Redundancy Rights in the UK: Consultation, Selection, Redundancy Pay and Employee Claims
Quick Answer: Redundancy can be a potentially fair reason for dismissal in the UK, but an employer must still follow an appropriate process. Depending on the circumstances, this can include genuine consultation, fair and objective selection, consideration of suitable alternative employment, proper notice and payment of statutory or contractual redundancy entitlements. Employees may have legal claims where the redundancy is not genuine, the selection process is unfair, consultation requirements are not followed, or the dismissal is discriminatory or otherwise unlawful.
Redundancy can arise when an employer's need for employees changes.
A business may close, a workplace may shut, the employer may reorganise its operations, or fewer employees may be required to perform particular work.
For an employee, however, redundancy can involve much more than simply losing a job.
It can affect:
- Income.
- Notice pay.
- Statutory redundancy pay.
- Pension arrangements.
- Benefits.
- Future employment.
- Family finances.
UK employment law therefore provides a legal framework governing redundancy dismissals.
The employer generally needs a genuine redundancy situation and must act reasonably when selecting employees for dismissal.
Consultation can also be an important part of a fair redundancy process.
This article explains redundancy rights in the UK, including the meaning of redundancy, consultation, selection pools, selection criteria, redundancy pay, notice, alternative employment, collective consultation, unfair dismissal and discrimination.
Legal disclaimer: This article provides general educational information only. It is not legal advice and does not create a solicitor-client relationship. Employment law is fact-sensitive and the applicable rules can differ depending on the employee's circumstances, employment status, length of service and jurisdiction.
Key Takeaways
- Redundancy can be a potentially fair reason for dismissal.
- The employer must have a genuine redundancy situation.
- Employees should generally be consulted where appropriate.
- Selection should be based on fair and reasonable criteria.
- Discriminatory selection is unlawful.
- Employees with sufficient qualifying service may be entitled to statutory redundancy pay.
- Contractual and statutory notice rights can apply.
- Suitable alternative employment should be considered where appropriate.
- Pregnancy, maternity and certain family-related circumstances can create additional protection.
- Collective consultation rules can apply where an employer proposes 20 or more redundancies at one establishment within a 90-day period.
- An unfair redundancy can potentially result in an unfair dismissal claim.
- Strict Employment Tribunal limitation periods apply to relevant claims.
What Is Redundancy?
Quick Answer: Redundancy is a statutory concept that generally arises where an employer's need for employees to carry out work has diminished or where a business or workplace is closing.
Common redundancy situations include:
- Business closure.
- Workplace closure.
- Reduced requirement for employees to perform work of a particular kind.
- Business restructuring.
- Technological changes reducing the need for employees.
What Are the Legal Types of Redundancy?
Redundancy can generally arise where:
- The employer intends to close the business.
- The employer intends to close the workplace where the employee works.
- The employer's need for employees to carry out work of a particular kind has diminished.
The exact statutory definition should be applied to the circumstances of the case.
Is Redundancy the Same as Being Fired?
Quick Answer: Redundancy is a form of dismissal, but it is legally distinct from dismissal for misconduct or capability.
In redundancy, the reason for dismissal relates to the employer's business requirements rather than primarily to the employee's conduct or ability.
Does an Employer Need a Genuine Redundancy Situation?
Quick Answer: Yes. A redundancy dismissal should be based on a genuine redundancy situation falling within the statutory framework.
An employer cannot simply label another type of dismissal as "redundancy" to avoid employment protections.
Can an Employer Use Redundancy to Remove an Employee It Does Not Like?
Quick Answer: No. A redundancy process should not be used as a disguised disciplinary or performance-management exercise.
If redundancy is merely a pretext for removing a particular employee, the dismissal may be challenged.
Can an Employer Make Someone Redundant Because of Poor Performance?
Quick Answer: Redundancy and poor performance are legally different concepts.
If the real reason for dismissal is capability, the employer should generally address the matter through an appropriate capability process rather than improperly labelling it redundancy.
Can an Employer Make Someone Redundant Because of Misconduct?
Quick Answer: Misconduct is generally a separate potentially fair reason for dismissal.
An employer should not use redundancy as a substitute for a disciplinary process where misconduct is the genuine reason.
What Is a Redundancy Consultation?
Quick Answer: Redundancy consultation is the process through which an employer discusses the proposed redundancy with affected employees and, where applicable, representatives.
Consultation can address:
- Why redundancies are proposed.
- The proposed selection process.
- Potential alternatives.
- Ways of avoiding redundancies.
- Reducing the number of dismissals.
- Mitigating the consequences for employees.
How Long Should Redundancy Consultation Last?
Quick Answer: There is no single universal minimum consultation period for every individual redundancy.
The appropriate consultation process depends on the circumstances.
However, specific statutory minimum periods apply to collective redundancies involving the relevant number of employees.
Does an Employer Have to Consult About Redundancy?
Quick Answer: Consultation is an important part of a fair redundancy process, although the exact legal requirements depend on the circumstances.
Collective consultation rules can impose additional statutory requirements.
What Is Collective Consultation?
Quick Answer: Collective consultation applies where an employer proposes to dismiss 20 or more employees as redundant at one establishment within a 90-day period.
The employer must consult appropriate employee representatives in accordance with the applicable statutory framework.
How Many Redundancies Trigger Collective Consultation?
Quick Answer: Collective redundancy consultation requirements can apply where an employer proposes 20 or more redundancies at one establishment within a 90-day period.
How Long Must Collective Consultation Last?
Where collective consultation applies, statutory minimum periods can depend on the number of proposed redundancies.
For 20 to 99 proposed redundancies, consultation generally needs to begin at least 30 days before the first dismissals take effect.
For 100 or more proposed redundancies, consultation generally needs to begin at least 45 days before the first dismissals take effect.
These are minimum statutory periods and should not be confused with the overall length of an appropriate consultation process.
Who Is Consulted in Collective Redundancies?
Quick Answer: Where collective consultation applies, the employer must consult appropriate employee representatives.
These can include:
- Trade union representatives.
- Employee representatives elected for the purpose.
The applicable representative structure depends on the circumstances.
What Happens If an Employer Does Not Carry Out Collective Consultation?
Quick Answer: Failure to comply with collective consultation obligations can expose an employer to a protective award and other legal consequences.
The potential consequences depend on the circumstances and applicable statutory provisions.
What Is a Protective Award?
Quick Answer: A protective award is a statutory award that can be made where an employer fails to comply with applicable collective consultation obligations.
It is separate from ordinary redundancy pay.
What Is a Redundancy Selection Pool?
Quick Answer: A redundancy selection pool identifies the group of employees from which those selected for redundancy will be chosen.
The appropriate pool depends on the structure of the business and the work affected.
How Should Employees Be Selected for Redundancy?
Quick Answer: Selection should generally be based on fair, objective and reasonable criteria appropriate to the circumstances.
Potential criteria can include:
- Skills.
- Qualifications.
- Performance.
- Disciplinary record.
- Attendance, subject to discrimination and other legal restrictions.
- Length of service, where appropriate.
Can an Employer Select Employees Based on Performance?
Quick Answer: Potentially. Performance can be a legitimate selection criterion if it is applied fairly and supported by reliable evidence.
The employer should avoid using performance criteria as a disguised capability process.
Can Attendance Be Used as a Redundancy Selection Criterion?
Quick Answer: Potentially, but attendance criteria require particular care.
Absence related to disability, pregnancy or other protected circumstances should not be improperly counted against an employee.
Can Pregnancy Affect Redundancy Selection?
Quick Answer: Yes. Pregnancy and maternity create important statutory protections.
An employer must not select an employee for a discriminatory reason.
Employees on maternity leave can also have specific rights concerning suitable alternative vacancies in redundancy situations.
Can Maternity Leave Affect Redundancy?
Quick Answer: Maternity leave does not automatically prevent redundancy, but additional statutory protections can apply to employees who are pregnant or on maternity leave.
The employer must comply with the applicable equality and family-leave protections.
Can an Employee on Sick Leave Be Selected for Redundancy?
Quick Answer: Potentially, but the employer must take care where sickness absence relates to disability.
Disability-related absence can engage the duty to make reasonable adjustments and discrimination protections.
Can an Employer Select Someone Because They Are Disabled?
Quick Answer: No. Disability is a protected characteristic under the Equality Act 2010.
Redundancy selection must not unlawfully discriminate because of disability.
Can an Employer Use Last In, First Out?
Quick Answer: Length of service can potentially be used as a redundancy selection criterion, but a purely age-related approach can create discrimination risks.
Employers should consider whether selection criteria indirectly discriminate against protected groups.
Can an Employer Choose Anyone for Redundancy?
Quick Answer: No. The employer should have a reasonable basis for the selection process.
The selection process should be consistent with the genuine redundancy situation and applicable equality law.
Can an Employee Challenge Redundancy Selection?
Quick Answer: Potentially. An employee can challenge selection where the process was unfair, discriminatory, irrational or otherwise unlawful.
What Makes a Redundancy Selection Unfair?
Potential problems can include:
- Predetermined selection.
- Discriminatory criteria.
- Inconsistent scoring.
- Unsupported performance assessments.
- Manipulated selection scores.
- Failure to consult.
- Failure to consider relevant evidence.
- Using redundancy to disguise another reason for dismissal.
Can an Employee See Their Redundancy Scores?
Quick Answer: Employees may have legitimate reasons to request information concerning how their selection was assessed.
The availability and extent of disclosure depends on the circumstances and applicable data protection and employment law.
What Is a Redundancy Scoring Matrix?
Quick Answer: A redundancy scoring matrix is a structured method of assessing employees against predetermined selection criteria.
A typical matrix can include:
- Skills.
- Qualifications.
- Performance.
- Experience.
- Attendance.
The criteria should be relevant and applied consistently.
Can Redundancy Scores Be Manipulated?
Quick Answer: If scores are deliberately manipulated to select a predetermined employee, that can potentially undermine the fairness of the redundancy process.
What Is Voluntary Redundancy?
Quick Answer: Voluntary redundancy occurs where employees are invited to volunteer for redundancy, usually in return for an agreed financial package.
An employer is not necessarily required to accept every employee's application for voluntary redundancy.
Is Voluntary Redundancy the Same as Resigning?
Quick Answer: No. Voluntary redundancy generally involves an agreed termination in the context of a redundancy exercise.
The contractual and statutory consequences depend on the terms of the arrangement.
Can I Change My Mind About Voluntary Redundancy?
Quick Answer: It depends on whether the agreement has become legally binding and on the terms governing withdrawal.
Employees should check the documentation before assuming they can withdraw.
What Is Compulsory Redundancy?
Quick Answer: Compulsory redundancy occurs where the employer selects employees for dismissal because their roles are genuinely redundant.
The employer must follow an appropriate redundancy process.
What Is Statutory Redundancy Pay?
Quick Answer: Statutory redundancy pay is a payment available to eligible employees whose employment ends because of redundancy.
Eligibility and calculation depend on statutory requirements.
Who Is Entitled to Statutory Redundancy Pay?
Quick Answer: Employees generally need sufficient continuous service and must satisfy the statutory eligibility requirements.
The applicable qualifying period and other requirements should be checked against the law in force at the date of dismissal.
How Is Statutory Redundancy Pay Calculated?
Quick Answer: Statutory redundancy pay is calculated using age, length of service and weekly pay, subject to statutory limits.
The statutory calculation generally provides:
- Half a week's pay for each complete year of service below age 22.
- One week's pay for each complete year of service from age 22 to 40.
- One and a half week's pay for each complete year of service from age 41 onwards.
Only a limited number of years of service are counted for statutory purposes, and a statutory maximum weekly pay applies.
Does Age Affect Redundancy Pay?
Quick Answer: Yes. Statutory redundancy pay uses different calculation rates depending on the employee's age during each year of qualifying service.
Does Length of Service Affect Redundancy Pay?
Quick Answer: Yes. Statutory redundancy pay is based partly on qualifying continuous service, subject to statutory limits.
Does Salary Affect Redundancy Pay?
Quick Answer: Yes. Weekly pay is relevant to the statutory calculation, subject to the statutory maximum.
Can I Receive More Than Statutory Redundancy Pay?
Quick Answer: Potentially. An employment contract or redundancy policy may provide enhanced redundancy pay.
An employer can also offer an enhanced voluntary redundancy package.
Is Redundancy Pay Tax-Free?
Quick Answer: Certain termination payments can receive favourable tax treatment, but not every payment made when employment ends is treated in the same way.
The tax treatment depends on the nature and amount of the payment.
Do I Get Notice Pay When Made Redundant?
Quick Answer: Employees are generally entitled to the notice required by their contract or the statutory minimum, whichever provides the greater entitlement where applicable.
An employer may instead make a payment in lieu of notice where the contract or circumstances permit.
What Is Payment in Lieu of Notice?
Quick Answer: Payment in lieu of notice, commonly called PILON, is a payment made instead of requiring the employee to work through the notice period.
The contractual terms and applicable tax rules should be considered.
Can I Be Made Redundant Without Notice?
Quick Answer: An employer can potentially terminate employment immediately by making an appropriate payment in lieu of notice where legally and contractually permitted.
Can I Get Holiday Pay When Made Redundant?
Quick Answer: Accrued but untaken statutory holiday and qualifying contractual holiday should generally be addressed when employment ends.
Can I Get Bonus Payments After Redundancy?
Quick Answer: The answer depends on the contractual terms, bonus scheme and whether the payment has already accrued.
Bonus arrangements should therefore be reviewed carefully.
What Is Suitable Alternative Employment?
Quick Answer: Suitable alternative employment is another role offered by the employer or an associated employer that may be appropriate for the employee following redundancy.
Suitability can depend on:
- Job duties.
- Pay.
- Location.
- Status.
- Working conditions.
- Hours.
Can I Refuse Suitable Alternative Employment?
Quick Answer: Potentially. An employee may be able to refuse an alternative role, but the consequences can depend on whether the role was suitable and whether the employee had a reasonable basis for refusing it.
What Is the Four-Week Trial Period for Alternative Employment?
Quick Answer: Where an employee accepts a suitable alternative role in a redundancy situation, a statutory four-week trial period can apply in specified circumstances.
Special rules can apply where the employee is disabled.
What Happens If the Alternative Job Is Not Suitable?
Quick Answer: If an alternative role is unsuitable, the employee may potentially remain entitled to redundancy rights, subject to the circumstances.
Can I Be Made Redundant While on Maternity Leave?
Quick Answer: Redundancy can potentially occur during maternity leave, but additional statutory protections apply.
Where a suitable alternative vacancy exists, employees on maternity leave can have enhanced rights to be offered such a vacancy in specified circumstances.
Can I Be Made Redundant While Pregnant?
Quick Answer: Pregnancy does not provide an absolute immunity from redundancy, but discrimination law provides strong protection against pregnancy-related selection.
A genuine redundancy process must not be used as a reason to discriminate because of pregnancy.
Can an Employer Make Someone Redundant Because They Are on Paternity Leave?
Quick Answer: Employees exercising statutory family-related rights can have additional protection, and redundancy selection must not unlawfully discriminate or penalise protected leave.
Can Disability Affect Redundancy?
Quick Answer: Yes. Disability can affect redundancy selection, reasonable adjustments and the treatment of absence.
Employers should consider the Equality Act 2010 where disability is relevant.
Can an Employer Make a Disabled Employee Redundant?
Quick Answer: Potentially. Disability does not automatically prevent a genuine redundancy dismissal.
However, the employer must comply with equality law and consider reasonable adjustments where applicable.
Can an Employer Make an Older Employee Redundant?
Quick Answer: Potentially, but age is a protected characteristic under the Equality Act 2010.
Redundancy selection must not unlawfully discriminate because of age.
Can an Employer Make a Woman Redundant Because She Is Pregnant?
Quick Answer: No. Selecting an employee because of pregnancy can constitute unlawful discrimination and may engage specific pregnancy and maternity protections.
Can Redundancy Be Discriminatory?
Quick Answer: Yes. A redundancy process can be discriminatory if an employee is selected because of a protected characteristic or if apparently neutral criteria unlawfully disadvantage a protected group.
What Protected Characteristics Are Relevant to Redundancy?
The Equality Act 2010 protects characteristics including:
- Age.
- Disability.
- Gender reassignment.
- Marriage and civil partnership.
- Pregnancy and maternity.
- Race.
- Religion or belief.
- Sex.
- Sexual orientation.
Can Redundancy Be Automatically Unfair?
Quick Answer: A redundancy dismissal can potentially be automatically unfair where the real reason for dismissal is a protected statutory reason.
The precise protection depends on the circumstances.
Can I Claim Unfair Dismissal After Redundancy?
Quick Answer: Potentially. An employee who satisfies the relevant eligibility requirements may bring an unfair dismissal claim if the redundancy dismissal was not fair.
A genuine redundancy situation does not automatically make every dismissal fair.
What Makes a Redundancy Dismissal Unfair?
Potential grounds can include:
- No genuine redundancy situation.
- Unreasonable selection criteria.
- Unfair selection.
- Predetermined outcome.
- Inadequate consultation.
- Failure to consider alternatives.
- Failure to consider suitable alternative employment.
- Discriminatory selection.
Does an Employer Have to Consider Alternatives to Redundancy?
Quick Answer: A fair redundancy process should generally consider whether redundancies can be avoided or reduced and whether suitable alternative employment is available.
Can an Employer Make Everyone in a Department Redundant?
Quick Answer: Potentially, if the employer's need for employees carrying out that work has genuinely diminished or the relevant work is ending.
The employer should still consider consultation and the appropriate process.
Can an Employer Close a Department and Make Everyone Redundant?
Quick Answer: Potentially. Closing a department can create a genuine redundancy situation.
However, employees can still have rights concerning consultation, selection, notice and redundancy pay.
Can an Employer Relocate a Business Instead of Making Employees Redundant?
Quick Answer: Potentially. Relocation can raise questions concerning workplace closure, mobility clauses and suitable alternative employment.
The contractual terms and circumstances are important.
What If My Employer Moves the Workplace?
Quick Answer: The effect of relocation depends on the employment contract and the distance and circumstances involved.
A mobility clause can be particularly important.
Can Refusing Relocation Lead to Redundancy?
Quick Answer: Potentially. If an employee cannot reasonably move to a new workplace, redundancy issues can arise depending on the circumstances.
Can an Employer Make Me Redundant and Rehire Me?
Quick Answer: An employer can potentially propose changes to employment arrangements after redundancy, but the legal consequences depend on the circumstances.
Dismissal and re-engagement can involve significant employment law issues.
What Is Fire and Rehire?
Quick Answer: "Fire and rehire" generally refers to dismissing employees and offering them re-engagement on different terms.
This is legally distinct from a genuine redundancy exercise and can raise contractual and unfair dismissal issues.
Can an Employer Make Me Redundant Because My Job Is Changing?
Quick Answer: Potentially, but the employer must establish whether the existing role has genuinely become redundant or whether the situation is instead a contractual or capability issue.
Can Automation Cause Redundancy?
Quick Answer: Yes. Technological change can potentially reduce the employer's need for employees to perform particular work and therefore create a genuine redundancy situation.
Can Outsourcing Cause Redundancy?
Quick Answer: Potentially. Outsourcing can affect the employer's need for employees, although additional legal considerations can arise where a business or service is transferred.
Can a Business Sale Cause Redundancy?
Quick Answer: Potentially, but business transfers can engage the Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE.
The specific circumstances should be examined before assuming that redundancy is appropriate.
Does TUPE Protect Employees From Redundancy?
Quick Answer: TUPE can provide important protection where employment is transferred to another employer.
Redundancy following a transfer can raise specific legal issues.
What Happens to Redundancy Pay If the Employer Becomes Insolvent?
Quick Answer: Eligible employees of an insolvent employer may be able to claim certain payments from the National Insurance Fund through the Redundancy Payments Service.
The eligibility and limits depend on the statutory framework.
Can I Claim Redundancy Pay if My Employer Goes Bust?
Quick Answer: Potentially. Eligible employees can make claims through the statutory insolvency arrangements.
Can I Claim Redundancy Pay if I Have Worked Less Than Two Years?
Quick Answer: Statutory redundancy pay generally requires the relevant qualifying period.
However, contractual redundancy schemes can provide enhanced or additional rights.
Can an Employer Refuse to Pay Redundancy Pay?
Quick Answer: If an employee is legally entitled to statutory or contractual redundancy pay, failure to pay can potentially result in a claim.
What If My Employer Says I Am Not Entitled to Redundancy Pay?
Quick Answer: The employee should check their length of service, employment status, contractual terms and the circumstances in which employment ended.
Where entitlement is disputed, professional advice may be appropriate.
Can I Claim Redundancy Pay If I Resign?
Quick Answer: Generally, statutory redundancy pay is associated with dismissal for redundancy rather than ordinary resignation.
However, the circumstances of termination must be examined carefully.
Can I Claim Redundancy Pay If I Accept Voluntary Redundancy?
Quick Answer: Potentially. Voluntary redundancy arrangements commonly include redundancy compensation, but the exact entitlement depends on the agreement and statutory position.
Can I Claim More Redundancy Pay Through My Contract?
Quick Answer: Potentially. Some employers provide enhanced contractual or discretionary redundancy packages.
Can I Claim Unpaid Redundancy Pay at an Employment Tribunal?
Quick Answer: Potentially. Certain disputes concerning redundancy payments can be brought through the Employment Tribunal, subject to the applicable jurisdiction and limitation rules.
How Long Do I Have to Challenge a Redundancy?
Quick Answer: Unfair dismissal claims are generally subject to a three-month-less-one-day limitation period from the effective date of termination, subject to Acas Early Conciliation and applicable statutory extensions.
Other redundancy-related claims can have different limitation rules.
Do I Need to Contact Acas Before Challenging Redundancy?
Quick Answer: Most Employment Tribunal claims require Acas Early Conciliation before proceedings are issued, subject to applicable exceptions.
Can I Appeal a Redundancy Decision?
Quick Answer: Many employers provide an internal redundancy appeal procedure.
An appeal can allow an employee to challenge:
- Selection scores.
- Procedural failures.
- Discrimination.
- Failure to consider alternatives.
- Incorrect information.
Does an Appeal Extend the Tribunal Deadline?
Quick Answer: Employees should not assume that an internal appeal extends the Employment Tribunal limitation period.
The limitation deadline should be calculated independently.
What Evidence Can Prove an Unfair Redundancy?
Useful evidence can include:
- Redundancy letters.
- Consultation notes.
- Selection matrices.
- Scoring documents.
- Emails.
- Company restructuring documents.
- Organisational charts.
- Job advertisements.
- Evidence concerning replacement employees.
- Alternative vacancy information.
- Witness statements.
Can Hiring Someone After Making Me Redundant Prove Unfair Dismissal?
Quick Answer: It can be relevant evidence, but it does not automatically establish that the redundancy was unlawful.
The nature of the new role and the circumstances of the redundancy must be examined.
Can My Employer Recruit for My Old Job After Redundancy?
Quick Answer: Recruiting for substantially the same role shortly after redundancy can raise questions about whether a genuine redundancy situation existed.
However, the employer's changing business requirements and the differences between roles must be considered.
Can an Employer Replace a Redundant Employee With Agency Workers?
Quick Answer: Potentially, but doing so can raise questions about the genuineness of the redundancy.
The circumstances and nature of the work must be examined.
Can an Employer Outsource My Job and Make Me Redundant?
Quick Answer: Potentially. Outsourcing can create a genuine redundancy situation, although TUPE and other legal considerations may apply.
What Should I Do If I Am Told My Job Is at Risk of Redundancy?
- Ask for the business reason for the proposed redundancy.
- Request details of the proposed selection process.
- Review the proposed selection criteria.
- Ask about alternative vacancies.
- Attend consultation meetings.
- Keep written records.
- Review your employment contract.
- Check your potential redundancy pay.
- Consider whether discrimination is involved.
- Obtain legal advice where appropriate.
Should I Attend a Redundancy Consultation Meeting?
Quick Answer: Generally, yes. Consultation provides an opportunity to ask questions, challenge assumptions and suggest alternatives.
Can I Be Accompanied at a Redundancy Meeting?
Quick Answer: The right to be accompanied depends on the nature of the meeting and applicable legal and contractual rights.
Employers may also have policies providing broader accompaniment rights.
Can I Ask for Voluntary Redundancy?
Quick Answer: Yes. An employee can express an interest in voluntary redundancy where the employer has opened a voluntary redundancy scheme.
Acceptance is generally a matter for the employer and the terms of the scheme.
Should I Take Voluntary Redundancy?
Quick Answer: The decision depends on the financial package, alternative employment prospects, pension consequences, tax treatment and personal circumstances.
The terms should be reviewed carefully before acceptance.
Can I Negotiate a Redundancy Package?
Quick Answer: Potentially. Employers sometimes negotiate enhanced redundancy packages, particularly where termination is being agreed voluntarily.
The legal and financial consequences should be understood before agreeing to settlement terms.
What Is a Settlement Agreement in a Redundancy Situation?
Quick Answer: A settlement agreement can be used to resolve employment claims and terminate employment on agreed terms.
It can involve compensation above statutory redundancy entitlement.
Should I Sign a Redundancy Settlement Agreement?
Quick Answer: An employee should understand exactly which claims are being waived, what payment is being offered and what other obligations are included before signing.
Independent legal advice is normally required for a settlement agreement to validly waive employment claims.
What Happens to My Pension When I Am Made Redundant?
Quick Answer: Pension consequences depend on the type of pension arrangement and the scheme rules.
Employees should obtain information from the pension provider before making decisions.
Can Redundancy Affect Universal Credit or Other Benefits?
Quick Answer: Redundancy payments and subsequent income can affect entitlement to certain benefits.
The relevant benefits rules should be checked separately.
Redundancy Rights Checklist
- ā Confirm that there is a genuine redundancy situation.
- ā Ask why redundancies are proposed.
- ā Review the selection pool.
- ā Review the selection criteria.
- ā Attend consultation meetings.
- ā Challenge inaccurate selection scores.
- ā Ask about alternative employment.
- ā Check notice entitlement.
- ā Calculate statutory redundancy pay.
- ā Check contractual redundancy benefits.
- ā Consider discrimination issues.
- ā Check whether collective consultation rules apply.
- ā Keep all redundancy documents.
- ā Consider an internal appeal.
- ā Check Employment Tribunal deadlines.
- ā Contact Acas where appropriate.
Frequently Asked Questions
What is redundancy?
Redundancy generally arises where an employer's need for employees to perform particular work has diminished or a business or workplace is closing.
How much redundancy pay am I entitled to?
Statutory redundancy pay depends on age, qualifying service and weekly pay, subject to statutory limits. Contractual schemes may provide enhanced payments.
Do I have to be consulted before redundancy?
Consultation is an important component of a fair redundancy process, while collective consultation rules impose specific requirements where the relevant threshold is met.
Can my employer choose anyone for redundancy?
No. Selection should generally be based on reasonable and fair criteria appropriate to the redundancy situation.
Can redundancy selection be discriminatory?
No. Employees are protected against discrimination based on protected characteristics.
Can I be made redundant while pregnant?
Potentially, if there is a genuine redundancy situation, but pregnancy and maternity provide important additional statutory protections.
Can I be made redundant while on maternity leave?
Potentially, but employees on maternity leave can have enhanced rights concerning suitable alternative vacancies in qualifying redundancy situations.
Can I refuse alternative employment?
Potentially. The consequences depend on whether the alternative role is suitable and whether the employee has a reasonable basis for refusing it.
Can I challenge redundancy?
Potentially. Employees can challenge redundancy where the dismissal is unfair, discriminatory or otherwise unlawful.
How long do I have to bring an unfair dismissal claim?
An unfair dismissal claim is generally subject to a three-month-less-one-day limitation period from the effective date of termination, subject to Acas Early Conciliation and applicable statutory rules.
Can I get redundancy pay if my employer becomes insolvent?
Eligible employees may be able to claim certain statutory payments through the Redundancy Payments Service.
Can I negotiate redundancy pay?
Potentially. Enhanced redundancy packages can sometimes be negotiated, particularly in voluntary redundancy or settlement situations.
What This Means for You
Being told that your job is at risk of redundancy does not necessarily mean that your employment must end.
The first question is whether there is a genuine redundancy situation.
The second is whether the employer has followed a fair and reasonable process.
Employees should pay particular attention to the selection pool and scoring criteria.
If the employer has already decided who will be dismissed before consultation takes place, this can raise concerns about whether consultation was genuine.
Employees should also consider whether the selection process disadvantages them because of a protected characteristic.
Disability-related absence, pregnancy, maternity and other protected circumstances can be particularly important.
Financial entitlements should also be calculated carefully.
Check:
- Statutory redundancy pay.
- Contractual redundancy pay.
- Notice pay.
- Accrued holiday.
- Bonus entitlements.
- Pension consequences.
Where alternative employment is offered, consider whether the role is genuinely suitable and whether a statutory trial period applies.
Finally, do not ignore limitation periods.
An employee who believes the redundancy was unfair may have only a limited period in which to begin an Employment Tribunal claim.
An internal appeal does not generally remove the need to comply with the Tribunal limitation period.
Conclusion
Redundancy is a legitimate business mechanism, but it is not a legal shortcut for dismissing an employee.
A genuine redundancy situation must exist, and the employer should follow a fair process.
This can involve consultation, fair selection, consideration of alternatives and suitable alternative employment.
Employees may also have statutory rights to redundancy pay and notice.
Where collective redundancies are proposed, additional consultation obligations can arise.
Equality law is equally important.
An employer cannot lawfully select employees for redundancy because of protected characteristics such as sex, race, disability, age, pregnancy or religion or belief.
A redundancy dismissal can potentially be challenged as unfair where the employer has no genuine redundancy situation or where the selection and dismissal process falls outside the range of reasonable responses.
Employees should therefore treat a redundancy consultation as an important legal process rather than a formality.
Keep documents, challenge inaccurate information, ask about alternative roles and calculate the financial consequences carefully.
Where the dismissal appears unlawful, limitation periods should be checked immediately.
The key principle is simple: a genuine business need may justify redundancy, but the employer must still comply with the legal protections governing selection, consultation, dismissal and employee compensation.
Legal Disclaimer
This article is provided for general educational and informational purposes only. It is not legal advice and does not create a solicitor-client relationship. UK employment law is subject to legislative change, and statutory redundancy pay limits, qualifying requirements, collective consultation rules and Employment Tribunal procedures should be verified against the law in force at the relevant time.