The law
There are things businesses must do when making staff redundant. There are things they must avoid.
For example, employers can't select people they want to make redundant because of their age, gender, race, or pregnancy or maternity leave. This is unfair dismissal. It could also amount to discrimination.
It's also unfair dismissal and potentially discrimination if someone is made redundant because of their
- marital status
- sex
- gender reassignment
- sexual orientation
- disability
- religion or belief
- trade union membership
- working pattern such as part-time hours or fixed term contract
- whistleblowing.
There are other examples. If you think you’ve been unfairly dismissed or discriminated against you could choose to go to an employment tribunal.
Choosing staff
Employers must conduct a proper process. They must be fair when deciding who to make redundant.
Fair ways to decide who to make redundant include looking at
- staff length of service (last in, first out)
- staff skills, qualifications and experience
- whether there are any volunteers for redundancy
- staff appraisals and disciplinary records.
No selection method (in particular the ‘last in, first out' method) should discriminate. For example, young people should not be the only ones losing their jobs.
If a role or department no longer exists, people in that role or department can be made redundant without going through a selection process. But, your employer may need to look at the wider business. There may be other roles or departments that should be taken into account. If your employer is not going through a selection process, and you feel this is unfair, you should raise this with your employer. You could also take legal advice.
Consultation
a union or elected employee representative. It must start at least 30 days before anyone's job ends.
For 100 or more redundancies, consultation is at least 45 days before anyone’s job ends. In both cases, the collective consultation must meet certain legal requirements.
In all redundancy cases, even where the employer is cutting less than 20 jobs, the employer should consult with people one by one before deciding to make you redundant. But there are no rules about how the employer should carry this out.
Even if a company is shutting down, there must still be a consultation.
Consultation is a chance for you to suggest other options to redundancy. You can also ask questions. You can talk about the reasons for the redundancies. Your employer should listen to what you have to say. They should consider it and come back to you with its response. If not, your redundancy may be unfair.
Voluntary redundancy
An employer can ask for volunteers. But, it does not have to accept them if the employee is doing an important role that is needed in the business.
Employers must be fair to everyone when asking for volunteers. For example, redundancy should not only be offered to older people.
Employers sometimes offer extra redundancy payments for people who volunteer.
If your employer accepts your request, you may be asked to sign a written agreement. This is called a settlement agreement. You must seek legal advice before signing this. Your employer will usually contribute towards your legal fees.
Pay
When being made redundant, you may get
- redundancy pay
- notice period
- notice pay
- holiday pay.
The amount of statutory redundancy pay you will get depends on a few things. These are your wages, your age and how long you've worked for a company.
People who've worked for a company for less than two years are not entitled to statutory redundancy pay.
Everyone else gets at least the minimum redundancy pay required by law. This is called statutory redundancy pay:
- one and half weeks' pay for every full year of employment after age 41
- one week's pay for every full year of employment from age 22 to 40
- half a week's pay for every full year of employment up to age 22.
Your weekly pay is the average you earned per week over the 12 weeks before the day you got your redundancy notice.
When calculating statutory redundancy pay, your weekly wage and length of service will be capped. If you are made redundant after 6 April 2024, your weekly wage will be capped at £700. The maximum length of service taken into account is 20 years.
The most statutory redundancy pay anyone can receive is currently £21,000.
The cap on weekly wages and the total amount of statutory redundancy pay goes up each year.
Employers can choose to pay more. They can also choose to pay people who've worked for them for less than two years. You should check with your employer if you are entitled to this.
Redundancy pay up to £30,000 is not taxable.
Accepting a different job
If your employer offers you another job, think about it carefully.
You may lose your redundancy rights if you unreasonably turn it down.
Things to think about
- Is it like your current job?
- What are the terms and conditions?
- Does it match your skills and abilities?
- What are the pay and benefits?
- Are the hours and location what you want?
You can go to an employment tribunal if the job is unsuitable and you've been told you must take it.
If there's a suitable job that hasn't been offered to you, it could be unfair dismissal.
From 6 April 2024, pregnant employees or those taking maternity leave now have extended redundancy protection.
Your employer must offer you a suitable job if you are pregnant, on maternity leave or within 18 months of giving birth or the date of adoption as a priority. Even if other employees are also suitable. If not, you may be able to bring a claim for unfair dismissal and discrimination.
Talk to your employer or a regulated legal adviser.
Trial periods
You may have the right to a four-week trial if you accept another job from your employer.
If you need training, it could be longer. This will need to be agreed in writing before the trial period starts.
Tell your boss during the trial period if the job isn't suitable. You will still get your redundancy rights. But if you don't give notice during the trial, you will lose your rights.
Job hunting
If you've worked for your employer for at least two years, you can take paid time off to look for another job or for training when facing redundancy. The amount of time you can take off must be reasonable. It will depend on your circumstances. You should speak to your employer to work out what pay you will get during this period.
Notice period
Most people get a notice period.
This is the time between officially finding out you're leaving and your last day of work. You are entitled to be paid during your notice period.
Statutory notice periods are
- at least one week's notice if you have been employed for between one month and two years
- one week's notice for every full year between two years and 12 years
- 12 weeks' notice for 12 years or more.
Check your contract. You might be entitled to more. But you will always be entitled to the statutory notice period as a minimum.
Your employment can end without notice. But if you are made redundant you must still receive any pay you are due for the rest of what would have been your notice period.
If a business goes bust
If the business you work for goes bust and can't pay you, you may be able to apply to the government for
- redundancy pay
- wages
- notice pay
- holiday pay.
The official receiver will explain how it affects you and what you need to do.
Transferred to a new employer?
You won't receive funding from government if you moved to a job with a new employer before your old employer went bust.
If you moved afterwards, you can apply for help.
Reapplying for your job
If your employer wants to reduce staff, you may need to reapply for your job. This could mean competing against colleagues for your job.
If you don't apply, or you don't get the job, you will be made redundant in the usual way.
Appealing
You can appeal if you think you've been treated unfairly. Write to your employer explaining why.
More help
You can get more information and advice from Money Helper or Citizens Advice.
Or you could find out more about your rights from a regulated legal adviser.