Redundancy law

The prospect of redundancy is a heavy weight on many employees’ minds, and is particularly common in the current economic climate.  An employer has the legal right to make a business decision that it wishes to make redundancies, as long as they can show that there is a “reduced need for employees to do work of a particular kind” or they are closing their business or a particular site.  However, even if your employer can meet this definition, if you are being faced with the prospect of being made redundant, it must still be done fairly.

Reasons for Redundancy

Common reasons for redundancy include workplace closures, business reorganisation, a relocation of the business, or technological advances.  If you are being made redundant, your employer has a duty to consult with you over the proposed redundancies, to try to find ways of avoiding your redundancy and present you with any alternative job vacancies within the company.

Your employer should notify you of how many employees they are proposing to make redundant and should place you in a “selection pool” if there are other employees with the same or a similar job role to yours.  Your employer should then score you and your colleagues using a redundancy matrix with objective selection criteria, give you the opportunity to comment on this, and apply the scoring consistently and fairly in order to identify the employees with the lowest scores, who are then likely to be made redundant.   If you are pregnant or on Maternity Leave, you could have additional protection from redundancy and should seek detailed legal advice. 

Collective Redundancies

If your employer is proposing to make 20 or more employees redundant over a period of 90 days or less at the same place, they are under an obligation to collectively consult with the employee representatives or a trade union.  An employer’s failure to comply with this obligation could mean awards of up to 90 days’ gross pay being made in favour of each affected employee.  If an employer is proposing to dismiss 100 or more employees within a 90 day period, consultation must begin at least 90 days before the first dismissal takes effect, and if the proposals affect between 20 and 99 employees within a 90 day period, consultation must begin at least 30 days before the first dismissal takes effect. 

Redundancy or Lay Off

Occasionally an employer will try to “lay off” employees as an alternative to making redundancies, and it should be noted that your employer only has the right to do this if it is in your contract of employment or if it has become “custom and practice”, or if you agree. 

A redundant employee with over two years’ qualifying service is entitled to a redundancy payment under statute (or under contract if your employer operates an enhanced redundancy payment scheme).  The statutory redundancy payment is based on your gross weekly salary, age, and length of service (capped at £400 per week pay and 20 years’ service). 

Unfair Redundancy

Regardless of your length of service, you have the right not to be selected for redundancy on certain prescribed grounds which relate to statutory rights, health and safety, employee representation, trade union membership, or the ”protected characteristics” listed under the Equality Act 2010, (age, disability, marriage and civil partnership, gender reassignment, pregnancy and maternity, race, religion or belief, sex or sexual orientation).  If you are made redundant on one of those grounds, you can bring a claim for automatic Unfair Dismissal even if you have less than one year’s service.

Employees with 12 months’ service have the right not to be unfairly dismissed and can bring a claim without having to show that they were made redundant on the basis of a prescribed ground.  Any employee has the right to request a written statement from their employer showing how their redundancy pay has been calculated, and it is a criminal offence for your employer not to provide this.