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Employment

Redundancy rights: Everything you need to know

The pandemic has thrown the spectre of redundancy across many people’s working lives. Luckily, The Big Issue is here to help.

Redundancies rose to a record 395,000 between September to November 2020 in a brutal assessment of the UK economy. The pandemic and ensuing lockdowns have heralded the worst recession in 300 years and, although the extension to the furlough scheme has kicked the can down the road, many people are being forced to consider their options.

Chancellor Rishi Sunak has said he can’t save every job. Businesses are closing, at least in the short term, and, for many people, voluntary redundancy is becoming a necessary but difficult consideration.

That’s why The Big Issue, with our Ride Out Recession Alliance, is focussing on finding answers to these problems. It is one thing to focus on supporting people who have been forced out of their homes, who have lost their source of income and reached desperation, and it is another to make sure they don’t reach that point in the first place. 

The Big Issue wants to do both, to treat both the symptoms and the causes. With the new RORA Jobs & Training programme, people who are struggling for work get a three-month digital subscription, weekly advice on how to get your next job, access to free or discounted training courses, and the ability to search The Big Issue jobs board with hundreds of thousands of jobs.

Register for RORA Jobs & Training here

For the vast majority of people who end up on the streets, it’s the end of a slippery slope. A string of bad luck can start the slide and, without a safety net to catch them, homelessness is the last stop. 

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As the recession bites, redundancy becomes a consideration for many business owners. But employers can’t just fire their staff at will.Employees have rights after all. And it pays to know what they are.

Worried about redundancy? Need to know your options? The Big Issue has found the answers so you’re not in the dark.

Do I have a right to redundancy pay?

You only have redundancy rights if you are classed as an employee – a worker or self-employed individual doesn’t have redundancy rights. If you can be told what to do, have an employment contract and do regular work, you’re more likely to be an employee. So, you need to know what your employment status is and you can check with your employer or seek advice about this.

As an employee, you will have a right to redundancy pay only if you have been working for your employer for two years or more. In fact, if your employer tries to make you redundant a week or two before the two-year mark, you are likely to still be eligible for redundancy pay as you’ll work a one-week notice period that counts towards the two years.

If an employer is able to offer alternative work for certain roles, some employees such as women on maternity leave have the right to be offered alternative employment in priority to other staff.

According to the Government, there are jobs without a right to redundancy pay, such as the police, armed forces and apprentices. If you are being dismissed for misconduct, however, this isn’t redundancy and you wouldn’t get any redundancy pay.

What does my employer have to do in redundancy proceedings?

Redundancy happens when an employer closes their business, a workplace or needs fewer staff to do particular work.

An employer has to follow a fair procedure to make you redundant, but what is fair in any particular situation can vary. If the whole workplace is closing, for example, there may be no point doing competitive selection between the staff.

But generally if some staff are staying and some are going, employers will be expected to have some fair method for deciding that.

First off, employers must consult with employees about how to avoid redundancies and how to mitigate the effect of them if they happen. If they don’t consult at all, they will almost certainly be making unfair redundancies.

If your employer is making more than 20 people redundant over a 90-period, then they must follow collective consultation rules. This means your employer has to consult with trade union reps or employee reps, or directly with staff if there aren’t any of those. They must explain the planned redundancies and how they’ve chosen those people for redundancies. Reps should be given time to consider the plans. See the full steps here.

For fewer than 20 redundancies, it’s considered good practice for employers to follow many of the same principles as those for collective consultation. They should individually consult with those who are at risk.

“Part of a fair selection process for redundancy is likely to involve putting in place an objective set of criteria and applying that consistently,” explains Peter Woodhouse, employment lawyer at law firm Stone King. “If no such scheme is put in place I would be looking very carefully at whether the dismissal was unfair.”

Employers have sometimes sought to use a “last in, first out” criteria, whereby the newest employees are chosen for redundancy first.

But Joanne Moseley, employment lawyer at law firm Irwin Mitchell, explains this approach will “affect a particular age group, usually younger people, and possibly sex”. So it could be discriminatory, and therefore not lawful.

Employers should have a balanced set of criteria alongside skills, appraisals, performance and disciplinary records to make the decision.

And then there’s voluntary redundancy, in which employers ask for volunteers or you can volunteer yourself. Your employer can refuse to give you voluntary redundancy if they really want to hold on to you.

What happens with voluntary redundancy?

If you want to put yourself forward to be made redundant, you can either offer yourself independently or put your name forward when your employer asks for volunteers.

Ideally you would apply for voluntary redundancy in writing and follow the necessary procedures or policies in place at your employer.

The same rights against discrimination apply to voluntary redundancy as they do to regular redundancy: If you feel like you were stopped or denied voluntary redundancy because of a protected characteristic the it could be classed as discrimination.

Can I appeal a redundancy?

An employer has to offer appeals in conduct dismissals, but they don’t have to for redundancy. You don’t have a statutory right to appeal a redundancy.

However, Peter Woodhouse explains that “although the law doesn’t go so far as to say that not giving an appeal is always wrong, it would almost always be sensible to offer it.

“Even the best run redundancy programmes can make errors and appeals give an employer an opportunity to fix them.”

You should check if your employer has an appeals process and, if not, you should ask to appeal anyway. Explain in writing why you think the redundancy is unfair, using a template from an organisation like Acas. It’s a good idea to get a staff or trade union representative to join you in meetings with your employer.

If they refuse and you still think you have a case, you could seek legal advice about taking them to employment tribunal.

When does redundancy count as unfair dismissal?

If you are selected for redundancy for any of the following reasons, it is likely to be unfair or discriminatory:

  • Your working pattern, for example working part-time
  • Whistleblowing
  • Membership or non-membership of trade unions
  • Maternity leave and pregnancy
  • Paternity or dependants’ leave
  • Health and safety activities
  • Because of discrimination against protected characteristics such as age, gender, marital status, ethnicity and so on under the Equality Act 2010.

How many weeks or years of redundancy pay am I entitled to?

You must have worked for your employer for two years or more to be entitled to statutory redundancy pay. There are three main scenarios:

  1. You get half a week of your weekly pay for each full year you were under 22 while employed.
  2. You get one week of your weekly pay for each full year you were 22 or older, but under 41.
  3. You get one and half week’s weekly pay for each full year you were 41 or older. The maximum employment term for which you’ll get pay is 20 years.

Your weekly pay is the average amount you earned per week over the 12 weeks before the day you were given a redundancy notice. Here is a redundancy pay calculator.

How much notice do I have to get?

How long you’ve worked at your organisation affects how much notice of redundancy you’re entitled to.

This will usually be set out in your contract but must be one week of notice for each year you’ve worked there for two to 12 years.

If you’ve been there for more than 12 years, you must be given at least 12 weeks’ notice.

Your company might pay you more than statutory redundancy pay if they’re worried you might otherwise have a case for an employment tribunal.

What are my redundancy rights if I have worked for my employer for less than two years?

All employees have a right to a redundancy notice no matter how long they’ve worked there.

If you’ve worked at your employer for more than a month and less than two years, you are only entitled to one weeks’ notice of redundancy and no redundancy pay. This is called statutory notice pay. You should receive full pay during your notice.

What are my redundancy rights when I’m on furlough?

You still have all your employee and redundancy rights under furlough.

Being on furlough doesn’t protect you from any redundancy proceedings – your employer can still begin redundancy proceedings if the business is downsizing or changing but must stick to fair procedures and fair redundancies.

The main point is your employer can’t select only you for redundancy just because you happened to be put on furlough. For example, if they are downsizing (but not closing) they need to put you in a pool of selected candidates for redundancy based on fair criteria. They can’t just get rid of you because you were the one on furlough.

However, if only your role is identified as no longer needed, under a fair procedure, your dismissal could be fair. But the employer will also need to show why they put you in a standalone position.

What are my redundancy rights if I’ve been temporarily laid off?

Sometimes employers don’t have enough work for their employees and temporarily send them home, also called being laid-off. Your boss should consider other options before coming to this decision, though.

If you’ve been temporarily laid off without pay (or under circumstances explained here) then you can claim statutory redundancy pay if you’ve been an employee for two years or more.

Make sure you write to your employer within four weeks of the last day of the lay-off.

Can I be made redundant for mental ill health or bereavement?

“This is really quite complicated,” explains Moseley. “If someone has been off sick for ages, and the employer wants to dismiss them, that could potentially be a capability procedure and so it could be fair.

“But if their condition amounts to a disability, then they have to jump through a number of other hoops first before starting redundancy proceedings, including making reasonable adjustments.”

What redundancy rights do I have if my company is insolvent?

This means a company cannot pay their debts. If you aren’t transferred to a new employer or asked to keep working, you may be made redundant.

You can apply to the government for redundancy pay, holiday pay, outstanding payments like overtime or unpaid wages, and for your statutory notice pay you would have been entitled to.

The government has an insolvency fund and if you satisfy the tests, you will get your payments.

Are my redundancy rights affected if I don’t belong to a union?

No. But the trade union will talk to the employer on your behalf. The employer will still have to individually consult employees too.

What are my redundancy rights when I’m on sick leave?

The fact you’re on sick leave doesn’t remove your right to a fair redundancy process.

But be warned that if your employer fairly identifies that your job is now not required by the company, then you could be fairly dismissed.

“In practice, if you’re off sick, your job will be covered by others. As a result those on long term sick could suddenly be identified as not required,” explains Woodhouse.

“However, if they’ve properly identified why the sick employee’s position is the one targeted for dismissal, that may still be fair.”

What are my redundancy rights after a TUPE transfer (i.e. when my company is being sold onto another)?

TUPE transfer rights are employment rights that kick in when your employer is selling or transferring the business, or contracting parts of it in or out. The contract moves to being between the purchaser of the business and the employee.

This situation doesn’t restrict the new employer’s right to make someone redundant, but they have to do it for what’s called “ETO reasons” – for economic, technical or organisational reasons. There can’t be discrimination or unfair procedures.

“If the employer has got to reduce workforce, that’s fine, but you have to put the incoming staff in with the existing staff in the redundancy pool,” explains Woodhouse. “If it’s just the incoming staff, that’s going to be an issue.”

Again, you can appeal internally or go to tribunal if you think it’s unfair dismissal.

What are my redundancy rights around company cars and equipment?

You usually have to hand it all back, which will be set out in your contract.

Where do I complain or get advice about a possible breach of redundancy rights?

After trying to appeal in-house, if you want to go to tribunal you first have to go through the government’s paid-for conciliation service (where you try and work out your differences without a tribunal), called ACAS. You have to go to them first even if you’ve already decided you want to go to tribunal.

Can redundancy rights change?

It’s interesting to know that the two-year redundancy pay limit is a political decision that can change. Tony Blair’s Labour government reduced it to one year, but it was extended to two years in 2012.

Career tips and advice from our Jobs and Training series:

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