Experts predict that following on from the COVID-19 pandemic, a jobs crisis is looming. If you find yourself at risk of redundancy, due to coronavirus or anything else, it’s important to know your rights. We’re here to explain where you stand.
Redundancies take place when a company is making changes. It’s a form of dismissal from your job. A business might decide to make redundancies:
to cut costs
when closing down
when moving premises
when changing operations or altering structures.
Regardless of why you’re being made redundant, you may have rights to:
a notice period
a redundancy payout
time off to find a new job
an alternative job within the business.
Of course every situation is different, but it’s worth looking at what you’re entitled to.
By law, a business has to choose fairly who will be made redundant.
For you to be made redundant, your job has to cease to exist. You can’t just be replaced by someone else. But the employer can continue making appointments for other roles in the business.
There may be a selection process during which employees are selected for redundancy. This could be based on a range of criteria which covers:
capability to fulfil the role
disciplinary and attendance record
the nature of the work to be completed by remaining staff
length of service (last in, first out).
They may even ask for volunteers for self-selection redundancy. If you were already thinking of leaving anyway, voluntary redundancy could be a good option for you.
Some companies even ask employees to reapply for their own job roles as part of the selection process, to help them decide who will be made redundant.
In some cases, you could be made redundant with no selection process. For example, if a whole area of the business is closing down, all the employees in that section could be made redundant. Similarly, if you’re the only employee in a specific business function, there wouldn’t need to be a selection process.
If you’re told you’re being made redundant, your employer must explain why and how you were chosen. It must comply with the reasons above.
There’s a long list of reasons why a company cannot select you for redundancy. For example, you cannot be chosen as a result of age, gender, race, religion, disability or pregnancy. A redundancy for any of these reasons – among others – is likely to be considered unfair dismissal. If you believe you’re a victim of unfair discrimination, you have the right to appeal and then take the matter to an employment tribunal.
Your employer should attempt to offer suitable alternative employment within the company, if it’s available. If you’re offered an alternative role, you have a right to a four-week trial period to see if it works for you. This doesn’t affect your statutory redundancy pay – you’d still be entitled to it.
The amount of redundancy pay you get depends on factors including:
your length of service
your weekly wage
whether the business is offering over and above the statutory redundancy pay package.
If you’ve been employed by the business for two years or more, you’ll have a right to statutory redundancy pay as a minimum. But you won’t be offered statutory redundancy pay if your employer offers you suitable alternative work.
Statutory redundancy pay is:
half a week’s pay for each full year you were under 22
one week’s pay for each full year you were 22 or older, but under 41
one and half week’s pay for each full year you were 41 or older.
Any payments are capped at 20 years of service.
A week’s pay is set at your average weekly earnings for 12 weeks before your redundancy notice was served. But, if you were on furlough due to the pandemic, it’ll be based on your pre-furlough earnings. The weekly pay is capped at £538 per week if you were made redundant after 6 April 2020, or lower if you were made redundant before that. Therefore, the maximum statutory redundancy pay you can get is £16,140.
The good thing about redundancy payouts less than £30,000 is that they aren’t taxable.
During the coronavirus pandemic, you still have the same redundancy rights. This includes the right to statutory redundancy pay if you qualify.
Some people have been on furlough but are now being made redundant. If this is the case for you, your statutory redundancy payout will be based on your pre-furlough weekly earnings.
Some people were made redundant because of the pandemic, but before the furlough scheme came into play. If this applies to you, there might be an option for your employer to re-employ you. If they agree to put you back on the payroll, then you could still be eligible for furlough pay.
If the business is going through insolvency and can’t pay, you may still have rights. You can apply to the government for partial payment of your statutory redundancy pay.
First, you’d need to write to your employer formally requesting the outstanding payment within six months. If they still didn’t pay, you’d need to download a Redundancy Claims form from The Insolvency Office. You can send it to the Redundancy Payments Office or to the insolvency practitioner handling your former employer's case. Alternatively, you can complete this form on the GOV.UK website to claim any money owed to you if your employer has already been made insolvent.
If you’re being made redundant, it won’t take place with immediate effect. You’ll get a notice period.
The minimum statutory notice periods are as follows:
one week’s notice if you’ve been employed by the business for a month to two years
one week’s notice for each year if you’ve been employed between 2 and 12 years
12 weeks’ notice if you’ve been employed for 12 years or more.
Your contract will explain whether your employer will give you longer notice periods than the statutory ones. You’ll be paid during your notice period.
Check your contract as some businesses offer ‘payment in lieu of notice’ which is when they pay you but don’t expect you to work your notice. If that’s the case, your employment could be ended without notice.
If you’re being made redundant, you have a right to a consultation with your employer. You’ll be able to talk about why you’re being made redundant and what alternatives there might be.
If 20 or more redundancies are being made, there are rules and legal requirements about how the consultation is handled. If there are 19 or fewer redundancies, there are no rules about how the consultation is done.
The minimum length of the consultation is 30 days for 20-99 redundancies or 45 days for 100+ redundancies.
If the idea of redundancy is playing on your mind as a result of the pandemic, there are a few things you could do to prepare yourself in case it happened to you.
For example, you could:
Sort your finances. Start saving. Create a budget. And see if you can get mortgage and income protection insurance – although this might be harder to get at the moment due to the pandemic.
Start your job search. Keep your eyes peeled and see what’s out there. Get your CV ready now in case you need to leap into action.
Make yourself indispensable. The more valuable you are to the business, the less likely you are to be selected for redundancy.
Train. Now might be a good time to do some extra training or gain some additional qualifications, especially if you fancy a career change.
Here are more tips on how to be prepared for redundancy
If you found a new job elsewhere before the end of your notice period, you could talk to your employer. They might be willing to release you without docking your redundancy pay. But if you leave your job without your employer’s permission, they’re entitled to reduce the amount of redundancy pay owed to you.
There are a few agencies you could speak to if you need more information about redundancy or unfair dismissal. These include:
If you are worried about your employment, compare income protection plans to find the best cover, so you will be protected should the worse happen.