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Coronavirus (COVID-19) – Redundancy

Last updated: 13 Jul 2021

*PLEASE FOLLOW ANY GOVERNMENT GUIDANCE OR GUIDANCE SPECIFIC TO YOUR LOCAL AREA AS GUIDANCE ON THE CORONAVIRUS (COVID-19) IS CHANGING DAILY*

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This article covers FAQs about redundancy.

The redundancy process

What is redundancy?

Redundancy is a form of dismissal from your job. It usually happens when employers need to reduce their workforce.

Redundancy is one of five potentially fair reasons for an employer to dismiss an employee.

Redundancy can happen for one of three reasons:

  1. your place of work closes or moves, either temporarily or permanently;
  2. the type of work you do will no longer be done at your place of work; or
  3. fewer employees are needed to do the particular type of work that you do.

To see if the redundancy is fair, you should think about:

  1. if there was a genuine redundancy situation;
  2. if your employer followed a fair redundancy process; and
  3. if your employer considered alternatives to redundancy including appropriate alternative roles before making you redundant. 

For more information, see our pages on redundancy.

I’m at risk of redundancy. What should I do?

If you have been notified you are at risk of redundancy or are in the process of a redundancy consultation you can ask your employer to put you on furlough under the extended Coronavirus Job Retention Scheme (CJRS). Under the extended scheme you can be furloughed even if you haven’t been furloughed before.

See our Furlough FAQs for more information and the updated guidance for the extended furlough scheme. The extended scheme will remain open until September 2021. Under the extended scheme employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. However, in July employers will be expected to contribute 10% and in August and September they will be expected to contribute 20%. You will continue to be entitled to 80% in July, August and September.

We’ve outlined the process that your employer has to follow in more detail in the questions below, tailored to the coronavirus crisis. You can also see our general page on redundancy for more information, and what to do if you are under threat of redundancy.

If you find yourself in a situation where you are made redundant, you should receive redundancy and notice pay even if your employer followed a fair process (provided you have worked for your employer for long enough). You may also be eligible for certain benefits. We have a specific website page on financial support for families whose income is affected by coronavirus.

What process does my employer have to follow when making redundancies?

In order for the redundancy to be lawful, there needs to be a genuine redundancy situation, and your employer needs to follow a process that uses fair selection criteria to decide which employees to make redundant.

A fair process usually requires your employer to identify an appropriate ‘pool’ of those at risk of redundnacy, to consult with individuals in the pool. Once you have been consulted, your employer should use objective, measurable criteria to decide which employees to make redundant.

If your employer is proposing to dismiss 20 or more employees at one establishment within 90 days or less, this triggers the duty to follow the rules around collective consultation. This most usually arises where redundancies are being proposed.

See redundancy page for more information on the process your employer needs to follow when making redundancies.

Does coronavirus change the redundancy process?

You are still entitled to the same redundancy rights as you normally are, even during the pandemic. This includes your right to a fair redundancy process, redundancy pay and notice periods. However, your employer might adopt a more streamlined process.

If your employer goes ahead with redundancy, they still have to follow a fair process, consider alternatives to redundancy and look for suitable alternative roles.

Your employer might have to make some changes to the redundancy process because of COVID-19, for example consultation may have to take place virtually over the phone or using video technology rather than face-to-face.

Employers may need to adapt their selection criteria to remain fair. For example, if your employer selects you for redundancy purely based on the fact you are on furlough, this is likely to be unfair.

Using the normal selection criteria (e.g. measuring performance and absence) may also be unfair if some of the workforce has been off work for the last few weeks/months for childcare, caring responsibilities, or shielding reasons or some of the workforce is on furlough. Performance indicators should normally be applied to employees for the same period. So if some employees are off work during coronavirus and some are not, your employer should use the period before the coronavirus crisis to assess performance.

If your employer fails to follow the correct procedure or does not use fair selection criteria, then you may be able to bring an unfair dismissal claim in the Employment Tribunal and you should seek advice.

Can I volunteer to be made redundant?

Employers may ask for volunteers for redundancy. If your employer asks for volunteers, you can volunteer.

It is up to your employer whether they select you for redundancy, so volunteering does not necessarily mean you will be made redundant.

Can I force my employer to make me redundant?

Ordinarly, no. It is up to your employer whether to make redundancies.

If you have been laid off or on reduced hours for a certain amount of time, you may be able to apply for redundancy. This will apply if you have been laid off without pay, or put on reduced hours and receiving less than half a week’s pay, for:

  • 4 or more weeks in a row
  • 6 or more weeks in a 13-week period.

If this applies to you, you can write to your employer to claim redundancy within 4 weeks of the last day of the time period described above. There is more information on this process on the government’s website.

If you definitely want to leave your job, you can resign. If you resign, you will need to give your employer notice. You will receive your pay during your notice period, but you will not receive a statutory redundancy payment.

If you are dismissed or if you resign, you may be eligible for financial support. There is more information on the financial support available to parents and carers on our financial support FAQs.

My employer wants to reduce or change my hours instead of making me redundant. What can I do?

Changes to your employment contract, such as changing or reducing your hours, usually have to be agreed between you and your employer. Moving you from full time to part time hours may be a change to your employment contract, depending on the terms of your contract. If you object to the reduction in your hours, then you should make this clear to them. If you continue to go to work, you should say that you are doing so under protest, and that you do not accept the proposed changes. We have a sample letter of protest that you can use.

If this happens to you, and you don’t agree to changes, your employer can make you redundant instead. Sometimes employers impose changes or use ‘fire and rehire’ tactics in order to avoid making redundancies.

To make you redundant, there should be a genuine redundancy situation. This happens for one of three reasons:

  1. your place of work closes or moves (this can be temporary or permanent)
  2. the type of work you do will no longer be carried out at your place of work
  3. fewer employees are needed to do the particular type of work that you do

If your employer wants to reduce your hours, this might be covered by reason 3 – fewer employees are needed to do your type of work.

Your employer should still follow a fair redundancy process – there is more information on this on our redundancy page. For example, your employer should not be reducing your hours for a discriminatory reason. This page also include information on the payment you should receive after being made redundant.

You could try to negotiate a more acceptable change with your employer, for example, that gives you enough hours or a suitable shift pattern. You could also suggest a trial period to your employer, to see how well your proposed arrangement works. There is more information on our page on the law when your employer asks you to change your hours.

If you want to preserve your hours and avoid redundancy, flexible furlough may be a good solution. As part of a redundancy process, your employer should consider ‘suitable alternatives’. If your employer does not have enough money to pay you for full-time work, then part-time furlough may be a ‘suitable alternative’ that your employer should consider instead of forcing you to go part-time. For more information on flexible furlough, see our page on FAQs on the furlough scheme.

If your workplace has a collective agreement, they may be able to agree to a change on your behalf. You should seek legal advice if this is the case.

Redundancy, notice and holiday pay

What pay am I entitled to if I am made redundant?

If you are made redundant, you will be entitled to:

  1. Redundancy pay
  2. Notice pay
  3. Accrued annual leave that you have not yet taken

Whether or not you receive redundancy pay and notice pay usually depends on how long you have worked for your employer. Your contract might also give you more than the legal minimum – you should always check your contract to see what it says.

How is redundancy pay calculated?

You will be entitled to statutory redundancy pay if you have been employed by your employer for at least 2 years and you have been made redundant. The amount this will depend on how much you earn a week, how old you are and how many whole years you have worked for your employer.

You can use the government calculator to calculate your redundancy pay.

Your employer may also offer you contractual redundancy pay (more than the statutory minimum). You should check your contract to see what it says about redundancy and pay. 

How is notice pay calculated?

The law states that employees must be given one week’s pay for each year of continuous employment, up to a maximum of 12 weeks. This is known as the statutory minimum period of notice. 

For example, if you have been working for 2 full years, you will be entitled to 2 weeks statutory notice. The maximum is 12 weeks so even if you’ve worked 14 years, you will only get 12 weeks’ notice.

Remember, your employment contract may offer you more than the legal minimum set out above. You should check your contract to see what it says about redundancy and notice pay.

If you are made redundant while you are on furloughyour notice pay might be calculated differently. Read the question on redundancy and notice pay during furlough below for more information.

How is holiday pay calculated?

If there is annual leave that you have accrued but have not taken before the end of your notice period, you have the right to be paid for this holiday. For example, if you have 2 weeks of holiday left to take by the time that your notice period ends, you are entitled to 2 weeks’ pay on top of your notice pay and redundancy pay.

Furlough and redundancy

I’ve been made redundant. Can I be rehired and put on furlough?

Up until 30 September 2021, you can be re-employed and put on the furlough scheme if your employer agrees. The government guidance states that to be eligible for furlough, for periods on or after 1 May 2021 you must have been employed and on the PAYE payroll on 2 March 2021 (as long as they made a PAYE RTI submission to HMRC between 20 March 2020 and 2 March 2021).

You should approach your employer to ask if they will consider rehiring and furloughing you. However, it may be that your employer will be reluctant to do so if your role is likely to be redundant after the end of the furlough scheme. If they have already made redundancy payments and notice pay they may not want to re-employ former employees if at the end of the furlough scheme, the economic outlook has not improved and the role is again redundant.

My employer could have put me on furlough instead of making me redundant. Is this lawful?

It really depends on the circumstances. You cannot force your employer to put you on furlough, just as they cannot force you to accept furlough. Both parties need to agree.

If your employer makes you redundant when they could have put you on furlough at no great additional cost (meaning that you have agreed to cut down your pay to the 80% reimbursed by the government) and they are able to continue to pay National Insurance Contributions and pension, in our view, depending on the timing of your redundancy process you could argue unfair dismissal (if you have 2 years of service – see our page on redundancy and our page on unfair dismissal). It will depend on the circumstances and whether your job will be expected to be viable once the extended furlough period comes to an end.  It may now be seen as reasonable to make you redundant if your employer believes that there will be a redundancy situation at the end of the extended furlough period or if they cannot afford to pay the contribution required towards the furlough scheme.  

An Employment Tribunal will look at your employer’s resources at the time, whether your job is viable, and whether they could instead have put you on furlough instead. However, as the furlough scheme is likely to end in September 2021, employers may decide have little choice but to start redundancy procedures now.

You may also be able to make a discrimination argument if you think they’ve made you redundant (instead of keeping you furlough) because of your sex or other protected characteristic.

If you are under threat of redundancy, please see our webpage on the practical steps you can take.

If I am made redundant while I am still on furlough, how should my redundancy pay be calculated?

Redundancy pay while on furlough

Your redundancy pay is not affected by being on furlough. If you are made redundant while you are furloughed, your redundancy pay will be calculated using the amount you earned before you were furloughed (or what you would have been earning had you not been on furlough). You should receive 100% of the redundancy pay you are entitled to, even if you agreed to a pay cut as part of your furlough agreement. But you may get less than 100% of your notice pay (see more in point 2 below).

Notice pay while on furlough

Whether you are entitled to be paid your notice pay at your normal pay rate or your furlough pay rate depends on your contract with your employer. The rules differ according to whether you are entitled to statutory notice (the amount of notice the law says you must be given) or contractual notice (the amount of notice your employer agrees to give you in addition to the statutory notice).

If you are only entitled to statutory notice (or less than one week more than the statutory notice period) from your employer, your notice pay should be based on your full salary, not your furlough salary.   

If your contract gives you at least one week more than the statutory notice period, your notice pay will depend on your furlough agreement with your employer. If you agreed to receive less than 100% of your pay while you are on furlough, and you remain on furlough for your entire notice period, then your notice pay will be paid at the same rate as your furlough pay. If your furlough period comes to an end before your notice period has run out, and you do not agree to continue with furlough, then you will be entitled to 100% of your pay for the remainder of your notice period that you are not on furlough. 

Since 1 December 2020, Employers are no longer able to make a claim for furlough pay for any period of notice.  Your employer cannot claim for your statutory redundancy pay through the furlough scheme.

These rules only apply to those with normal working hours. If you do not have normal working hours or your pay varies with the amount of work done, it can be complicated to work out what one week’s pay is. You should seek advice if that is the case.

Pay for accrued annual leave/holiday

You continue to accrue annual leave while on furlough. If there is annual leave that you were not able to take before the end of your notice period, you have the right to be paid for this holiday, even if you cannot take it.

Read our redundancy page for more information or seek advice if you are not sure how much you should be paid.

If I take part in the consultation process, will this end my furlough leave?

No. To be eligible for furlough leave, you cannot undertake work for, or on behalf of your employer. Taking part in the consultation process will not end furlough leave.  

Can I sign away my redundancy rights in my furlough agreement? 

It depends on what the agreement says, the right in question, and how long you’ve worked for your employer. Usually, you cannot sign away statutory rights including your right to a redundancy payment, or right not to be unfairly dismissed.

Your right to a fair redundancy process

Employers have to follow a fair redundancy process before making employees redundant. There is a lot more information in our page on redundancy.

Even if you have agreed that you could be made redundant at the end of the furlough period, your employer should still have to follow this process. It will depend what the agreement says, and whether it is reasonable.

Your right to be protected from unfair dismissal

Employees with at least two years of service have a statutory right not to be unfairly dismissed. This means that if your employer fails to follow a proper redundancy process, you may be able to bring a claim for unfair dismissal. You can only sign away your right to bring an unfair dismissal claim if you enter into a settlement agreement called a compromise agreement meets certain legal requirements, or if you sign a COT3 form issued by ACAS.

Employees with less than two years of service do not have protection against unfair dismissal where the reason for dismissal is redundancy. However, if you are selected for redundancy for a discriminatory or automatically unfair reason (including dismissal because you have taken time off for dependants) then you could still have a claim against your employer. You cannot sign away your right to be protected against discrimination.

There is more information about unfair dismissal on our webpage on this topic. 

Your right to redundancy pay

Employees with at least two years of service have a right to receive a statutory redundancy payment on redundancy. You cannot sign away your right to receive statutory redundancy pay. To work out how much statutory redundancy pay you may be entitled to, you can use the government’s calculator.

Employees with less than two years of service are not entitled to statutory redundancy pay.

If you are entitled to contractual redundancy pay in your contract, then you could have waived that entitlement when you signed the furlough agreement with the relevant wording included. However, you should check the exact wording of the furlough agreement and your contract.

Family-related leave and redundancy

What if I am on maternity, adoption, shared parental or paternity leave?

If you are on maternity, adoption, paternity or shared parental leave and you are at risk of redundancy, you have special protection. You have an automatic right to be offered any suitable and appropriate vacancy (where one is available) before it is offered to any other employee (even if they are also at risk). We have a page on redundancy if you are on maternity, adoption, shared parental or paternity leave which you can read for more information.

If you are made redundant and your employment ends on or after the qualifying week (the 15th week before your baby is due), you will still be entitled to Statutory Maternity Pay for 39 weeks. If you are on another type of family leave, you may also be entitled to statutory pay, see our page on redundancy while pregnant, or on maternity, adoption or shared parental leave. This is in addition to any statutory redundancy pay you may be entitled to.

If you think your redundancy is not fair

I don’t think my redundancy was fair. What can I do?

If your employer has not followed a fair process, or the redundancy is not genuine, you may have a claim for unfair dismissal. In order to claim unfair dismissal, you must have worked for your employer for at least two years.

If you don’t have two years’ service, unfortunately you won’t be able to claim unfair dismissal, even if your employer did not follow the process correctly.

In some situations, you do not need two years of service with an employer to claim unfair dismissal. If the dismissal is automatically unfair (for example if you have been selected for redundancy because you are pregnant or on family-related leave), you can bring a claim against your employer regardless of how long you’ve worked for them. 

If you feel you have been unfairly dismissed or discriminated against, you should seek advice or see our article on what to do if you are having problems at work.

There are strict deadlines for making claims so you should not delay in contacting ACAS to start early conciliation.

What should I do if I think my employer has discriminated against me in the redundancy process?

If you feel you were selected for redundancy or not chosen for a role that was suitable for a discriminatory reason, for example, because you are female, pregnant, on family-related leave or because of another protected characteristic (race, sexual orientation, gender reassignment, marital status, age, disability, religion or belief) then you may have a claim for discriminatory dismissal. In this case you will not need two years’ service to bring a claim. 

You should seek advice if you believe that you may have been made redundant unfairly.  There are strict deadlines for making claims so you should not delay doing this. 

Part-time workers and redundancy

Sometimes employers attempt to restructure their businesses by making employees redundant. Employers must follow a fair process when selecting an employee for redundancy. It is not fair to dismiss an employee if the only reason for the redundancy is because he or she works part-time hours. Read the full information about part-time work and redundancy.

Settlement agreement

My employer is asking me to sign a settlement agreement. Should I sign it?

Many employers, when making large scale redundancies, want to close off the possibility of employees bringing Employment Tribunal claims even when they have complied with a full and proper redundancy process. Asking you to sign an agreement doesn’t mean there is something unlawful going on.

There is a legal requirement for you to get advice from a solicitor or trade union representative before signing a settlement agreement so you should discuss any concerns with them before signing. Once you sign a settlement agreement, you will not be able to bring a claim in the Employment Tribunal against your employer.

You should seek advice if you believe that you may have been made redundant unfairly. There are strict deadlines for making claims so you should not delay doing this. 

Redundancy because of insolvency

My employer is insolvent and has made me redundant. What are my rights?

See our article on your rights if your employer is made insolvent.

If your employer is insolvent, you can apply to the National Insurance Fund for unpaid “employer’s payments”. This will cover your statutory redundancy payment and certain other sums due under your employment contract such as holiday pay, outstanding payments like unpaid wages, overtime and commission and money you would have earned working your notice period (‘statutory notice pay’).

You’ll get up to 8 weeks of money you’re owed. Payments for wages and other money you’re owed are capped at £538 a week (£525 if you were made redundant before 6 April 2020).

If your employer is insolvent, you may be able to make a claim to the Employment Tribunal for compensation if you were unfairly dismissed or if there was a failure to collectively consult about your redundancy for a protective award. Your claim in these circumstances would be against both the Secretary of State for Business, Energy and Industrial Strategy and your former employer.

How to apply for money owed in insolvency

You can apply for redundancy pay, unpaid wages and holiday pay as soon as you’ve been made redundant. The person dealing with the insolvency (the ‘insolvency practitioner’ or ‘official receiver’) will give you a ‘CN’ (case reference) number. You cannot claim without the CN number.

You must apply for redundancy pay within 6 months of being dismissed.

The application will ask if you want to apply for statutory notice pay. Choosing ‘Yes’ does not mean you’ve applied. You’ll be told when to apply. You can apply for redundancy, unpaid wages and holiday online.

Claiming for loss of notice pay (‘statutory notice pay’) You need an ‘LN’ reference number to make a claim. It’ll be sent after your notice period would have ended. This is usually no more than 12 weeks after you’re dismissed. You must apply for redundancy first – even if you’re not owed any money. Once you have the LN reference number, claim online for loss of notice.

Money you get (or could have got) by claiming benefits will be deducted from your payment. Contact the Redundancy Payments Service if you have queries about completing the online forms. You’ll need your case reference number or National Insurance number.

The information on the law contained on this site is provided free of charge and does not, and is not intended to, amount to legal advice to any person on a specific case or matter. If you are not a solicitor, you are advised to obtain specific legal advice about your case or matter and not to rely solely on this information. Law and guidance is changing regularly in this area.