Redundancy overview


As specialist UK employment lawyers, we have a vast amount of experience in advising on all redundancy situations.


Employment law – Redundancy

WHAT IS REDUNDANCY?

If you are dismissed because of redundancy, this usually means that your employer has needed to reduce their workforce.
This may either be because the place where you work is closing down, or because there is longer the need (or no longer expected to be the need) for you to carry out the particular kind of work that you do.

If you are dismissed because of a need to reduce the work force, and one of the remaining employees moves into your job, you will still qualify for a redundancy payment so long as no vacancy exists in the area (type of work and location) where you worked.

Normally your job must have disappeared. It is not a plausible redundancy if your employer immediately takes on a direct replacement for you.

It does not matter, however, if your employer is recruiting more workers for work of a different kind, or in another location (unless you were required by contract to move to the new location). The definition of redundancy therefore covers 3 basic situations:-

Where the employer ceases to carrying on business (other than involving a transfer of an undertaking) on a permanent or temporary basis;

Where the employer ceases business in the place where the employee is employed;

Where the employer’s business no longer requires any employees or as many employees to do a particular kind of work (whether generally or in the place where the employee was employed).
If you are dismissed because of a need to reduce the work force, and one of the remaining employees moves into your job, you will still qualify for a redundancy payment so long as no vacancy exists in the area (type of work and location) where you worked.

Classic examples of genuine redundancy situations

Examples of when someone may be genuinely redundant include:

  • the work the person does is no longer needed due to a downturn of business, a new line of work which requires a different skill set, or a new process being introduced (see below under “redundancy situations);
  • the employee’s job no longer exists because the work is being done by other employees;
  • the workplace has closed because the employer has ceased trading or has become insolvent heading;
  • the employer’s business, or the work the person is doing, moves to another location;
  • the employer’s business is transferred to a different employer.

Even if there is a genuine redundancy situation, your employer must still follow a correct redundancy process (see below) failing which the redundancy can still be deemed to be an unfair dismissal.

REDUNDANCY PROCESS

Please click here to access the redundancy process page

REDUNDANCY PAY

If you have been employed with your present employer for a minimum of 2 years, you are entitled at the very least to a minimum statutory redundancy payment from your employer. You may be entitled to a larger amount of compensation because your employer has a contractual redundancy scheme, or there is custom and practice of them providing enhanced payments.

Losing the right to a statutory redundancy payment

Even if you are entitled to redundancy pay, there are reasons you might not get it, for example:

  • if your employer claims to have offered suitable alternative employment
  • if you want to leave before the date your employment is due to end, for example, you have found another job.

How much is a statutory redundancy payment?

The amount of a statutory redundancy payment is calculated using a formula based on:

  • how long you have worked for your employer (see below); and
  • your age (see below); and
  • your weekly pay (see below)

Statutory redundancy pay is worked out as follows:

  • 1½ week’s pay for each complete year of employment when you were aged between 41-64 inclusive
  • 1 week’s pay for each complete year of employment when you were aged between 22-40 inclusive
  • ½ week’s pay for each complete year of employment when you were aged between 18-21 inclusive. Employment before the age of 18 is ignored when working out statutory redundancy pay.

Weekly pay

The weekly pay which will be used to work out the redundancy payment will usually be your normal weekly gross pay at the time you were made redundant up to the maximum limit which is £475.00 as from 6th April 2015 February 2015.

A week’s pay does not usually include overtime pay. Where earnings vary each week, an average of the 12 week period leading up to the redundancy will be used. If commission is paid regularly, this should be included in a week’s pay. An average should be calculated, for example, an amount that could be expected in a year, divided by the number of weeks worked in a year. The maximum statutory redundancy payment you could receive is £14,250 from 6th April 2015.

Check what statutory redundancy payment you would be entitled to by  clicking here

COLLECTIVE REDUNDANCIES

 Please click here to go to the collective redundancies page.

We have vast experience in advising on redundancy matters. Please call 020 7100 5256 and ask to speak to Philip Landau or any member of the employment law team for a free initial consultation.

 

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