What are your rights during redundancy

In this article, I am going to cover what redundancy is, how it works, some of your rights, some places to go for help and some tips for the last day of work. It can be a scary time but with the right information you should be able to come out the otherside knowing you got what you were entitled to.

Just a reminder, anything I say here is not legal or financial advice. You may want to speak to an expert to get advice specific to your particular circumstances.

It’s not a pleasant topic but something that being educated about can make a big difference. There will be certain aspects that are specific to you, your contract of employment and the employer, therefore this is an overview of the situation.

So what is redundancy?

Redundancy is a form of dismissal from your job and it happens when employers need to reduce their workforce. It could be the case that an entire section of a company is no longer needed and that job roles become redundant.

There is a process for employers to follow to make an employee redundant.

This is the summary from the government lead charity, moneyhelper

‘If you’re faced with redundancy, your employer must treat you fairly and act according to your contract and legal redundancy rights. That includes making sure you’re consulted, following the right selection process and giving you a proper notice period. If not, you could have a claim for unfair dismissal, or claim compensation for lack of consultation.’

Let’s break that down into chunks and work on it.

1. Selection

The selection process needs to be fair, based on competency, experience, capability and not things like age, race, gender or if you are disabled or pregnant. 

If your job role is selected to be made redundant then it should have been selected fairly and explained to you why it was selected. If you believe you have been selected unfairly, this may be classified as unfair dismissal then you can usually appeal the decision.

2. Notice

If you are selected then you have the rights to a notice period, this is the time between your employer’s statement of redundancy and your last working day.

If you’ve worked there for at least one month then you get at least one weeks notice.

If you have worked there for more than 2 years then you get a week’s notice for each year you have been there up to a maximum of 12 weeks, at 12 years of employment or more.

It is possible for an employer to offer Pay in Lieu of notice, which will be an offered lump sum payment instead of working your notice period. This payment is taxed as per your normal wage.

Alternatively you could go through a period known as garden leave. This is where you are still considered employed and have to follow the terms of your contract but do not have to go into work. You will need to be available to be called in if you are needed and you are not able to start a new job.

Finally your employer may offer you something known as a compromise agreement. This is a payment for giving up your rights and agreeing to not go to an employers tribunal. Your employer should pay for you to get independent legal advice to understand the rights you would be giving up.

3. Payment

There is a statutory redundancy pay provided you have worked for your employer for at least 2 years. This payment system caps at 20 years of employment and varies by age.

You receive half a weeks pay for each full year of employment you were under 22

One weeks pay for each full year you were 22 – 41

One and a half weeks pay for each full year you were 41 or older.

The weekly payment is calculated as the average amount you earned per week in the 12 weeks leading up to your redundancy notice.

There is a maximum amount of statutory redundancy pay, which was increased in April 2021 and is now capped at £544 as the weekly payment and £16,320 for the total payment.

Redundancy pay, including any severance pay, under £30,000 is not taxable.

You are not eligible for statutory redundancy if you are in the armed forces, police or crowns servants. If your employer keeps you on, or you refuse an alternative they have suggested without good reason, you will also lose your right to statutory redundancy pay. There are some other exceptions, you can find those details on the gov.uk website, linked in the description.

4. Additional Information

If you have been employed for at least 2 years, you can request time off to look for another job or to receive training to get another job. Your employer is responsible to pay at least 40% of one weeks pay for this.

If you find another job you can request to leave early, it is possible to maintain your redundancy pay but this is subject to your employers agreement, so it’s worth discussing with them.

5. Housekeeping

Some things to consider before leaving your workplace for the last time. Try to get the details of your pension, job references from your employer, your P45. Go over the details of payments, wages and any other money you may be owed and check you have received everything due.

6. Help

There are services out there to provide information or support for people going through or facing redundancy. Some of these you will find linked below in the description.

Remember a lot of this is subject to your contract of employment and personal circumstances, none of it should be considered financial or legal advice. Seek professional assistance if you feel it is required but I hope you found this video useful.