the employer's business, or part of the business, has
ceased to operate; and/or
the employer's business has
moved to a different place; and/or
the business's need for work
of a particular type to be done has ceased or diminished.
Redundancy
is a form of dismissal. In order to claim redundancy, usually
you must have been dismissed from your job.
If you resigned, you will not be redundant. You may, however,
be able to argue that although you have resigned, you have
actually been dismissed. This is called constructive
dismissal and occurs when an employee has been put
in a position where there is no choice but to resign, for
example, where you have been made to take another job which
is not suitable, whereas you should have been offered redundancy.
If you opt for voluntary redundancy, this will usually count
as a dismissal and therefore you would still be able to make
a claim for unfair dismissal, even though you have agreed
a redundancy package. It is only where you have signed a compromise
agreement that you will be precluded from bringing
any future claim.
Classic examples of genuine redundancy situtations
Examples of when someone may be genuinely redundant include:
the work the person does is no longer required, perhaps
due to the employer moving into a new line of work which
no longer needs the person's skills, or a new process
is introduced so that the job that was carried out is
no longer necessary (see below under heading redundancy
situations)
the
employee's job no longer exists because the work is being
done by other employees (see below under heading redundancy
situations)
the
workplace has closed because the employer has ceased trading
or has become insolvent (see below under heading redundancy
situations)
the
employer's business, or the work the person is doing,
moves to another location (see below under heading redundancy
situations)
the
employer's business is transferred to a different employer
(see below under heading redundancy
situations)
Even if there is a genuine redundancy
situation, your employer must still follow a correct redundancy
process failing which the redundancy can still be
deemed to be unfair
dismissal.
Classic examples of non-genuine
redundancy situtations
Employers often claim that there has been a reduction in the
work needing to be done but this is not always the real reason
for dismissal. It can be cheaper and less time consuming to
label someone "redundant" rather than follow, say
a performance process that could take many months. It may
be that the employee is simply disliked and redundancy can
be used as an excuse to fast forward that person's exit from
the company. It is important to look at all the circumstances
surrounding the redundancy. The following are examples which
may indicate that the redundancy is not genuine:
if your employer has recently taken on other people, or
intends to do so in the near future;
if you have been criticised
about your performance and subsequently face a redundancy
situation, this may indicate that your dismissal is more
about your poor performance than a genuine redundancy;
if you are the
only person being made redundant, or one of only a few
in a large company;
if you are pregnant, a woman,
from an ethnic minority, disabled, gay or of a particular
religion, this might indicate you have been dismissed
because of discrimination rather than because of a general
need to reduce the workforce;
if you have had a poor relationship
with your line manager, this might indicate you have been
dismissed for a reason other than a genuine redundancy
one.
Redundancy situations
The need for the worker has diminished or ceased
A redundancy situation may arise where a business continues
to operate but there is no longer a need for the skills for
which the employee was taken on. For example, a person employed
as a salesman for the south of UK region is made redundant
when the employer changes the business to focus on the North
only. The employer is still in business, but he no longer
needs any sales staff based in the South.
Redundancy may also arise if an employer reorganises the business
to improve its efficiency, so that fewer people are needed
to do the same amount of work.
In each case, it is the need for the work you do which is
in your contract which must have been reduced. Even if there
is other work available for you to do, the fact that the work
you were employed to do is no longer available means that
you are in a redundancy situation.
New systems in the workplace
You may be made redundant if a new process or system is introduced
which means that your job is unnecessary. The introduction
of the new system or technology will not automatically mean
that you are redundant. You will be redundant only if the
new system is the direct cause of your work no longer needing
to be done. Some new systems or technology may just enable
the same job to be done, but differently.
The job no longer exists because other workers are doing
the work you carried out
You may believe that you should not have been made redundant
because the tasks you were doing still need to be done, but
have been given to other people to do.
The important point to note is whether the work which you
were employed to do is still available for you to do. If it
is no longer available, even if it is being done by other
people, then your job no longer exists and you are therefore
redundant. The redundancy may still be unfair, however, if
you have been unfairly selected or your employer has not followed
the correct redundancy
process.
The workplace has closed, or is closing down
The most common example of where someone's work is no longer
needed is where the business or part of the business has closed
down or is closing down. You will almost certainly be redundant
in these circumstances.
The business moves
Where the place where you work, or the whole business moves,
a redundancy will arise if the employer has ceased or intends
to cease to carry on the business in the specific place where
you were employed. Even if there is a clause in your contract
which requires you to work anywhere the employer asks you
to, you may still be redundant if the business moves. Your
employer should consider, however, if it is possible for to
be moved to a new location.
The business is transferred to another employer
Where a business is transferred from one employer to another,
the transfer does not end the employment relationship. Usually,
your contract of employment is carried over into the new business,
with your existing terms intact (including your old redundancy
terms).
If you are made redundant in connection with a transfer, either
by your old employer before the transfer takes place, or by
the new employer after the transfer has taken place, the employer
would have to show that there was a real redundancy and that
the transfer was not the only reason (or the main reason)
for the dismissal. The rules governing such a situation are
found under the commonly known "TUPE Regulations".
Redundancy process
Selection - Who should be chosen for redundancy?
Your employer must use a procedure which is fair, objective
and non-discriminatory, using objective criteria. Unfair selection
for redundancy is a type of unfair dismissal. Someone who
has been unfairly selected for redundancy may therefore be
able to claim compensation for unfair dismissal as well as
redundancy pay.
It is unlawful to have redundancy selection criteria and/or
a redundancy procedure which involves discrimination on the
basis of disability, sex, race, religion or sexuality. It
is also unlawful to have criteria based on whether employees
chosen to be made redundant are part-time or pregnant, as
this would be sex discrimination. This is the case even if
the criteria and/or procedure have been agreed with the worker(s).
You do not have to have worked for your employer for any qualifying
period to be able to claim compensation for discrimination
from an employment tribunal.
Consultation
If a redundancy situation exists, your employer must consult
all employees who are at risk of redundancy as soon as possible,
informing them of the situation and discussing with them any
alternatives and the implementation of the redundancy situation.
Failure to consult may lead to a finding of unfair dismissal
by the Tribunal.
Suitable alternative employment
If your employer intends to make you redundant, there is a
legal duty to consider whether there are other jobs available
which you would be capable of doing. If such suitable employment
is available, it should be offered to you. If it is not, this
can amount to unfair dismissal.
Whether an alternative job offered is suitable will depend
on the terms of the job offered and your skills, abilities
and circumstances. Factors such as pay, status, hours and
location are relevant when deciding if a job is a suitable
alternative. Your employer does not have to offer a similar
position or a position in the same workplace.
The offer of alternative employment must be made before your
current job ends. It can be made in writing or can be verbal.
It must give you enough details about the new job so you know
what the difference is between your existing job and the new
job. You must also be offered a trial period in the new job-
usually 4 weeks during which you can still reject the position
and claim the original redundancy if it is reasonable for
you to do so.
Your employer may offer you a number of alternative jobs.
Each offer must give sufficient detail and you are entitled
to a trial period in each, if you wish.
If you are entitled to a statutory
redundancy payment, you may lose this right if you
reject a suitable alternative job offered by your employer.
You may, however, be able to claim unfair
dismissal, depending on whether it is reasonable for
you to reject the offer.
Minimum statutory dismissal procedures
In addition to the requirements of selection and consultation,
your employer must in any event follow a minimum statutory
dismissal procedure before dismissing you, and this includes
making you redundant. There is an exception where more than
20 employees are being made redundant - see under heading
below Redundancies of 20 people or more. In essence, the minimum
statutory procedures are that before making you redundant,
your employer must:
send you a written statement, telling you why they are
making you redundant
hold a meeting with you to
discuss the matter
offer and hold an appeal meeting
with you, if you want to appeal against your employer's
decision.
If your employer does not follow the proper procedures, any
dismissal will be automatically unfair and you will be able
to make a claim for unfair dismissal to an employment tribunal
(as long as you have worked for your employer for at least
a year). If you win your case, the tribunal may increase the
compensation awarded to you by up to 50% if your employer
did not follow the procedure.
Redundancies of 20 people or more
Where an employer is making 20 or more employees at one workplace
redundant within 90 days or less, this is called a 'collective
redundancy'. An employer making a collective redundancy must
consult with a recognized trade union where there is one.
If there is no recognized trade union, an employer must consult
with employee representatives before issuing redundancy notices.
There must also be standard individual consultation. There
are minimum periods of consultation required in these circumstances
and sanctions if an employer does not follow them.
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 £330.00 as from 1st February 2008.
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 £9,900 as from 1st February 2008.
Claiming redundancy pay if the employer has ceased trading
If your employer is insolvent and a receiver or liquidator
has been appointed to deal with the company's affairs, you
should claim your redundancy payment from the National Insurance
Fund. You can contact the fund on 0845 145 0004.
If your employer has ceased trading but is not insolvent,
you should write to your employer claiming the redundancy
payment. If the employer does not pay the statutory redundancy
pay, you must apply to an employment tribunal within six months
of your dismissal. You will need to raise a written grievance
with your employer first.
Other rights relating to redundancy
Right to notice of redundancy
Because redundancy is a form of dismissal, you will still
be entitled to your statutory or contractual period of notice
of dismissal, if your employer plans to make you redundant.
Time off to look for work
If you have been given notice of redundancy, you are entitled
to be paid for time off to look for a new job provided that
you have a minimum of two years service (this time can count
up to the date of expiry of your notice). The following employees
are not entitled to paid time off to look for work:
employees who have worked for their employers for less
than two years
overseas employees
merchant seamen
members of the armed forces
police service employees.
Your employer has give you reasonable time off. There is
no definition of what is reasonable, but common sense usually
prevails, for example, you may require further travel time
depending on where you are located and your personal circumstances.
Right to have the redundancy payment free of tax
Your redundancy payment, whether statutory or otherwise, can
usually be made without deduction of tax or NI up if it is
below the threshold of £30,000. It will then attract
tax at the appropriate rate.
Other
aspects of UK employment law for employees include:
Landau
Zeffertt Weir Solicitors