Employers hold most, but not all of the cards when it comes to redundancy – so it’s worth knowing your rights.
What is redundancy?
An employee who is dismissed for redundancy, and may qualify for redundancy pay, if one of the following are satisfied:
- The employer has ceased, or intends to cease continuing the business
- The requirements for employees to perform work of a specific type or to conduct it at the location in which they are employed has ceased or diminished.
- Changes in conditions that result in the new job being quite different from the old one
Assuming that your employer can justify a redundancy situation (and has gone through the necessary selection and consultation process), you may then be entitled to a redundancy pay out. It is worth noting that the first £30,000 of any redundancy payment can be made tax free.
What am I entitled to?
If you have been employed for two years or more, you will be eligible for a statutory redundancy payment. Your entitlement pay-out will be based on a formula which depends on your age, length of service and weekly salary. The total statutory maximum you can receive is £11,400.
You are usually also paid in lieu of your contractual notice at the same time.
Can I challenge the amount I'm offered?
Yes, here are some examples of possible challenges:
- You have not been offered what is the custom and practice of payments previously made to other staff
- Your employer has unfairly selected you, rather than other staff for redundancy
- Decision based on lack of consultation or ability to justify the redundancy in economic terms e.g. your performance has been above and beyond what was expected of you so why have you facing redundancy?
What is a compromise agreement?
This is a legally-binding document that prevents you from making any claims after a settlement has been agreed following a dispute, and in some cases even where there is no dispute at all. You must seek independent advice on the compromise agreement from a solicitor before it becomes binding.
What should I do if I am made redundant?
Ask an expert – seek professional legal advice as early as possible, and before you accept the redundancy.