Mon 24 Apr 2023

At risk of redundancy? What you need to know.

Redundancy situations most commonly arise where an employer has a reduced need for employees to do a particular job or work at a particular location. This can result in anything from one dismissal to a whole workplace closing.  There are different rules that apply depending on whether there are fewer than 20 employees being made redundant, or 20 or more in which case a "collective" redundancy procedure must be followed.  This factsheet focuses on a redundancy where fewer than 20 employees are affected.

What can I expect during a redundancy process?

Your employer should follow a redundancy procedure that is fair, objective and non-discriminatory.  This includes ensuring that there is a genuine redundancy situation and giving as much warning as possible of potential redundancies.  Your employer should consult with you and any other affected employees. 

What should I know about consultation?

Consultation is part of a fair redundancy procedure.  Where fewer than 20 employees are affected your employer should consult with you and other affected employees directly.  You employer should discuss with you:-

  • the redundancy proposal and ways in which the redundancies may be avoided or reduced;
  • the make-up of any redundancy pools they are using - the pool should include employees carrying out the same or similar work, or those with interchangeable skills;
  • the selection criteria to be applied to those pools to select individuals for redundancy - the criteria should be objective and non-discriminatory;
  • any alternative employment that may be available - you are entitled to a "statutory trial period" of 4 weeks for an alternative role.  If you refuse "suitable alternative employment" you may lose your right to a redundancy payment.

Consultation is a two-way process and you should be given the opportunity to comment on and discuss these matters, as well as presenting any ideas you may have as to how the redundancy may be avoided.  There is no minimum timescale for consultation when fewer than 20 employees are affected, but it should allow for full and proper discussion and will normally require at least two consultation meetings.

What rights do I have if I am selected for redundancy?

If you are selected for redundancy your employer should have explained to you why the selection process resulted in you being selected.  It is common practice for employees to be given the right to appeal their selection for redundancy, but it is not a legal requirement.  You also have the following rights:-

  • you are entitled to be given the proper notice period under your contract (albeit you may not be required to work your notice and you may be paid in lieu instead) and any payment due for accrued but untaken holidays;
  • your right to be considered for an alternative position will continue during your notice period;
  • if you have two or more years of continuous service you are entitled to reasonable time off work with pay to seek new work or arrange training;
  • if you have two or more years' service you are entitled to a redundancy payment.  You are also entitled to a written statement showing how your payment has been calculated;
  • if your employer is insolvent and unable to pay certain monies due to you such as notice pay, redundancy pay or holiday pay, you can apply to the Insolvency Service for them instead.

How are redundancy payments calculated?

If you have completed two full years of service you are entitled to a statutory redundancy payment.  The amount of the redundancy payment depends upon your age and length of service as follows:-

  • half a week’s pay for each year worked up to the age of 22;
  • a week’s pay for each year worked between the ages 22 and 41;
  • a week and a half’s pay for each year worked above the age of 41.

From April 2023 the statutory limit for a week’s pay is capped at £643 and the length of service is limited to a maximum of 20 years.  A redundancy payment calculator can be found here - Redundancy Payment Calculator

What if I believe I have been wrongly selected for redundancy

If you have two or more years' service you will be able to make a claim for "ordinary" unfair dismissal at an employment tribunal, although in some cases you may be able to claim "automatically unfair dismissal" with less than two years' service.  Depending on the circumstances you may also be able to make other claims that do not have a minimum service requirement such as for unpaid wages or notice pay or discrimination. 

Time limits

There are time limits that apply to making claims in the employment tribunal.  Usually claims relating to your dismissal must be started within three months from the date of termination of employment. You will require to undertake "Early Conciliation" via ACAS prior to making a tribunal claim.  If you do not raise a claim within the necessary timescale you are very likely to lose the right to pursue the claim.  If you are unsure you should seek legal advice immediately.

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