or more proposed redundancies there should be at least 45 days consultation

Suitable alternative role

Before making you redundant your employer has a legal obligation to make reasonable efforts to determine whether there are other roles available within the organisation that may be suitable for you. If your employer fails to do so you could potentially have a claim for unfair dismissal.

To be consider a suitable alternative role it does not need to be the exact same as your old role. Factors such as the pay, status, hours, and location will all be taken into account when deciding if the new role is a suitable alternative. Case law also suggests that it can be appropriate for a senior employee to be given the opportunity to consider a more junior role at a reduced salary. For a new role to be considered suitable alternative employment it must be offered before your current role ends. You should also be provided with enough details to be able to accurately distinguish the difference between your current role and the new one.

Four-week trial period

Following an offer of suitable alternative employment, you should also be offered a 4-week trial period. During this trial period you can decide to reject the new position and reclaim your redundancy if it is reasonable to do so. If you unreasonably reject the new role, then you might be ineligible to claim your statutory redundancy payment. However, what is considered reasonable is subjective and will depend on whether there was a reason specific to you which made you reject it. If your employer offers you multiple suitable alternative roles, you have the right to a 4-week trial in each role before making a decision.

If your employer fails to offer you suitable alternative employment then there may have been a breach of your redundancy rights.

Redundancy and mobility clauses

As briefly mentioned previously your employer can potentially rely on an express contractual mobility clause to move you to a different location, instead of making you redundant. Refusing to relocate could mean that you are in breach of contract as well as forgo the right to any redundancy pay you may have been entitled to. However, if your refusal to relocate is considered reasonable due to your specific circumstances then it could be considered unfair for your employer to dismiss you. Furthermore, if the mobility clause is drafted in a way that the courts deem to wide, such as requiring you to move anywhere, it will likely not hold up should you make a claim for unfair dismissal. This could mean that your employer is unable to rely on the mobility clause to avoid making redundancy payments to you.

Voluntary redundancy

Employers can offer voluntary redundancy before starting the official selection procedure. If you suggest to your employer that you are made voluntarily redundant then it’s at your employer’s discretion whether or not they select you for redundancy. In fact, often employers do not want to lose certain valuable employees and so will offer the poorer performing employees’ voluntary redundancy while retaining the better performing individuals. However, if you are not selected for voluntary redundancy, your employer cannot use this as a reason to later dismiss you as part of the compulsory redundancy. If they do, you might have a claim for unfair dismissal and should seek legal advice. You should also note that discrimination law applies to voluntary redundancy. For example, if using the last in, first out selection method results in only the youngest employees being made redundant, this could amount to age discrimination.

Before taking voluntary redundancy, you should carefully consider whether it’s right for you, and whether your redundancy rights are being honoured. This involves checking the redundancy package to see what kind of redundancy pay you would get as well as how voluntary redundancy would affect your benefits.

Why is voluntary redundancy in effect a dismissal?

If you apply for voluntary redundancy, you are essentially agreeing to be dismissed and not resigning as you might assume. This means you could potentially have a claim for unfair dismissal if for example the redundancy situation which lead to your dismissal was not genuine. However, generally if you are voluntarily dismissed your employer will require you to sign a settlement agreement (sometimes referred to as a “redundancy settlement agreement“) which waives any potential claim you might have.

Further reading: read our guide on settlement agreements here

How much am I entitled to receive under a settlement agreement

How much you would be entitled to receive under a settlement agreement in a redundancy situation will depend on the circumstances. Your settlement agreement will, as a general rule, be worth more if you have two years’ continuous employment (allowing you to bring a claim for unfair dismissal), if you have been discriminated against, or if your employer has an enhanced redundancy policy that it operates.

Further reading: how much should I receive for my settlement agreement?

Can I change my mind once I’ve applied for voluntary redundancy?

If your employer has already accepted your voluntary redundancy application, then it is generally not possible for you to change your mind unless your employer consents. If your employer has not yet accepted your application, you might be able to withdraw your application depending on the terms of the voluntary redundancy scheme.

Can my employer withdraw my notice of redundancy?

If you have officially been given your notice of redundancy, then your employer cannot withdraw this notice without your consent. However, in the case that your employer offers you your old job back on similar terms it might be considered an offer of suitable alternative employment which, should you unreasonably refuse could prohibit you from receiving your statutory redundancy payment. If you’ve already accepted a new job offer or your old role is offered to you on less favourable terms, then your refusal will likely be considered reasonable.

Do I have to apply for my own job during the redundancy process?

While having to apply for your own job might been unfair is it a generally acceptable and somewhat common situation. This would normally occur when employers are seeking to restructure the business and don’t require as many people in the same or similar roles. Refusing to apply for your own job may put your redundancy payment at risk and could open you up to dismissal for some other substantial reason which is one of the fair reasons for dismissal. It is always worth clarifying with your employer whether they would still offer you a redundancy payment in this situation or whether they would consider offering you voluntary redundancy.

Does my employer have to provide me with the opportunity to apply for a new role before advertising it externally?

Unfortunately, there is no statutory requirement for your employer to advertise any new roles within the organisation internally before advertising it externally. However, it is generally good practise for them to do so and many companies do follow this standard.

What happens if my employer advertises my role abroad?

If you have been made redundant because of the fact that your role no longer exists and then your role, or a similar one is advertised abroad you could potentially argue that it is a suitable alternative role, and you should have been considered for it. However, your employer might be able to show that the role is not suitable for you, for example if it requires a certain second language skill. Your employer might also be able to justify the additional costs involved with relocation as a reason for not considering you for the role. The specific facts of the case will need to be considered before advising you on any potential claims.

Can my employer still make me redundant for lack of skills if sufficient training has not been provided?

Whether it will be reasonable for your employer to make you redundant for not having the right skill set will depend on the situation. If it is a case of you requiring skills and experience which is substantially bigger than what you currently hold then it is likely reasonable for you to be made redundant. However, if you are only lacking a bit of extra training to develop the skills required to carry out the role effectively then it is reasonable to expect your employer to support you with this; what your redundancy rights are in this particular case will depend on the circumstances.

You should also note that your employer has a duty to consider whether there are any other suitable alternative positions that you might be a better bit for.

Do I have a claim if I believe that my employer has engineered my redundancy?

This would a tricky situation and you most likely run into some difficulty pursuing a claim. As long as a genuine redundancy situation exists and the test is met, your employer’s motive and conduct in engineering your redundancy is irrelevant. If you are still unsure, please get in touch with Redmans Solicitors to discuss your specific circumstances.

Can I force my employer to make me redundant?

Sometimes despite your role at work changing or less work for you to do your employer might simply refuse to make you redundant. This could be for a number of reasons, often financial, such as where upon redundancy a long-time senior employee would be entitled to a large redundancy payment and the employer is seeking to avoid making this payment. Although surprisingly, as an employee you do not have a general duty to be provided with work which means forcing your employer to make you redundant if they do not wish to do so will be very unlikely.

In situations where your employer has changed your role significantly without your consent and where they do not have the contractual right to do so you might be able to pursue a claim for constructive dismissal. However, this would not mean that you automatically would receive your full redundancy pay. Instead, the Employment Tribunal would likely award you with a basic award equivalent to statutory redundancy pay. Although difficult, this is just one of the legal avenues potentially open to you.

Can I appeal a redundancy dismissal?

Although there is no statutory right to appeal a redundancy, the ACAS code of practice encourages employers to offer appeals in situations where an employee feels they have been unfairly selected for redundancy. In situations where your employer does not allow you to appeal, it is worth checking to see if your employment contract provides for appeals. Additionally, you may be entitled to make a claim in the Employment Tribunal for unfair dismissal could find denying an appeal was outside the range of reasonable responses.

Why does my employer seem reluctant to offer an appeal in a redundancy situation?

Offering an employee an appeal in a redundancy dismissal means that there is a potential for other employees to be affected if you win your appeal process and are reinstated. Generally, it makes more sense for the employer to have a degree of finality after completing the selection process.

Am I entitled to a notice period?

It is a statutory requirement that you be given a notice period before your employment ends. This includes situations of redundancy. These statutory notice periods are:

• one week’s notice if you’re employed between one month and 2 years
• one week’s notice for each year if you’re employed between 2 and 12 years
• 12 weeks’ notice if you’re employed for 12 years or more

In addition to the statutory requirement for notice you should also check your employment contract to see if you are entitled to any contractual notice. Take a look at our notice guide for more information.

Am I entitled to redundancy pay?

If you are classified as an employee and have been continuously employed by your employer for at least two years you are entitled to statutory redundancy pay, should you be dismissed for reason of redundancy.

The amount of a statutory redundancy payment is calculated using:

• how long you have been employed in your role
• your age
• your weekly pay

You will receive the following:

• half a week’s pay for each full year that you were under 22
• one week’s pay for each full year that you were between 22 and 41
• one and a half week’s pay for each full year that you were 41 or older

Work out your statutory redundancy pay using the gov.uk calculator

Exceptions

You may not be entitled to receive statutory redundancy pay if any of the following apply (in which case your redundancy rights will be limited):

• You are not an employee
• You haven’t worked for your employer continuously for at least two years
• You haven’t been dismissed for redundancy
• Your employer decides to not make you redundant and keeps you on
• Your employer offers you suitable alternative work which you unreasonably refuse

Further, you will not be entitled to statutory redundancy pay if you fall into any of the following categories of workers:

• Merchant seaman, former registered dock workers or share fishermen
• Crown servants, members of the armed forces or police services
• Apprentices who are not employees by the end of their training
• A domestic servant who is a member of the employer’s immediate family

Enhanced redundancy pay

You may be entitled to receive an enhanced redundancy payment from your employer, even if you are not entitled to be paid statutory redundancy pay.

An enhanced redundancy payment is a contractual entitlement which you are entitled to receive under the terms of your contract of employment or because your employer has a custom or practice of giving employees who are being made redundant this type of payment. The value of an enhanced redundancy payment will generally be at the discretion of your employer, although you may be able to challenge the amount you are being paid if it isn’t consistent with what your employer normally pays in such circumstances.

If I am being made redundant while on maternity leave, how should my redundancy pay be calculated?

If you are away on maternity leave and made redundant, your redundancy pay should be calculated based on your normal weekly pay from before you left for maternity leave. Your redundancy pay should never be calculated based on your contractual or statutory maternity pay otherwise this could amount to pregnancy discrimination.

Short-term and temporary layoffs

Instead of redundancy your employer might decide to lay off employees, meaning you are given no pay and no work but retained as an employee. If your employer chooses to lay you off, you might be entitled to claim statutory redundancy pay if certain conditions apply. In order to qualify for this redundancy right you need to be classified as an employee, employed by your employer for at least two years and have been temporarily laid off for either:

• More than 4 weeks in a row
• More than 6 non-consecutive weeks in a 13-week period

You then must write to your employer within 4 weeks of your last non-working day to inform them that you intend to claim statutory redundancy pay. You should also keep in mind that if you are called back to work within 4 weeks of being laid off your claim will likely be rejected.

What about if my employer offers me another job?

If your employer is considering making you redundant, they have a legal duty to make reasonable effort to find you suitable alternative employment within the organisation. A failure to do so will open up a potential claim for unfair dismissal. To be considered suitable, this alternative position does not have to be particularly similar to your current job but will depends on a number of factors, including:

• The pay rate and benefits package
• The location
• The skills and experience needed for the role
• The similarities between the alternative position and your current role

Prior to accepting or rejecting any alternative employment you have the right to a 4-week trial period during which you are entitled to reject the position and opt for the original redundancy. This trial period must start within 4 weeks of your current role ending otherwise you will still qualify as being made redundant. If you do not feel like the job is suitable you should let your employer know of your decision in writing. However, you should note that if you unreasonably turn down a suitable position you may lose your entitlement to statutory redundancy pay.

Can I claim redundancy pay if my employer is insolvent?

If your employer has become insolvent and a liquidator has been appointed to realise the company’s assets, you can claim your redundancy payment from the National Insurance Fund.

You can file a claim for redundancy payment on the gov.uk page here

If your employer has only ceased trading but has not gone insolvent you must write to them claiming your redundancy payment. If your employer fails to make the payment you should first raise a grievance with them and secondly file a claim with the Employment Tribunal within six months of your dismissal. You will need to take action within this period of time to protect your redundancy rights.

Am I entitled to time off to look for new work in a redundancy situation?

If you have a minimum of two years employment you are entitlement to be paid for time off to look for a new job or to arrange training to help you find a new job. However, your employer only needs to pay you 40% of one week’s pay during this time off. Furthermore, the following employees are not entitled to paid time off to look for work:

• employees with less than two years continuous service
• overseas employees
• merchant seamen
• members of the armed forces
• police service employees

Your employer must give you a reasonable amount of time off, however what is reasonable is up to their discretion. When deciding what is reasonable employers should take into account any travel time as well as your unique personal circumstances.

Can I be taxed on my redundancy payment?

Whether you will be required to pay tax and National Insurance on your redundancy payment will depend on what payments you get. These payments could include statutory redundancy pay, enhanced redundancy pay, holiday pay, compensation for termination of employment, unpaid wages, and any company benefits. Generally anything below the threshold of £30,000 you won’t have to pay tax on and after that point it will then attract tax at the appropriate rate.

Further reading: advice on settlement agreements – common questions asked by employees

What value redundancy severance package should I expect?

Unfortunately, there’s not a simple answer to this question – the nature and value of the payments that would be reasonable in your situation will completely depend upon the facts that are specific to your situation. However, here are a number of tips for you if you’re going through a redundancy process:

1. Check what your notice period is and what estimate what value of payment you should expect (i.e. if you are paid £500 gross per week with no other benefits payable and have a notice period of 4 weeks then you should expect a payment of £2,000 gross in respect of your notice)
2. Check how many days accrued but untaken holiday you will have as of the date of the termination of your employment
3. Check whether you’re entitled to and what value of statutory redundancy pay you should expect (handy tip: use the Direct.Gov website calculator to work this out)
4. Get some legal advice from a specialist employment solicitor – you may think we would say this but if you’re being offered a settlement agreement by your employer then a) your employer has a statutory obligation to inform you to obtain legal advice from an independent adviser, and b) your employer will normally pay the majority – if not the whole – of your fees for doing so, so there’s no harm in making enquiries