HOW A REDUNDANCY WORKS - General Information

How redundancy works in the UK

In the United Kingdom, redundancy refers to the termination of an employee's contract due to factors such as the closure of a business, a reduction in the workforce, or the restructuring of an organization. The process of redundancy is governed by employment laws and regulations to ensure fair treatment of employees.

Employers obligations to employees in redundancy situations

When an employer considers making employees redundant, they must follow a structured and transparent procedure. This typically involves consulting with affected employees, providing relevant information about the reasons for redundancy, and exploring alternatives such as retraining or redeployment within the company.

Who is covered by UK redundancy law?

In the UK, employees with at least two years of continuous service are entitled to certain redundancy rights. These rights include receiving a statutory redundancy payment based on their length of service, notice periods, and, in some cases, the opportunity to move into a suitable alternative role within the organization.

Employers are obligated to conduct a fair selection process when choosing employees for redundancy, considering objective criteria such as skills, qualifications, and performance. Additionally, employers must consult with employee representatives or trade unions where applicable.

Employment tribunals

To further protect employees, the UK government has established employment tribunals where individuals can challenge their redundancy if they believe it to be unfair or not in compliance with employment laws. This legal framework aims to balance the needs of businesses with the rights of employees during the difficult process of redundancy.

Frequently asked questions about redundancy

1. What is redundancy?
   • Redundancy is a form of dismissal from employment when the job you are doing ceases to exist, and the employer doesn't replace it or reorganizes the workforce.
2. How is redundancy different from being fired or laid off?
   • Redundancy occurs when the job itself is no longer needed, whereas being fired or laid off may be due to personal performance or economic reasons.
3. What is the legal definition of redundancy in the UK?
   • Redundancy in the UK is defined under employment law as the situation where an employee is dismissed because the employer has ceased, or intends to cease, to carry on the business for which the employee was employed.
4. What rights do employees have during a redundancy process?
   • Employees have rights to consultation, notice, and often redundancy pay. They may also have the right to alternative employment within the same company.
5. What is a redundancy consultation?
   • It's a process where employers discuss with employees the reasons for redundancy, potential alternatives, and ways to mitigate the impact.
6. How much redundancy pay am I entitled to?
   • Redundancy pay is calculated based on your age, length of service, and weekly earnings. There are statutory redundancy pay calculations.
7. Can I appeal against redundancy?
   • Yes, you have the right to appeal if you believe the redundancy decision was unfair or there were procedural errors.
8. Can I be made redundant while on maternity leave?
   • While it is possible, there are strict regulations protecting employees on maternity leave. Employers must offer suitable alternative employment if available.
9. Do part-time or fixed-term employees receive redundancy pay?
   • Yes, part-time and fixed-term employees are entitled to redundancy pay if they meet the eligibility criteria.
10. Can my employer make me redundant without consultation?
    • Employers are legally required to consult with employees before making them redundant. Failure to do so can result in legal action.
11. How much notice should I be given before being made redundant?
    • Notice periods vary but are generally based on the length of service. Check your employment contract for specific details.
12. Can I look for a new job during my redundancy notice period?
    • Yes, you can and are encouraged to seek alternative employment during your notice period.
13. What is "gardening leave"?
    • Gardening leave is when an employee is asked to stay away from work during the notice period but still receives full pay and benefits.
14. Is there a maximum age for receiving redundancy pay?
    • No, there is no maximum age for receiving statutory redundancy pay.
15. Can I take legal action if I feel I was unfairly selected for redundancy?
    • Yes, you can appeal the decision internally and, if necessary, take your case to an employment tribunal.
16. Can I negotiate my redundancy package?
    • Yes, you can negotiate certain aspects of your redundancy package, such as the amount of redundancy pay or the terms of your departure.
17. Can an employer rehire after making redundancies?
    • Yes, but if the same or a similar role becomes available within a reasonable time, the employer should consider offering it to the employees made redundant.
18. How does redundancy affect my benefits and tax?
    • Redundancy pay is usually tax-free up to a certain limit, but ongoing benefits may be affected. It's advisable to consult with a tax professional.
19. What support is available for retraining after redundancy?
    • In some cases, employers may offer support for retraining. Additionally, government programs and initiatives may provide assistance.
20. Can I claim benefits after redundancy?
    • Yes, you may be eligible for state benefits, such as Jobseeker's Allowance. Eligibility criteria apply.

Please note that employment laws can change, and it's essential to seek up-to-date advice or consult with a legal professional for specific situations.

Next steps: Find your new role

After facing redundancy, finding a new job can be a challenging yet transformative process. Begin by updating your CV to highlight your skills and accomplishments. Sign up to online platforms like LinkedIn, to network with professionals in your industry and showcase your expertise. Actively search for job opportunities on job boards, company websites, and through recruitment agencies.

Consider expanding your skill set through relevant courses or certifications to enhance your marketability. Attend industry events, workshops, and seminars to stay updated on trends and make meaningful connections. Utilize your professional network for informational interviews and seek advice from mentors. Tailor your applications to each position, emphasizing how your experience aligns with the job requirements. Stay resilient, stay positive, and consider seeking guidance from career counselors or support groups to navigate the emotional challenges of the job search. Remember, each application and interview is an opportunity to showcase your strengths and find a new, fulfilling role. Good luck!

Understanding Redundancy in the UK

What is Redundancy?

Redundancy occurs when an employer needs to reduce their workforce. Redundancy can happen for various reasons including closing down the business, relocating, or changing the nature of the work. It is a form of dismissal that is distinct from being fired or let go for performance reasons.

Employee Rights

Employees who have worked continuously for their employer for at least two years are typically entitled to statutory redundancy pay. Additionally, employees have the right to a notice period, redundancy pay, time off to find a new job, and the right to appeal the redundancy decision or make a claim to an employment tribunal if they feel they have been unfairly dismissed.

Consultation Process

Employers must follow a fair redundancy process, which includes consulting with the employees. In organizations making 20 or more employees redundant, there must be a collective consultation lasting at least 30 days. During this period, the employer must inform and consult with employee representatives.

Calculating Redundancy Pay

Redundancy pay is calculated based on the employee's age, length of service, and weekly pay (subject to a statutory cap). The basic formula is:

• Half a week's pay for each full year the employee was under 22
• One week's pay for each full year they were 22 or older but under 41
• One and a half week's pay for each full year they were 41 or older

Notice Periods

Employees are entitled to a minimum notice period before their employment ends due to redundancy. This period varies depending on how long they have been employed. Typically, it's one week’s notice if employed between one month and two years; one week’s notice for each year if employed between two and twelve years; and twelve weeks’ notice if employed for twelve years or more.

Support and Assistance

Redundant employees can seek help and advice from various sources, including their local Jobcentre Plus, professional unions, and legal advisors. The ACAS (Advisory, Conciliation and Arbitration Service) also provides free and impartial information and advice to both employers and employees.