Redundancy

Your employer must follow a fair redundancy selection process if you have worked for them for at least two years. Every employer must have a clear redundancy process to follow. You should be able to find details of this in your contract, in a staff handbook or on the company intranet.

Your employer must meet with you at least once to have a consultation about your redundancy. In the meeting, they might offer you alternative employment to avoid making you redundant. This must be ‘suitable alternative employment’. If they offer you employment that matches your skills and pay level but you turn it down, you may lose your right for a statutory redundancy payment. In the meeting, your employer should explain why you are being made redundant and answer any questions you have.

If twenty or more people are being made redundant over a period of 90 days or less, your employer must undertake a Collective Redundancy Consultation under the Trade Union & Labour Relations (Consolidation) Act 1992 (TULRCA). The employee representative (often a trade union representative) will be the employees’ voice during the consultation.

If your employer does not follow a correct redundancy process, your redundancy could be unfair.

There are two kinds of redundancy pay: statutory redundancy pay and contractual redundancy pay.

You are entitled to statutory pay by law if you have worked for your employer continuously for two years and you are classed as an employee. If you have been on a fixed-term contract for two or more years or on shorter contracts without gaps in between, you will also be entitled to statutory redundancy pay.

Statutory redundancy pay is not paid to those who are self-employed, police officers, those serving in the armed forces, Crown servants, domestic staff working for a family, employees of a foreign government, and those who are a share fisherperson.

Employees who are 22 years old or younger receive half a week’s pay for every full year worked for their employer. Those aged 22-40 years receive one week’s pay for every full year, and employees who are 41 or older receive 1.5 weeks’ pay. The maximum amount anybody can get is capped at 20 years length of service and is subject to a weekly limit which normally increases in April every year (£571 per week for redundancies after 6 April 2022), no matter how long their period of service.

You will also be entitled to contractual redundancy pay if it is stated in your employment contract. This is paid on top of statutory redundancy pay.

You do not pay tax on redundancy money unless it exceeds £30,000.

You can challenge your redundancy if you have worked for your employer for at least two years and you do not think the redundancy was genuine, or your employer did not follow a fair redundancy process. You can also challenge redundancy if you believe you have been discriminated against.

When making redundancies, employers must comply with two pieces of legislation: the Employment Rights Act 1996 and the Equality Act 2010. The Employment Rights Act 1996 protects employees from unfair dismissal, and the Equality Act 2010 prevents discrimination under protected characteristics (age, disability, gender, race and more).

Your redundancy is also unfair if you have been selected, or partially selected, for any of the following reasons:

• You asked the employer to provide something you are entitled to by law, such as the minimum wage.
• You made a complaint about your employer or a colleague.
• You are on a fixed-term or part-time contract.
• You have taken time off for jury service.
• You refused to work on a Sunday, and you work in a shop.
• You are a member of a trade union that has taken strike action.

Sometimes employers use redundancies to dismiss employees they no longer want due to salary, age or other benefits they receive. This is unlawful, and you should seek legal advice from an employment solicitor straight away.