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Redundancy FAQs

How do I know if I've been fairly selected for redundancy?

As a first step, your employer must fairly select a category of employees for redundancy. Generally, employment tribunals grant employers a certain degree of leeway on this: provided a reasonable employer acting reasonably could have made the same selection, it will be upheld as fair.

Next, your employer should warn and consult employees affected by redundancy (or their representatives). Indeed, if your employer is thinking about making 20 or more employees redundant within a 90-day period, they must follow a detailed consultation process and procedure and inform the Secretary of State.

Then, once your employer has decided on the category of employees subject to redundancy, it must draw up fair selection criteria. 'Last in, first out' (or 'LIFO') used to be commonly applied, but in recent times has been criticised for being ageist and sexist (because it discriminates against the young and mothers who take career breaks to care for their children). Other selection criteria commonly used include: skills; experience; job performance; aptitude for the work; attendance; time-keeping; and disciplinary record.

Your employer must not only use fair and objective criteria, it must also apply the criteria objectively and fairly.

Your employer should also take reasonable steps to avoid or minimise redundancy by redeployment or retraining employees.

Sometimes selection methods are agreed in advance with a trade union. If this is the case, then your employer must follow the agreed guidelines. If they fail to do so, selection will be automatically unfair.

If you believe that your employer has unfairly selected you for redundancy, you have the right to appeal the decision. As part of the appeal, you can also request your employer explain the selection procedure it used and how it was applied.

Does my employer have to consult employees about redundancies?

If your employer proposes to make fewer than 20 employees redundant, it must consult with you individually. Your employer should explain the business rationale for redundancy and why you have been selected. It must also look at any alternatives to redundancy and ways to mitigate its effect. If it fails to do so, your redundancy may be unfair.

If you employer proposes to make more than 20 employees redundant, it should consult 'appropriate representatives' of the employees affected. These representatives may be trade union officials. If your employer doesn't recognise trade unions or you work for an employer that isn't represented by a trade union, your employer should make arrangements to allow you to elect representatives. (Your employer should also notify the Secretary of State of its intention to make more than 20 people redundant-- failure to do so is a criminal offence.)

When should my employer begin consultation over redundancies?

If fewer than 100 employees are to be dismissed in a 90 day period, your employer must begin consultation at least 30 days before giving the first notice of dismissal to an employee selected for redundancy.

If more than 100 employees are to be made redundant, your employer should begin consultation at least 90 days before giving the first notice of dismissal.

After the consultation period, will I get notice or payment in lieu of notice?

Yes, either notice or payment in lieu of notice. Your employee handbook or employment contract should outline the amount of notice you are entitled to, which may be more (but not less) than the period you are guaranteed under statute.

By statute:

  • if employed continuously for one month to two years, you should receive a minimum of one weeks' notice (so your employer does not need to give you any notice if you have been working for less than one month);
  • if employed continuously for over two years, you should receive one weeks' minimum notice for each year worked (up to a maximum minimum, as it were, of 12 weeks).

Note also that if you end up in court or before an employment tribunal a judge may rule you're entitled to "reasonable notice", which may be more than 12 weeks.

Your employer may offer to pay you instead of providing you with your contractual or statutory notice, which is called 'payment in lieu of notice' (often abbreviated to 'PILON'). This allows your employer to end your employment contract without providing you with any notice. However, they must pay you for all the wages you would have received had you worked your notice period.

In some circumstances, you have no right to notice. This may be the case where you are dismissed summarily for gross misconduct.

Check your employment contract to see how much notice you're entitled to. If you do not get this notice, or the statutory minimum, you can probably claim wrongful dismissal.

What if I choose not to work my notice period?

If you choose not to work your notice period you may lose your right to redundancy pay. You may also lose your right to redundancy pay if you have been selected for redundancy and you start a new job with a different company before your redundancy notice period has come to an end.

You are still entitled to redundancy pay if you go on strike during your redundancy period. However, your employer may serve a 'notice of extension' -- this is a formal request that you work the days that you were on strike at the end of your notice period. If you fail to work these days you may lose your redundancy pay.

How will I be notified that I am being made redundant?

Your employer should provide written notice that your role is 'at risk' of redundancy and announce the beginning of a 30-day consultation period. The letter should explain the business rationale for redundancy and why you have been selected. The notice should be clearly addressed to you and specify the date the consultation period will end and whether you will be expected to work through the notice period.

During the consultation period, your employer must consider alternatives to redundancy, such as redeployment and retraining, and look at ways to mitigate its effect on you. If it fails to do so, your redundancy may be unfair.

If your employer decides to proceed with redundancy, it will hand you a letter confirming this on the final day of the consultation period. This will repeat the business rationale for redundancy and why you have been selected . It will also document any steps that have been taken during the redundancy period to avoid redundancy or address your concerns.

The letter should explain any final payments made to you, including: statutory and/or contractual redundancy payments; payment in lieu of notice; holiday pay; and bonuses. It will also state how you can appeal the redundancy decision.

How much redundancy pay will I receive?

You should check your employee handbook to see how much redundancy pay you are entitled to, as some employers pay more than the statutory minimum. (However, the amount of redundancy pay that an employer can offer you cannot be less than the set statutory amount.)

The amount of statutory redundancy pay you receive will depend on the length of your employment, your age, and weekly pay before tax:

  • for each year of continuous employment between the ages of 16 and 21 you will get half a week's pay;
  • for each year of continuous employment between the ages of 22 and 40 you will get one week's pay;
  • for each year of continuous employment between the ages of 41 and 65 you will receive one and a half weeks' pay.

Note, however, that there is an upper limit of £464 (gross) on the amount of weekly pay you can claim, and a maximum overall statutory redundancy payment limit of £13,920.

In addition, any period of continuous employment over 20 years will be disregarded and for every month you are over the age of 64 you will lose 1/12 of your entitlement, and the entitlement disappears at age 65.

What if my employer cannot pay my redundancy pay?

If your employer is declared insolvent or cannot pay redundancy pay, you can apply for a direct payment from the National Insurance Fund. As a first step, write to your employer asking for redundancy pay. Then, if they are unable to pay, fill out Form RP1 available from the Insolvency Service.

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