Redundancy – an employee guide

Losing your job is scary, and redundancy can be a stressful experience, but you do have rights and there are strict redundancy procedures that employers must follow.

In this guide, we’ll take you through the key points of the redundancy process, including your rights and some tips on how to manage the process.

What is redundancy?

In simple terms it happens when the job you do is no longer going to exist within the company structure. This can occur for several reasons like downsizing or closure of the business, or when the nature or direction of a business changing.

Before embarking on a redundancy process, a company must ensure all other options have been explored and exhausted before resorting to job losses, including reducing cost.

The rules on redundancy are clearly set out in UK employment law and employers have several legal obligations they must meet during the process. These are:

– To be able to justify the use of redundancy as a reason for ending your employment

– To adopt a fair selection process

– To undertake adequate consultation with affected employees

– To provide a suitable notice period (or payment in lieu of it)

– To make a redundancy payment (depending on length of service, age, and the value of a week’s pay)

– To offer suitable alternative employment (if possible)

– To allow time off to search for a new job

What notice period am I entitled to?

The law states that your employer must give you a set amount of notice. This should be either the notice period in your contract, or the statutory minimum notice period. You should get whichever is the greater of the two.

The statutory minimum notice period is based on your length of service:

1 month – 2yrs: One week notice

From 2-12yrs: One week’s notice for each year of service

12+yrs: Notice is capped at 12 weeks

You may be offered a lump sum if your employer doesn’t need or want you to work your notice period, this is called “pay in lieu of notice”.

Your employer may also ask you to complete your notice period at home which is called “garden leave”. It’s important to note that although you’re no longer doing company work during this time, you’re still legally employed during garden leave. So, you won’t be able to start work with a new employer until that period has ended.

What redundancy pay am I entitled to?

You’re entitled to statutory redundancy pay if you’ve been continuously employed for 2 years or more. How much you receive depends on your age, length of service and your current salary.

These figures have recently been updated and will come into force on 6 April 2022.

– Weekly pay is capped at £544 (to 5 Apr) rising to £571 from 6 Apr

– Maximum statutory redundancy pay is £16,320 (to 5 Apr) rising to £17,130 from 6 Apr

For each full year you’ve worked for your employer you get:

Up to age 22 – half a week’s pay

Age 22 to 40 – 1 week’s pay

Age 41 or over – 1.5 week’s pay

You can work out your entitlement using this redundancy pay calculator on the government website.

You won’t pay any tax on your statutory redundancy pay, and if you’re owed holiday leave your employer should either pay you for it (this is taxable) or let you take it before you go.

Some employers choose to pay above these rates, and this is usually covered in either your contract or the company policy. If you are made redundant it’s always important to check that the financial package being offered is correct in line with your contractual and statutory rights.

What is voluntary redundancy?

Your employer may also offer staff the opportunity to take voluntary redundancy to reduce the overall number of compulsory job losses. There are several considerations before choosing this option:

– If enhanced redundancy pay is being offered make sure you know the exact amount

– Would this money last if your job search took longer than expected?

– What is the current job market like for your role/expertise?

– Taking voluntary redundancy can affect the benefits you’re entitled to when out of work

What is a redundancy consultation?

Consultations are there to ensure staff members at risk of redundancy are fully informed about what’s going on and are given the opportunity to ask questions, make alternative suggestions or to object to the proposals being made by the employer.

There are two types of redundancy consultation:

Collective consultation

– Always required when 20 or more employees are at risk of losing their jobs

– Where 20-99 employees are at risk, consultation must be 30 days before first dismissal

– Where 100+ employees are at risk, consultation must be 45 days before first dismissal

– Usually involves the business consulting with elected employee representatives of those affected or the trade union where one is recognised

Individual consultation

– should always happen in a redundancy situation, even where collective consultation is not required

– no legally set timescales for employers to follow

– you can have a representative with you during meetings for support

Individual redundancy consultation meetings

You should expect to attend at least 2 or 3 meaningful discussions before the employer makes a final decision about your selection for redundancy. You should always attend these meetings and pay close attention to what is said verbally and what is given to you in writing.

Our top tips for these meetings:

– Be polite and constructive in your responses

– Recognise that the person speaking to you about your redundancy may only be the messenger and not the decision maker

– Take a representative or companion with you for support and help in making notes

– Take time to prepare for the meetings so you come away with the info you need

– Draft any questions, challenges, and suggestions you want to make beforehand

– If you don’t understand something in the meeting then ask!

What if I don’t agree with the redundancy plans?

An employer can choose the shape and size of its organisation and the roles it wants to have in it and a tribunal will not challenge those decisions. However, you can and should make your own representations to your employer if you don’t agree with what they plan to do.

You can make your own representations in an individual consultation or do it through your elected employee representatives if collective consultation is taking place.

Your employer should be able to tell you exactly why there is a business need to make redundancies generally, why your role is affected, and why you personally have been selected.

Making alternative proposals to your employer

If you want to make alternative proposals to your employer, make sure you have thought through the implications of your suggestions from a commercial perspective. Try and pre-empt and counter any objections they may raise and do your best to ensure that your proposal meets the need identified in the business case for redundancy.

You can make your suggestions in your own individual consultation meetings, or through your employee representative during collective consultation.

Challenging a redundancy proposal

You can challenge and question not only the need for redundancies, but also the changes being proposed, and how roles or individuals have been selected. If you feel the criteria outlined isn’t objective, or the proposal doesn’t meet the needs in the business case, or simply that the process is being rushed you can challenge this.

Again, you can do this during collective consultation or directly in your own individual consultation meetings.

How does the redundancy selection process work?

Employers must fairly select who will be made redundant. They must first justify why roles are being lost (or changing) and how those roles are being selected for redundancy. Where individuals are being selected from a pool of their peers, selection should be based on objective factors such as:

– Skills

– Aptitude

– Qualifications

– Attendance record

– Disciplinary record

You can’t be selected because of things like your age, gender, a disability, pregnancy, or your race or religion. In law these are called protected characteristics, and to make decisions based on them would be discriminatory. Employers can choose a “last in, first out” approach to selection, but still need to justify why this is appropriate.

Can I challenge the redundancy selection process?

The short answer is yes! But you must base your challenge on the facts rather than your feelings. If you want to challenge your selection from your peer group, try to use existing evidence to question the scores allocated to you. Details of your recent appraisal or any praise or awards you have received from peers, managers or customers can all be helpful.

If you’re in a selection pool, ask to see the scores of your peers as they can be given to you anonymously. Seeing the comparison may help you to challenge and defend your own scores.

Also consider whether you think all the right people have been included in the pool, do you all have similar skills? Has anyone with a similar role or skills been excluded and has the employer justified that decision?

Keeping track of the details during the redundancy process

A lot of detail can be discussed in consultation meetings so it’s vital to keep track of the important points so that you can refer to them afterwards. Having a companion in your meetings can really help as they can take notes while you concentrate on the conversation as it happens.

– Consider taking an agenda along to ensure you get all the info you want

– Ask your employer for a copy of their notes from the meeting

– Ask for written confirmation of any offers made during the meeting

– Note any questions you asked that couldn’t be answered so you can follow them up

Does my employer have to offer me another job?

Your employer should always discuss opportunities for alternative employment with you.

They’re not obliged to create a vacancy for you, but they should identify all current vacancies within the business (and across the business group where applicable) and give you the opportunity to apply for them.

Engage fully in the discussion about re-deployment and apply for all roles that you think you could be successful in – do what you can to save your job!

Job hunting during redundancy

Once you have been placed at risk of redundancy, you should start to apply for external roles to keep your options open. If you are to be made redundant, ask your employer about the following things to support your job hunt:

– Will they provide a reference and what will it say?

– Will they fund outplacement counselling to help with CV preparation, job searching and interview techniques?

– Will you be allowed time off to job search and attend interviews during your notice period?

What happens if I accept an alternative role in the organisation?

If you avoid redundancy because your employer can re-deploy you to an alternative role, you have a right to a trial period of no less than 4 weeks. If during this time either you or the employer think you’re not suitable for the role, then you can be made redundant when the trial ends and you will still receive your redundancy payments.

Consider asking for an extended trial period if you think it will take longer for you to settle into the new role or fully experience whether it is right for you or not.

The right to appeal on redundancy

You should be offered the right of appeal if you’re made redundant – take that opportunity to ask someone more senior who has not previously been involved to review all the circumstances and consider whether the decision is correct and fair.

Draft your letter of appeal carefully and include all the points that you feel were not addressed in the consultation or where you feel you have had unsatisfactory responses to your questions. Explain why you think the decision is wrong and/or why the process followed has not been fair.

Tips on how to cope with redundancy

Any form of serious discussion with your employer can feel very personal and can knock your confidence. It’s important to remember that most decisions are based on business need and are not personal.

It can be a very emotional experience, but if you can keep those emotions in check and approach it in a business-like manner, you’re much more likely to have a better experience and may even save your job.

Although redundancy can be a painful event, it can often lead to a better job or working experience so try and stay positive.

If you need legal support with redundancy

We can help you to understand the process you’re involved in, your legal rights, how you can optimise your position, and what you can expect on an exit. If your employer has not met the required obligations, we can assist you in an internal appeal or to pursue your complaint on a more formal basis through ACAS and the employment tribunals.

Contact one of our friendly team today for a friendly informal chat.