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Your redundancy rights

Photograph of Nick Renaud-Komiy

Written by Nick Renaud-Komiya , Personal finance specialist

16 June 2020

If your employer makes you redundant, it is important to know your rights. We explain what help you’re entitled to if you lose your job due to the impact of COVID-19

Image of blackboard with text reading "know your rights"

As things change rapidly during the coronavirus (COVID-19) crisis, this guide will be updated regularly to reflect changes in rules and regulations.

The economic impact from Coronavirus is causing untold misery to many, with experts predicting a large number of job losses over the coming months.  

It’s likely that we’ll see an increase in redundancies, as some firms scale down the number of employees on their payroll to cut costs. Others may go out of business altogether.  

Here are some things you should know if you’re made redundant by your employer. 

On what grounds can you be made redundant? 

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.

The criteria an employer is allowed to use to select employees for redundancy include an individual's:

  • Skill

  • Qualifications

  • Capability within their role

  • Conduct and attendance record

  • And 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, 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 4 week trial period in this role to determine its suitability without forfeiting your right to Statutory Redundancy Pay.

Find out more on statutory redundancy pay here

How should you be informed? 

Before making any redundancies your employer must communicate their plans to workers in writing. They need to explain:

  1. The reason for the redundancies

  2. The number of redundancies they intend to make

  3. The selection procedure they intend to use

  4. How they will carry out the redundancies

  5. How they will work out redundancy payments

Your employer should also formerly consult individual members of staff being made redundant. If more than 20 redundancies are planned then managers need to consult a staff or trade union representative. 

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 the consultation must start at least 30 days before any dismissals take place. 

Where more than 100 staff are made redundant, the consultation must start at least 45 days before.

Are you entitled to a redundancy payment? 

An employer is legally obliged to give you a redundancy payment if you’ve worked continuously for them for more than 2 years.

The amount you’ll receive from your employer will depend on several factors including:

  • Your age

  • The amount of time you’ve been working for your employer (often called ‘length of service’)

  • Your current weekly wage

  • Whether they intend to offer redundancy pay above the legal minimum.

If you’re made redundant after 2 years then you’re at least entitled to Statutory Redundancy Pay (SRP). This is the minimum amount your boss has to give you by law.

This is currently capped at a maximum of £16,140 (or £16,800 in Northern Ireland). You will not be taxed on any SRP amount you receive below £30,000.

Statutory Redundancy Pay is calculated in the following way. You’ll receive:

  • 0.5 week's pay for each full year of service when you were under 22

  • 1 week's pay for each full year of service when you were aged between 22 and 41

  • 1.5 week's pay for each full year of service where you were over the age of 41

The Government caps the weekly wage covered by SRP at £538 per week (£560 in Northern Ireland). So, even if your salary was worth more than this, your SRP entitlement will be calculated as if your weekly pay was £538.  

Length of service is capped at 20 years

Your employer might offer a more generous redundancy package than your legal minimum entitlement. This should be discussed in your consultation meeting and you should request a copy of the offer in writing. 

It’s worth noting that any money you receive beyond the legal minimum for your circumstances will be subject to tax and National Insurance.

Work out whether you’re owed any redundancy pay.

What if your employer cannot pay?

If your employer becomes insolvent or is unable to pay your SRP for another reason, then you can claim at least some of the cash you’re entitled to from the National Insurance Fund.

The National Insurance Fund is a government-managed pot that all employees and self-employed workers pay into through their National Insurance Contributions (NICs).  

To claim from the National Insurance Fund you need to write to your employer within 6 months of being made redundant, formally requesting any outstanding payment owed to you.

If they still do not pay, you’ll need to download and complete the Redundancy Claims Form from The Insolvency Service. You’ll then need to 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 this.

Alternatively, you can complete this form on the GOV.UK website to claim any money owed to you if your employer has been made insolvent.

What happens to your workplace pension?

If you’re made redundant you may be concerned about what will happen to your workplace pension scheme. These pensions work in a variety of different ways. 

There are two main types: Defined benefit schemes (also known as final-salary schemes), and defined contribution schemes.

Learn more about how these schemes work.

If you’re unsure about what to do about your workplace pension, it may be a good idea to speak to a regulated independent financial adviser (IFA)

If your ex-employer goes into insolvency and you kept a defined benefit scheme in their pension scheme, you may be able to get help from the Pension Protection Fund.

The Government’s Money Advice Service has detailed information about your pension options if you’re made redundant.

The Pensions Advisory Service is another government-run body which provides help and information to members of the public on pensions and retirement savings.

Read our guide on how to get your retirement savings back on track if they are impacted by Coronavirus-related economic disruption. 

What support is available if you are made redundant?

 Get help claiming what you’re owed 

If your employer goes into insolvency and you’re owed money for wages, holiday or commission, you might be able to get help from the Government’s Redundancy Payments Service. 

In order to be able to make a claim with this service your employer must be unable to pay you.  

For more information, and to make a claim, check the Redundancy Payments Service website.  

Financial assistance 

You may also be eligible for unemployment benefits if you lose your job, regardless of whether you were made redundant due to the impact of COVID-19 or for other reasons.  

You could be entitled to at least one of several benefit schemes. 

These include:

  • Universal Credit

  • New Style Jobseeker’s Allowance

  • New Style Employment and Support Allowance

Read the UK government guidance for full details on applying for these benefits.

The Government has said that it is taking longer to process applications for certain benefits due to the impact of Coronavirus. So, if you think you might be eligible for this kind of financial assistance, it may be worth applying as soon as possible.

Help finding a new job 

You can search full-time and part-time jobs in England, Wales and Scotland through the government’s ‘Find a job’ service. There is a separate government-run job search site for workers in Northern Ireland.  If you’ve been made redundant and you live in England, you might be able to get help finding alternative work through the Jobcentre Plus Rapid Response Service

The Rapid Response Service is specifically designed to help people who are about to be made redundant or have recently been made redundant. It offers support finding training opportunities, benefits information and help with CV writing, among other things. 

The Service may also be able to help cover certain costs, like traveling to work, childcare, and tools and equipment. 

To be eligible for this support you need to contact them: 

  • If you suspect you’re going to be made redundant

  • During your notice period

  • Up to 13 weeks after you’ve been made redundant 

Get in touch by emailing rrs.enquiries@dwp.gov.uk

Similar government schemes operate in Scotland and Wales.  

What can you do if you feel you were dismissed unfairly? 

The government has some guidance on what you can do if you feel you have been unfairly dismissed.

If this happens you may be entitled to take legal action against your employer. But it’s worth noting that any legal action may be delayed as many courts remain closed due to the lockdown rules.

You might also be able to get compensation through an employment tribunal if you can reasonably argue that you were dismissed unfairly. 

Government guidance states that you can make a claim to the employment tribunal if you were dismissed unfairly or there was not a proper consultation about your redundancy.