Losing your job can be a tough time. As such, it can lead to job hunting stress and financial worries, amongst other things. Unfortunately, redundancy does happen and there are many reasons why your employer could make you redundant. If you do find yourself in this situation it’s important that you try not to take it personally, it’s also important that you know your rights.
As redundancy isn’t something we often have to deal with (hopefully), it can be a confusing time. To help you out, here’s a comprehensive guide to understanding redundancy, and what it could mean for you.
Redundancy and unfair dismissal
Redundancy is a form of dismissal from your job, because your employer no longer needs you in the role or they need to reduce their workforce. There are a number of reasons this could happen, a few of the most common reasons are:
- Your employer is changing the direction of the company and they no longer need your role
- The company is failing
- Another company is taking over
Your employer must be fair in their selection of you for redundancy. Sometimes employers will ask for voluntary redundancies or work on a last in, first out basis. You could also be selected if your disciplinary records or attendance are not as good as others.
As you must be chosen for redundancy fairly, your employer can’t dismiss you for reasons of discrimination such as age, gender, religion etc. Be sure to gather all the information surrounding the circumstances of your redundancy; and if you feel your employer is dismissing you unfairly, head to your local Citizens Advice Bureau (CAB) for professional advice on what to do next.
Before you panic, employers don’t just call you to their office one day, drop the redundancy bomb and move swiftly on. They will set up a formal redundancy consultation, where they can explain the situation and reasoning.
You can opt for a trade union or employee representative to attend the meeting with you; and this is also your chance to raise any objections you have with your boss.
If your employer is making more than 20 people redundant at once, group consultations will take place. These are a bit more regimented than the independent ones and a trade union or employee representative will be present by law. These consultations are also the point in which you receive your notice period, and can raise any queries you have regarding your rights or pay.
Notice of redundancy
After they’ve told you about your redundancy, your employer will have to give you a notice period. Thankfully they can’t just tell you to leave!
Your notice period is the amount of warning you’ll receive before your employment ends. It’s dependent on the amount of time you’ve been at the company. Of course, your employer does have the choice to give you more warning if they wish, this could give you longer to prepare for leaving and start finding a new job.
Notice periods work as follows:
- If you’ve been employed for between one month and two years, you have the right to at least one weeks’ notice before redundancy.
- If you’ve been there for more than two years, you’ll receive one weeks’ notice for each year you’ve been employed between two – 12 years.
- If you’ve been at the company more than 12 years, you’re entitled to 12 weeks’ notice – this is the maximum time the employer has to give you, but they can chose to give you more notice if they want.
Employers can ask staff to take voluntary redundancies for a financial incentive to save them have to go through the process of selecting people themselves. The employer can’t just offer older workers and incentive to retire early as this would be discrimination on age; but often these types of redundancies are offered to longer standing or more senior members of the workforce.
If your employer suggest the option of voluntary redundancy, anyone can put themselves forward for it. This doesn’t however mean that the employer has to select you. Ultimately, who they let go is their final decision.
If the company is changing directions or they no longer need your role, your employer may offer you alternative employment. This means you will stay within the same company, but they’ll offer you a different role. You don’t have to accept this role, but it may harm your redundancy compensation if you don’t.
Know your rights
If you are facing redundancy, it’s important that you know your rights; both you and your employer want this process to be as fair and as smooth as possible. If you find your employer is not acting fairly or you’re not receiving the correct pay or notice, get in touch with your local CAB for advice.
Below we will explain what you’re entitled to based on your length of service within the company. Make sure you’re clued up on what you should be getting!
What is a redundancy pay and will I receive it?
As compensation for your redundancy, you could receive a redundancy pay package. You will only be eligible for this providing you have been working for the company for at least two years. Pay is dependent on the age bracket you fall into; statutory pay works as follows:
- If you’re under 22, you can receive half a week’s pay for each full year you were at the company.
- For each full year you served at the company between the ages of 22 and 41 you will receive a full weeks pay.
- After 41 you will receive a week and a half’s pay for every full year you worked at the company.
There is a limit to how much pay you can receive overall if you’ve been at the company for a long time. Length of service is capped at 20 years and for those earning higher salaries weekly pay is capped at £479. The maximum amount of redundancy pay anyone can receive is £14,370.
Exceptions to statutory redundancy pay
There are a few exceptions to statutory redundancy pay. Even if you have been with your employer for more than two years. You will not receive this rate of pay if you are:
- Dismissed for misconduct (as this doesn’t count as redundancy)
- An apprentice who will not be employee in the company at the end of their training
- Offered another suitable role in the company, but turn it down without good reason
- A merchant seaman or share fisherman
- Crown servants, members of the armed forces or police services
- A domestic servant who is a member of your employer’s family
Pay in lieu
Your employer can choose whether or not they want you to continue working through your notice period. If they decide they want your position to cease with immediate effect, you can still receive redundancy pay, providing you’ve been there two years – phew!
You’ll receive a lump sum called pay in lieu. Your employer will work out how much you receive based on the usual rates of statutory pay as above, and your employment with the company ends immediately.
Your employer could also ask you to take something called ‘garden leave’. This is when they ask you to serve out the remainder of your redundancy notice period from home; though you’re not actually working, you’re still an employee of the company and will receive your usual hourly rate.
However, this means your employer could ask you to go back to work at any point during this period. And, as they still employ you, you can’t start another job in that time.
Looking for work
If you’ve been made redundant, whilst you’re serving out your notice period, you have the right to paid time off work to look for a new job. Your employer must give you a reasonable amount of time off to look for another job, or to start training for a new one. However, your employer only has to pay you 40% of that week’s pay for the time you take off. So don’t take it off just because you can, use it wisely!
Redundancy can be tough, especially if it comes as a surprise. But unfortunately, you can’t always avoid it. If you find out your employer is making you redundant, make sure you know your rights! You can use online calculators to work out how much statutory pay you can receive.
If you do feel like your employer has unfairly dismissed you for any reason, don’t let this stress you – you’re not alone! Seek advice from your local CAB or other online resources, trade union or employee representatives are also there to help you.