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Employment

Redundancy rights: Everything you need to know

You may be entitled to redundancy pay or have the option of appealing an unfair dismissal

Being made redundant can feel like you’re being totally blindsided. Even if the prospect of it has been on the horizon for a while, the reality of being left without a job can feel terrifying. 

Cate Sevilla was editor-in-chief at The Pool when the company collapsed, and went through the grief, shame and risk that comes with a job loss. 

“It might feel messy to be honest with those who ask how you are, or shameful to say “I lost my job” but trust me – so many people know what it’s like to be unemployed for a while (or to feel unemployable),” she says.

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While it is paramount that you take care of yourself and your mental health during this time, it is also important that you know your rights. You may be entitled to redundancy pay or have the option of appealing an unfair dismissal. 

If you’re worried about redundancy or have been made redundant, here’s what you need to know.

What are genuine grounds for redundancy?

When a business goes under and has to close, its staff are made redundant. Similarly, if a business shuts down its operations in one location, the employees working there may be made redundant if they can’t be transferred to another part of the business elsewhere – or don’t want to relocate. 

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A business may also make staff redundant if it needs to reduce its workforce, either because there is no longer a demand for the products or services the role provided, or because funding has been cut for the role. 

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New technologies have made some jobs redundant. In the past, people working manual jobs such as telephone operators or check out employees in supermarkets have seen their jobs replaced due to technological advances. There are fears that increased automation and technology could make millions of jobs redundant in the next few decades, however many people argue that new opportunities will arise with jobs to develop, maintain and further these technological advances. 

There are also fears that people working in carbon-intensive industries could face redundancy in the transition to a greener economy. If an oil rig or coal mine is shut down, those workers will be made redundant.  The government has made pledges to invest in green jobs, such as working on clean energy generation, aiming to host two million of them by 2030.

Is being made redundant the same as being sacked?

No, they are different things which come with different entitlements. The key difference between being made redundant and being fired, is who was at fault. 

When an employee is made redundant, it is due to a problem with the company that is not their fault – a perfect example of “it’s not you, it’s me.” Whereas when a person is fired from their job, this is because they have broken the terms of their employment contract.

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.

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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.

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. Your employer can refuse to give you voluntary redundancy if they really want to hold on to you.

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, 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 much 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 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 being off work on long-term sick leave for mental health or stress?

“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 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.”

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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.

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.

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