Redundancy FAQs


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Redundancy FAQs

Am I entitled to statutory redundancy payment?

What is the current statutory weekly limit for redundancy pay?

Can I get more?

Am I entitled to my notice period in addition to the redundancy payment?

How long will it be before I can expect my money?

Do I pay tax and NI on my redundancy payment?

Do I pay tax on my notice pay?

Am I entitled to a payment if I work a few hours a week?

How much notice am I entitled to by being dismissed for redundancy?

What can I do if I disagree with the redundancy payment?

What is the consultation period if there are a large number of employees being made redundant by my employer?

Is it right that I can be given notice during the collective consultation, or must my employer wait until the end of the consultation period?

What if there is little or no consultation in connection with my redundancy?

Am I obliged to take the alternative position if it is offered?

What if I consider I have been unreasonably selected for redundancy?

The company I work for has been taken over by a new entity. Am I still entitled to a redundancy payment?

Am I entitled to any benefit during my notice period in respect of my company car and mobile phone?

Am I allowed time off by my employer to go for interviews and look for another job?

What are settlement agreements?

Am I entitled to statutory redundancy payment?
Yes, as long as you have completed 2 full years of service since the age of 18.Back to Top Back to top
What is the current statutory weekly limit for redundancy pay?
The statutory limit in 2015 is £475.Back to Top Back to top
Can I get more?
Not if it is a genuine redundancy and your employer is not paying you an enhanced package.Back to Top Back to top
Am I entitled to my notice period in addition to the redundancy payment, even if I don’t work it?
Yes. In many cases, you are not required to work your notice and therefore you will be paid in lieu in addition to your redundancy pay and outstanding holiday entitlement. Otherwise, you will have to work your notice.Back to Top Back to top
How long will it be before I can expect my money?
If your employer is paying the redundancy, it is usually paid on the last day that you work within a very short time afterwards.Back to Top Back to top
Do I pay tax and NI on my redundancy payment?
There are no deductions on your redundancy payment up to £30,000. Any payment over and above this amount is usually subject to tax at your marginal rate.Back to Top Back to top
Do I pay tax on my notice pay?
It depends on whether your contract of employment gives your employer discretion to make a payment in lieu of notice. If your employer has such discretion, they must deduct tax form the notice pay. If they do not, then it can be paid gross.Back to Top Back to top
Am I entitled to a redundancy payment if I work only a few hours a week?It does not matter how many hours a week you work; if you have worked for the employer for two years or more since the age of 18, you are entitled to redundancy payment.Back to Top Back to top

If I am being dismissed by reason of redundancy, how much notice am I entitled to?
The statutory minimum notice is one week for every complete year worked, up to a maximum of 12 weeks. If your contract provides for a greater notice period, you will be entitled to receive this longer period of notice.Back to Top Back to top
What can I do if I disagree with the redundancy payment?
In the first instance you should contact your employer to see why there is a discrepancy. If they do not agree with you, then you have the right to put your case to an Employment Tribunal, which must be done within 6 months of being made redundant.Back to Top Back to top
What is the consultation period if there are a large number of employees being made redundant by my employer?
The minimum consultation period required by law is: –

  • 20 – 99 employees – at least 30 days
  • 100+ employees – at least 45 days

Back to Top Back to top

Is it right that I can be given notice during the collective consultation, or must my employer wait until the end of the consultation period?An employer does not need to wait until the end of the consultation period before giving an employee notice of dismissal. It is often more cost effective to start the consultation and give the employee their dismissal notice after a week or so. Consultation can then take place during the notice period. If the consultation determines that an employee will not be made redundant after all, then the notice can be retracted.Back to Top Back to top
What if there is little or no consultation in connection with my redundancy?
Your employer is under a duty to properly consult with you. If this does not take place, you may have a claim for unfair dismissal, on procedural grounds if nothing else. If your employer can show that had proper consultation taken place, the outcome would have still been the same- your damaged may only reflect the salary you would have received during that period of consultation.
What if my employer has not considered a suitable alternative position?
Again, his failure to do so may amount to an unfair dismissal.Back to Top Back to top
Am I obliged to take the alternative position if it is offered?
Not if it an obvious reduction in status, salary or responsibilities. If you do unreasonably reject the offer, however, you may lose your entitlement to a redundancy payment. Don’t forget, you have a 4 week statutory trial period in the new job. As long as you reasonably refuse the position within this trial period, your original redundancy can stand.Back to Top Back to top
What if I consider I have been unreasonably selected for redundancy?
Selection procedures based on a points system are regarded positively by tribunals. Some of the following selection criteria such as length of service, attendance, skills, qualifications, performance records and disciplinary records are usually considered fair. The test is usually one of objectivity by the employer. The “last in first out” criteria should not necessarily be adopted as this does not always represent in itself fair selection. Your dismissal for redundancy may be held to be unfair if you can show that there were employees in similar positions to yourself who were not dismissed and that the selection criteria used to choose you were applied unfairly. For example, perhaps one of the criteria used was attendance. You are selected but you can show that your attendance record is significantly better than other employees who were not selected.
Some selections, based on for example pregnancy of employees, race, or sex will be deemed to be automatically unfair.Back to Top Back to top
The company I work for has been taken over by a new entity. Am I still entitled to a redundancy payment?
This may be a transfer of an undertaking and it is possible that you may not be entitled to a redundancy payment. This is a very complex areas and professional advice should be sought.Back to Top Back to top
Am I entitled to any benefit during my notice period in respect of my company car and mobile phone?
If you are receiving a car allowance, then you are entitled for this sum to be included in your payment in lieu of notice. The same does not apply to your mobile phone.Back to Top Back to top
Am I allowed time off by my employer to go for interviews and look for another job?
You are allowed “reasonable” time off with pay, as long as you have been continuously employed for 2 years.Back to Top Back to top
What are settlement agreements?
They are a legally binding agreement, recognised in the Employment Rights Act 1996 setting out the basis of the severance payment you are receiving, in return for which you agree not to take your employer to a Tribunal. The document needs to be explained to you by an independent solicitor and that solicitor needs to warrant in the agreement that you have received the appropriate advice. Many companies use compromise agreements as a way of setting out the formal arrangements of the termination of your employment.Back to Top Back to top

 

For more information on your employment law rights and a free consultation, please get in contact on 020 7100 5256 and ask to speak to Philip Landau or any member of the employment team, or email us.

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