What is redundancy?

If your employers are considering making you redundant – which will result in the termination of your employment – they have a duty to treat you fairly and there are number of steps they must follow by law. You may also be entitled to a redundancy payment.  

Reasons for redundancy

There are several reasons why you might be made redundant such as your job becoming nonexistent, your employers might need to reduce staff numbers to cut costs, or the company you work for may close down or relocate.

You will usually be made redundant if your job disappears but sometimes someone else’s post will no longer be needed, they will be moved to your job and it is you who is made redundant. This is known as ‘bumping’ and is only allowed if the employer can prove that the decision was made fairly.  

Collective redundancy

If your company is considering making more than 20 employees redundant within a 90 day period, this is known as collective redundancy and a special procedure has to be followed. Your employers must consult with representatives of the employees who could be affected – ie, the employees’ trade union official if they have one, or someone the employees elect as their representative if they don’t. If your employer does not consult the representatives then a claim may be put before an Employment Tribunal for a protective award (a monetary award of up to 90 days pay). 

Individual redundancy

If less than 20 employees at one company face redundancy, then different rules apply. This means your employer must: be fair in the way they choose the people to make redundant; warn and consult those likely to be affected; take reasonable steps to find other posts for those whose jobs have ceased to exist; give the correct amount of notice and redundancy pay; consider alternatives to the redundancy route. If you are offered another job instead of redundancy there is a right to a trial period in any alternative post. 

If your employer moves

If your company moves and your employers say you have to move to keep your job, you should check your employment contract to see if it contains a ‘mobility clause’. If it does, this means your employers can usually compel you to move to areas permitted by the clause unless they are being totally unreasonable (expecting you to up sticks to Timbuktu at a day’s notice, for example).

If there is no mobility clause and you don’t want to move, your employer may make you redundant. Whether you receive any redundancy pay depends on various factors including how reasonable you have been in refusing to move. If it’s not far and it doesn’t unduly affect you or your family you may be found to be unreasonable by refusing to make the move. 

Redundancy pay

The amount of redundancy pay you get depends on your age, how long you’ve worked for the company and how much you earned. You should receive a statement from your employer with your redundancy payment showing how it was worked out. Redundancy pay under £30,000 is not taxable. Check your employment contract to see if you are entitled under the terms of this to more of a pay-out than the statutory minimum. If you have been an employee of a company for more than two years you will receive at least:

• 0.5 week’s pay for each full year of service where your age was under 22 ;
• 1 week’s pay for each full year of service where your age was 22 or above, but under 41;
• 1.5 week’s pay for each full year of service where your age was 41 or above.

Redundancy pay is also payable when a fixed-term contract of two years or more expires and is not renewed because of redundancy.

Possible redress

If your employer fails to follow the redundancy procedures properly or doesn’t have a valid reason for making you redundant but uses redundancy as an excuse to get rid of you, you may be able to bring a claim for unfair dismissal before an Employment Tribunal. In most cases you will need to have a year's service to make such a claim. The rights to redundancy payments and collective consultation are claimed separately from unfair dismissal.