Redundancy generally incorporates three different situations relating to where an employee may be dismissed; business closure, workplace disclosure and reduction of workforce. An employee dismissal will be by reason of redundancy if it is “wholly or mainly attributable to” the employer:
- Ceasing or intending to cease to carry on the business for the purposes of which they employee was employed (Business closure).
- Ceasing or intending to cease to carry on the business in the place where the employee was employed (Workplace closure);
- Having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work (Reduced requirement for employees).
If you are being made redundant, you may be eligible for:
- Redundancy pay
- Notice period
- Consultation with your employer
- Option to move to a different job
- Time off to find a new job
An employer will typically make redundancies for various reasons including the whole or part of the organisation closing, changing the types or number of roles needed for work or changing location. If an employee is dismissed for performance or conduct, this is not redundancy. In this case, an employer must have followed disciplinary or capability procedures before dismissing the employee.
Employees have rights to a fair redundancy process in a TUPE (Transfer of Undertakings (Protection of Employment)) transfer when an employee transfers from a current to new employer.
You cannot be selected for the following reasons. Your redundancy may classed as discriminatory or an unfair dismissal if founded in any of the following:
- Sex
- Gender reassignment
- Marital status
- Sexual orientation
- Race
- Disability
- Religion or belief
- Age
- Membership or non-membership of a trade union
- Health and safety activities
- Working patter (e.g. part time or fixed term employees)
- Maternity leave, birth or pregnancy
- Paternity leave, parental or dependants leave
- Exercising statutory rights
- Whistleblowing (e.g. making disclosures about an employer’s wrongdoing)
- Taking part in lawful industrial action lasting 12 weeks or less
- Taking action on health and safety grounds
- Doing jury service
- An employee is the trustee of a company pension scheme.
How your employer must consult you
If 20 or more employees are made redundant, an employer must hold a collective consultation. If there are fewer than 20 employees being made redundant then an employer should consult these employees individually.
Employees should check their employment contract when being made redundant as there may be additional consultation rights.
Voluntary redundancy
When an employer is planning on making redundancies, an employee can choose to put themself forward before being selected, which is known as voluntary redundancy.
Employers are not able to offer voluntary redundancy to age groups which are eligible for an early retirement as this could be age discrimination. However, it is possible for an employer to offer an early retirement package for certain age groups which could be one element of a voluntary redundancy offer which is open to all employees.
Settlement agreement
An employer and employee will enter into a settlement agreement on termination of employment. This is an agreement between the parties to compromise on the employees contractual and statutory claims. This can assist the employer in ensuring that the employee does not bring any future claims against the company, while compensating the employee for the loss of their employment.
A settlement agreement must be structured in a prescribed form. It is a legally binding document between the employer and employee to settle any potential claims out of the employment relationship. It involves a written agreement which is regulated by statute, in which an employee agrees to waive their right to bring certain tribunal claims usually in return for a lump sum payment. This means once a settlement agreement has been signed by the employee, the employee is unable to make a claim against the employer for unfair dismissal which provides security to the employer. A settlement agreement can also be used in the absence of an existing dispute, such as voluntary redundancy.
Should you require any further information regarding Settlement Agreements and/or obtaining advice as to their contents, please see our Settlement Agreement – Independent legal advice article or contact our Employment Team on 0121 705 7571 or employment@wallacerobinson.co.uk.
Redundancy Pay
When an employee has been selected for redundancy, then that employee is entitled to statutory redundancy pay. If an employee has been working for their current employer for two years then they will be entitled to the following:
- Half a weeks pay for each full year you were under 22
- 1 weeks pay for each full year you were 22 or older, but under 41
- 1 and a half weeks pay for each full year you were 41 or older.
Redundancy pay under £30,000 is not taxable.
An employee will not be entitled to redundancy pay if:
- Employer offers to keep you on
- Employer offers the employee suitable alterative work which the employee refuses without good reason
- If an employee falls into one or more of the following categories:
- Merchant seamen, former registered dock workers (covered by other arrangements) or share fisherman.
- Crown servants, members of the armed forces or police services.
- Apprentices who are not employees at the end of their training.
- A domestic servant who is a member of the employers immediate family.
- Short term and temporary layoffs.
An employee may still be able to claim statutory redundancy pay if the employee has been temporarily laid off (without pay or less than half a week’s pay) for either;
- More than 4 weeks in a row
- More than 6 non-consecutive weeks in a 13-week period
- To make a claim for redundancy an employee should first write to their employer telling them they wish to claim statutory redundancy pay. This must be done within 4 weeks of their last non-working day in the 4 or 6 week period.
Notice pay
An employer should pay the employee through their notice period or in lieu of notice depending on their circumstances.
Payment in lieu of notice is money paid to an employee by their employer as an alternative to being given their full notice. This means that the employees’ contract can be ended without any notice.
Notice periods
An employee must be given a notice period before employment ends.
The statutory redundancy notice periods are:
- At least 1 weeks notice if employed between 1 month and 2 years.
- 1 weeks notice for each year if employed between 2 and 12 years.
- 12 weeks notice if employed for 12 weeks or more.
Consultations
An employee is entitled to a consultation with their employer when they have been made redundant. The employer should tell you the reasons about why you are being made redundant and any alternatives to redundancy.
An employee can make a claim to an employment tribunal if their employer doesn’t consult properly (e.g. if they start late, don’t consult properly or don’t consult at all).
An employer must give a valid and justified reason which is consistent which how the employer has treated other employees. The employer must act reasonably, for example by following a disciplinary procedure that meats the codes of practise. The employer must treat all employees the same, whether they are part time or full-time workers. Lastly, the employer must give notice in line with the employment contract and statutory notice requirements.
Valid reasons for dismissing an employee include;
- Inability to do the job, employers should follow disciplinary procedures and support the employee to improve their performance by dismissing them.
- Illness, if the employee has a long-term illness that makes it impossible for them to do the job.
- Summary dismissal, an employer may dismiss an employee immediately for gross misconduct, such as violent behaviour. Proper investigation should be carried out before making the dismissal.
Our team of Employment Lawyers would be happy to assist further and advise you further regarding your rights in a redundancy. Wallace Robinson & Morgan Limited are based in Solihull & Dorridge and serve clients across Birmingham and the West Midlands, Warwickshire, Worcestershire and further afield. If you would like to discuss your matter, please call 0121 705 7571 and ask to speak to a member of the Employment team or email us at employment@wallacerobinson.co.uk.
Amun Sunner
Paralegal – Family & Dispute Resolution Departments
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