What is Redundancy?
Redundancy is a form of dismissal from your job. It happens when employers need to reduce their workforce.
Q: What rights do I have in a redundancy situation?
A: If you’re being made redundant, you might be eligible for certain rights, including:
- redundancy pay
- a notice period
- a consultation with your employer
- the option to move into a different job
- time off to find a new job
You must be selected for redundancy in a fair way, eg because of your level of experience or capability to do the job.
You can’t be selected because of age, gender, or if you’re disabled or pregnant etc. If you are, this could be classed as an unfair dismissal.
Q: Have I been correctly selected for redundancy?
Your employer should use a fair and objective way of selecting you for redundancy.
Commonly used methods are:
- last in, first out (employees with the shortest length of service are selected first)
- asking for volunteers (self-selection)
- disciplinary records
- staff appraisal results, skills, qualifications and experience
Your employer can make you redundant without having to follow a selection process if your job no longer exists, eg if:
- your employer is closing down a whole operation in a company and making all the employees working in it redundant
- you’re the only employee in your part of the organisation
Your employer may offer you a different role if one is available.
Q: Do I have to reapply for my own job?
A: You might be asked to reapply for your own job, which could help your employer decide who to select.
If you don’t apply or you’re unsuccessful in your application, you’ll still have a job until your employer makes you redundant.
Q: What is unfair selection?
You can’t be selected for the following reasons – your redundancy would be classed as an unfair dismissal:
- marital status
- sexual orientation
- religion or belief
- your membership or non-membership of a trade union
- health and safety activities
- working pattern (eg part-time or fixed-term employees)
- maternity leave, birth or pregnancy
- paternity leave, parental or dependants leave
- you’re exercising your statutory rights
- whistleblowing (eg making disclosures about your employer’s wrongdoing)
- taking part in lawful industrial action lasting 12 weeks or less
- taking action on health and safety grounds
- doing jury service
Q: Can I appeal?
A: You can appeal if you feel that you’ve been unfairly selected. Write to your employer explaining the reasons.
You may be able to make a claim to an employment tribunal for unfair dismissal.
It’s up to your employer whether they actually select you if you volunteer for redundancy.
Your employer can’t just offer voluntary redundancy to age groups eligible for an early retirement package – this could be unlawful age discrimination.
However, an early retirement package (for certain age groups) could be one element of a voluntary redundancy offer open to all employees.
Q: Can I claim Redundancy Pay?
You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for 2 years or more.
- half a week’s pay for each full year you were under 22
- 1 week’s pay for each full year you were 22 or older, but under 41
- 1 and half week’s pay for each full year you were 41 or older
- Length of service is capped at 20 years and weekly pay is capped at £538 per week. The maximum amount of statutory redundancy pay is £16,140.
Q: Is a redundancy payment taxable?
A: Redundancy pay (including any severance pay) under £30,000 isn’t taxable.
Your employer will deduct tax and National Insurance contributions from any wages or holiday pay they owe you.
You’re entitled to a consultation with your employer if you’re being made redundant. This involves speaking to them about why you’re being made redundant and any alternatives to redundancy.
You can make a claim to an employment tribunal if your employer doesn’t consult properly (eg if they start late, don’t consult properly or don’t consult at all).
If your employer is making 20 or more employees redundant at the same time, the consultation should take place between your employer and a representative (rep).
This will either be:
- a trade union rep (if you’re represented by a trade union)
- an elected employee rep (if you’re not represented by a trade union, or if your employer doesn’t recognise your trade union)
Collective consultations must cover:
- ways to avoid redundancies
- the reasons for redundancies
- how to keep the number of dismissals to a minimum
- how to limit the effects for employees involved, eg by offering retraining
Your employer must also meet certain legal requirements for collective consultations.
Length of consultation
There’s no time limit for how long the period of consultation should be, but the minimum is:
20 to 99 redundancies – the consultation must start at least 30 days before any dismissals take effect
100 or more redundancies – the consultation must start at least 45 days before any dismissals take effect
Fixed-term contract employees
Your employer doesn’t need to include you in collective consultation if you’re employed under a fixed-term contract, except if they’re ending your contract early because of redundancy.