I Am At Risk Of Redundancy. What Do I Need To Know?
You are an employee and you hear rumours your employer is considering cuts to the workforce. You don’t know what this means, or how it will affect you. Understandably, you are worried.
Most employees won’t experience a redundancy process many times during their working lives. However, it can come unexpectedly and understanding your rights during this daunting period is crucial. Below, we will examine what you can expect from the redundancy process, how redundancies are correctly carried out and how we can help you navigate this crucial juncture of your career.
What can I expect during a redundancy process?
The Employment Rights Act 1996 (“the Act”) defines redundancy as a situation where an employee’s dismissal is primarily due to one of two reasons:
- The employer has ceased or intends to cease the business operations for which the employee was hired, either overall or at the specific location where the employee worked.
- The business’s need for employees to perform specific work, either generally or at the location where the employee worked, has ceased, diminished, or is expected to do so.
Under the Act, employers are required to follow both a transparent and above all fair process when making employees redundant. Typically, this will involve several key stages which the employer will undertake, including:
Consultation: It’s not enough for your employer to simply send you an email saying that you’ve been made redundant. Your employer must engage in a meaningful consultation process with affected employees. Usually, this involves providing information about the reasons for the proposed redundancies, the criteria used for selecting employees and any alternative measures they have considered to avoid resorting to a redundancy exercise.
Selection: Why have I been selected for redundancy when Mike and Tina haven’t? Employers are required to use fair and objective criteria when selecting employees for redundancy. Common selection criteria include the employees’ skills, qualifications, performance, and disciplinary record. Discrimination on the basis of protected characteristics such as age, gender, race, or disability is strictly prohibited under the Equality Act 2010.
Notice Period: You will have signed a contract of employment with your employer when you first started your role. Refer to your employment contract to understand what notice your employer is required to provide you with before their employment ends. Keep in mind that the length of the notice period will depend on your length of service. If your contract does not specify a notice period, it will be determined by statutory minimums.
Redundancy Payment: Employees who are made redundant may be entitled to a statutory redundancy payment. This payment is based on the employee’s length of service, age, and weekly pay, subject to statutory maximums.
What should I know about consultation?
Consultation is a crucial aspect of the redundancy process and it is enshrined in Section 188 of the Act. Employers must engage in meaningful discussions with employees who are at risk of redundancy, which includes:
– Seeking employees’ input and feedback on the proposed redundancies and any potential alternatives or mitigation measures.
– Providing employees with relevant information about the reasons for the proposed redundancies, the selection criteria, and any alternatives that have been considered.
– Allowing employees the opportunity to ask questions and seek clarification on any aspects of the redundancy process.
Failure to adequately consult with employees during the redundancy process can render the dismissal unfair and may result in claims of unfair dismissal being brought against the employer.
It is important to note that by law, employers must hold “collective consultation” where all of the following apply:
- the employer is proposing 20 or more redundancies
- the redundancies are in one establishment
- the employer proposes to make the redundancies within 90 days
If there are fewer than 20 redundancies, your employer should consult with affected employees individually before proceeding with any redundancies. By law there are no rules about how long individual consultation lasts. However, you should check if your employer has a policy or agreement about this and refer to your employment contract as it may include additional consultation rights. If your employer is holding consultations individually, they should hold a meeting with you in private at least once.
What rights do I have if I am selected for redundancy?
If you are selected for redundancy, you have certain rights under both the Employment Rights Act 1996 and any applicable employment contracts. These rights include:
– The right to receive a statutory redundancy payment, as set out in the Act. The amount of redundancy pay you are entitled to will depend on your length of service, age, and weekly pay, subject to statutory maximums.
– The right to receive a notice period before your employment ends. The length of the notice period will depend on your length of service and the terms of your employment contract.
– The right to reasonable paid time off to look for alternative employment, if you have been continuously employed for two years or more.
Additionally, if you believe that you have been unfairly selected for redundancy, you may have grounds to challenge the decision under the Act. This could include claims of unfair dismissal, discrimination, or failure to follow a fair redundancy process.
How are redundancy payments calculated?
Redundancy payments are calculated in accordance with statutory formulas prescribed by the Act. The statutory redundancy payment is calculated based on:
– The employee’s length of continuous service with the employer.
– The employee’s age at the date of redundancy.
– The employee’s weekly pay, subject to statutory maximums.
The current statutory redundancy payment formula is as follows:
– 0.5 week’s pay for each full year of service where the employee was under 22 years old.
– 1 week’s pay for each full year of service where the employee was aged 22 or older, but under 41.
– 1.5 week’s pay for each full year of service where the employee was aged 41 or older.
The length of service is capped at 20 years, and there is a statutory maximum limit on a week’s pay, which is reviewed periodically.
In addition to the statutory redundancy payment, some employment contracts may provide for enhanced redundancy payments or additional benefits when your employment ceases. It’s essential to review your employment contract carefully to understand your entitlements in the event of redundancy.
What if I believe I have been wrongly selected for redundancy?
If you believe that you have been unfairly selected for redundancy, you may have grounds to challenge the decision under the Act. This could include claims of unfair dismissal, discrimination, or failure to follow a fair redundancy process.
Usually, a dismissal will be unfair if the employer fails to establish a genuine redundancy situation, or if the employer’s decision to select the employee for redundancy was unreasonable or discriminatory.
In addition to the statutory rights provided under the Act, cases have been heard by employment tribunals regarding what constitutes fair selection criteria and procedures in redundancy situations. In a recent case, the Employment Appeal Tribunal held that employers must use fair and objective criteria when selecting employees for redundancy, and must act reasonably throughout the redundancy process.
Time Limits
Be warned, the time limits for bringing a claim of unfair dismissal or discrimination in connection with redundancy are generally three months from the date of dismissal so you may need to act quickly.
Failure to adhere to this deadline may limit your ability to challenge the redundancy decision or claim. Therefore, it’s essential to seek legal advice promptly if you believe that you have been unfairly treated in a redundancy situation. Remember, you must submit your application to the Employment Tribunal within the three-month timeframe, or you risk losing the opportunity to challenge your employer’s decision.
Additionally, consider utilising the ACAS Early Conciliation process before making an Employment Tribunal application, as this may provide an opportunity for resolution without the need for formal legal proceedings.
Here at the Jonathan Lea Network, our employment law team can help you understand your redundancy rights and assist if you think that your employer has not carried out a redundancy process correctly. We regularly advise on redundancy issues and other employment law matters and we are also able to review any settlement agreements that your employer may provide you. Don’t delay and get in touch with us at wewillhelp@jonathanlea.net, or give our friendly team a call on 01444 708640.
This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited 2024.
