Employment rights specialist, Jo Seery, gives advice on checking whether redundancies are genuine, what rights employees have to alternative employment and what compensation might be available.
The pandemic has forced us all to adapt to a ‘new normal’ which is challenging in itself, and then for some there’s possible worry about whether a loved one is facing redundancy. This article focuses on providing guidance for you and your family during these testing times.
Your redundancy rights
In general, employees who are dismissed by reason of redundancy have a right to:
- A redundancy payment;
- To be treated fairly in the redundancy process; and
- Reasonable time off work to look for alternative employment.
Reasons for redundancy
The law says a redundancy situation arises when:
- A business closes;
- A workplace closes; or
- There are fewer employees needed to do the work available.
If an employer closes their business and then reopens it as something completely different, that would also count as a redundancy.
If the actual workload has not decreased, but fewer employees are needed to do it, for example, because of a reorganisation, this would be a redundancy situation too.
When employers are consulting with staff over redundancies (‘collective redundancies’) the definition of redundancy is wider and covers “any dismissal for a reason not related to the individual concerned...”. This would cover, for example, dismissals because terms and conditions of employment are changing and a new contract is being imposed.
In each case, you need to work out whether there is a redundancy situation, and if there is, whether the dismissal was caused by that situation. You need to keep an eye out for ‘redundancies’ that are in fact employers covering up a dismissal which would otherwise amount to discrimination or victimisation - such as when trade union activists face redundancy.
Two years’ continuous service entitles someone to a statutory redundancy payment.
The payment is calculated according to age, weekly pay (subject to a statutory cap currently £538 per week) and the number of years of continuous employment. The formula followed is:
- One and a half weeks’ pay for each complete year of service after reaching the age of 41;
- One week’s pay for each complete year of service between the ages of 22 and 40 inclusive; or
- Half a week’s pay for each complete year of service below the age of 22.
Some people may also have a contractual right to a redundancy payment that is better than the statutory minimum.
The government today (30 July) announced that furloughed workers losing their jobs are entitled to have statutory redundancy and statutory notice pay calculated on the basis of their normal pay and not their furloughed pay.
Redundancy is deemed to be a fair reason for dismissal. However, the employer must act reasonably and follow a fair procedure. A fair procedure requires the employer to:
- Warn and consult;
- Apply a fair selection procedure; and
- Consider alternative employment.
A failure to follow a fair redundancy procedure will normally make the dismissal unfair.
An employer proposing to make 20 or more employees redundant in any 90-day period, must consult with trade union representatives or other elected employee representatives before any redundancies are made.
Suitable alternative employment
Before making anyone redundant employers are required by law to look for suitable alternative employment for the employees.
Someone made redundant who refuses a suitable offer of alternative employment can lose the right to a redundancy payment.
Whether an alternative job is suitable is ultimately decided by an employment tribunal. They will look at what the whole job entails, not just the tasks to be performed, the terms and conditions (especially hours and wages) and the responsibility and status involved. Location may also be relevant.
For support with redundancy or other employment matters, consult with your trade union representative or speak to our employment law experts.
Thompsons' settlement agreement team
If your employer has asked you to sign a settlement agreement, Thompsons’ trade union solicitors can assist. Our specialist lawyers have a wealth of experience in handling individual and large-scale workplace redundancies.