Redundancy

July 29, 2020

BBC News, 24 July 2020

By Kevin Peachey Personal finance reporter

Job losses are climbing as businesses feel the financial effects of the coronavirus crisis.

What are your rights if you are made redundant?

What is redundancy?

When a business needs to reduce its workforce, it closes jobs and the people doing those jobs are made redundant.

It is not the same as getting the sack.

If you are made redundant, you have rights written into law. 

Who can be selected for redundancy?

You must have been chosen fairly. 

Among the reasons that are not considered a fair basis for selection: 

  • Your age or gender
  • You are pregnant
  • You have been a whistleblower
  • You are a member of a trade union
  • You have asked for holiday or maternity leave

Employers may make selections based on length of service (last in, first out) or disciplinary records.

Many firms ask for volunteers, and offer a redundancy payment

However, it is up to the employer whether they actually select those volunteers for redundancy. 

I’m furloughed. Can I be made redundant?

You can be made redundant while on furlough, but the same rules of fairness apply.

Some people will have redundancy rights in their contract which may be more generous than the legal minimum.

Can my employer make me redundant on the spot?

No. 

The amount of notice you are given will depend on how long you have been employed: 

  • At least one week’s notice if you have been employed between one month and two years
  • One week’s notice for each year if employed between two and 12 years
  • 12 weeks’ notice if employed for 12 years or more

You are entitled to a consultation with your employer if you are being made redundant.

If an employer is cutting 20 or more jobs at any one time, it must organise a collective consultation involving a union or employee representative. This must start at least 30 days before anyone’s job ends. 

If 100 or more people are being made redundant, group meetings must start at least 45 days before anyone’s job ends. 

Even if a company is insolvent and is shutting down, there is still a consultation process.

What redundancy pay am I entitled to?

If you have worked continuously for your employer for two years or more, you have the legal right to redundancy pay. There is a statutory minimum but some employment contracts and employers are more generous.

The amount is calculated from your age, length of continuous service, and current salary. You will get at least: 

  • Half a week’s pay for each full year worked when you’re under 22
  • A week’s pay for each full year worked when you’re between 22 and 41
  • One and a half week’s pay for each full year worked when you’re 41 or older

An employer is not obliged to pay you more than £16,140, or £16,800 if you’re in Northern Ireland.

If you want to check your entitlement, the government has a redundancy calculator as does the Money and Pensions Service.

If you still have holiday owed when you leave, you are entitled to be paid for that too.

If a business has gone bust, then redundancy pay may be provided by the government.

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