When is a redundancy a real redundancy?
A redundancy arises when the business is closing, a workplace is closing, or the need for employees to do a particular kind of work has reduced or stopped. If your role disappears but the same work is immediately given to someone else under a different job title, that is not redundancy — and dismissing you for it may be unfair.
What your employer must do
Consult you.Consultation must happen while decisions can still be influenced, not after they have been made. You are entitled to understand why your role is at risk, how the pool of at-risk employees was chosen, and what criteria are being used to select from it.
Use fair selection criteria. Criteria should be objective and capable of being evidenced — performance records, skills, disciplinary history. Selection based on age, pregnancy, disability, part-time status or trade union membership is unlawful.
Look for alternatives. Your employer must make reasonable efforts to find suitable alternative work within the business, including in group companies where they exist.
Follow the collective rules where they apply. Where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation with employee representatives is required, with minimum periods before dismissals take effect.
What you are owed
If you have two years’ continuous service, you are entitled to statutory redundancy pay:
- half a week’s pay for each full year worked while under 22
- one week’s pay for each full year worked between 22 and 40
- one and a half weeks’ pay for each full year worked from 41
Service counts for a maximum of 20 years, and a week’s pay is capped at £751 — so the maximum statutory payment is £22,530. Many employment contracts provide enhanced redundancy terms, so check yours.
Separately, you are owed your notice pay (or pay in lieu), accrued but untaken holiday, and any outstanding wages or commission. Redundancy payments up to £30,000 are generally free of tax and National Insurance, but notice pay is taxable in the normal way.
You also have the right to reasonable paid time off to look for work or arrange training once notice has been given.
If it has been done badly
A poorly run redundancy can amount to unfair dismissal, and where selection was influenced by a protected characteristic, a discrimination claim may follow — with no cap on compensation. Time limits are short, so act quickly.
Talk to us
For advice on a redundancy process, a proposed settlement, or a claim, call our employment team on 0151 422 0982.