Updated on 18 June 2015.
Redundancies are made when a company needs to scale down the number of employees they have on their pay role, either because they need to cut costs, because they are moving or changing operations or because they are closing down.
For you to be made redundant your job has to cease to exist completely; your employer is not allowed to take on someone else to directly replace you. However, even when an employer has made redundancies they are still able to recruit new members of staff to fill different roles in different areas of the business or in different locations.
Your employer is obliged, by law, to select the individuals who will be made redundant fairly. They are not allowed to base their decision on factors such as age, race, gender, disability, sexuality or membership/non-membership of a trade union.
The criteria an employer is allowed to use to select employees for redundancy include an individual's skill, qualifications and capability within their role, their conduct and attendance record, the nature of the work that is to be done by remaining staff and any other agreed procedure they have in place.
If you are made redundant your employer should explain to you why and how you were selected. If you believe you were discriminated against unfairly, you have the right to pursue your claim to an employment tribunal.
They should also make reasonable attempts to offer you suitable alternative employment within the company. If they offer you an alternative position you have the right to a four week trial period in this role to determine its suitability without forfeiting your right to Statutory Redundancy Pay.
If you are worried about your job there are things you can do to try and secure your employment, or prepare yourself if redundancy is unavoidable:
Make yourself indispensable: Easier said than done, but taking on extra responsibility and working above your usual work load could make it harder for your company to lose you.
Sort your finances: In case the worst happens make sure your finances are in order whilst you're still working. Draw up a budget and look at mortgage and income protection insurance.
Start your job search early: It's worth keeping your ear to the ground for a new job, even if you are happy where you are. Keep your CV up to date so you will be ready should you need to start applying for new jobs.
Before making any redundancies your employer is obliged to notify the workforce of their intentions in writing. They need to explain:
Your employer should also formerly consult either the individual members of staff that will be affected or, if more than 20 redundancies will be made, a staff representative or union official.
During the consultation process they will need to discuss alternatives to redundancy and show how they are keeping the numbers affected to a minimum.
If more than 20 employees are being made redundant this consultation needs to take place at least 30 days before any notice is given, for instances where more than 100 staff will be made redundant this is extended to 90 days.
If you are notified that you are to be made redundant your employer has to either adhere to the notice period set out in your contract of employment, release you on paid 'gardening leave' or award you pay in lieu of notice (whereby you receive a payment from your employer instead of working out your full notice).
If your contract does not specify a notice period then Statutory notice should apply, this is as follows:
The amount of remuneration you will receive from your employer will depend on a number of factors including:
If you have been working for your employer continuously for more than 2 years you will at least be entitled to Statutory Redundancy Pay (SRP). This is currently capped at a maximum of £13,920. You will not need to pay tax on any amount you receive as SRP that is less than £30,000.
Statutory Redundancy Pay is calculated on the following basis:
The current maximum weekly wage covered by Statutory Redundancy Pay is £464.
You can use the calculator on the Gov.UK website to work out whether any redundancy pay is owed to you.
It may be that your employer is willing to offer a redundancy package above the Statutory Redundancy Payment. This should be discussed in your consultation meeting and you should request a copy of the offer in writing. It is worth bearing in mind that anything paid above and beyond any Statutory Redundancy Pay you receive will be subject to tax and National Insurance.
Your rights - and the company's responsibilities - if it goes into administration are slightly different. Read our guide: Employee rights during Administration for what you can expect, and what you may need to do to recover lost pay and any redundancy.
If your employer is made insolvent or is unable to pay your redundancy entitlement for some other reason then you will be able to claim partial remuneration from the National Insurance Fund.
However, you will first need to write to your employer within 6 months of you being made redundant formally requesting any outstanding payment owed to you.
If they still do not pay you will need to download and complete the Redundancy Claims Form from The Insolvency Service and either send this to the Redundancy Payments Office or to the insolvency practitioner handling your former employer's case if you have been instructed to do so.
Once you have been made redundant and are working your notice your employer is obliged to give you reasonable time off to look for another job and to arrange training that will help you find another job.
If you need to start a new job with a different company before the end of your notice period the best thing to do is to talk to your employer as they may be willing to release you without docking your redundancy pay. Bear in mind that if you leave without their permission, they are entitled to reduce the amount owed to you.
Firstly you should raise your concerns with your employer or with a representative such as a trade union official. If they are unable to resolve the situation then you may need to issue a formal complaint through your employer's grievances procedure.
If you need more information about being made redundant or advice regarding unfair dismissal you should either contact ACAS (the Advisory, Conciliation and Arbitration Service), the Citizens Advice Bureau or the Labour Relations Agency.
Our guide How to Deal with Redundancy can help you to soften the blow if you are made redundant, with advice on how to prepare for the worse and what you can do after the event.
Written by Hannah at money.co.uk
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