Redundancy

Coronavirus update: If you have questions about being made redundant for coronavirus-related reasons, see our FAQ page on this topic for more information.

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.

Just because you have been made redundant, doesn’t mean your dismissal is fair. To decide whether a redundancy is fair, you have to look at three questions:

  1. Is there a genuine redundancy situation?
  2. Did your employer follow a fair redundancy process?
  3. Did your employer consider appropriate alternative roles before making you redundant?

There is more information on these three key issues below, as well as answers to some frequently asked questions about redundancy. 

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

Is there a genuine redundancy situation?

A genuine redundancy happens for one of three reasons:

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

If there isn’t a genuine redundancy situation, your employer can still dismiss you, but there must be another potentially fair reason to do so.

However, it is unlawful to make you redundant if one of the three reasons above does not apply. For example, if you are returning from maternity leave and your employer says your role is being made redundant, but you find out that they are keeping your maternity cover, then your role is not genuinely being made redundant, and you could have a claim against your employer.

Did your employer follow a fair redundancy process?

If there is a genuine redundancy situation, your employer has to follow a fair redundancy process. 

Your employer should identify an appropriate group or “pool” of employees for redundancy. For example, if you work in an office and there are 5 of you doing secretarial work, but there is only enough work for 2 people, all 5 of you should be placed in the “pool”. 

Your employer should then consult with all the individuals in the pool who may be at risk of redundancy. This will usually mean having an individual meeting with each person in the pool. In the meeting, your employer should explain who is in the pool, why there is a risk of redundancy, and the process going forward. Your employer must consider what you have to say and not dismiss it out of hand. However, this does not mean that they have to agree with you.

You can ask to bring someone with you to your consultation meeting, like a colleague or a member of HR. It is good practice for your employer to allow you to bring someone to this meeting. If your employer has concerns about this request, you can reassure them that the person is only there to take notes and offer moral support. You should also check your employer’s policies, in case they cover this. If you have a disability, being accompanied to your consultation meeting may be considered a reasonable adjustment that your employer has to make for you.

The consultation rules differ if your employer is considering making more than 20 employees redundant. If this is the case, specific timescales and procedures must be followed. Your employer has to consult the representatives of the employees affected. See https://www.gov.uk/staff-redundant/redundancy-consultations for more details.

Your employer should then apply objective selection criteria to the individuals in the pool to assess who is provisionally selected for redundancy. The criteria should be measurable, not just based on personal opinion. The employer should decide the weight to be attributed to the different factors depending on their importance. Ideally, there should be more than one person scoring but this might not always be possible. Potential selection criteria might include:

  • Skill, knowledge and experience
  • Performance records, if your employer can show how they are measuring this (for example, through annual appraisals)
  • Disciplinary record
  • Attendance record – where attendance is used, it is important that the reasons for poor attendance are examined. For example, your employer must be careful not to discriminate on the grounds of sex or disability.
  • Length of service – this is generally not used, because of the risk of age discrimination, but it may be used as a tie-breaker.

If the whole business is closing, or the employer is closing down a whole section of a company, then the employer should select all those employees in that part of the business as “at risk”. In these circumstances, they would not need to use the selection criteria above, because they are making everyone in that part of the business redundant.

Your employer will usually give you a score based on one or more measurements, then choose the people with the lowest scores for redundancy. They should:

  • tell you in advance how they will choose and score you
  • score everyone in the pool using the same method
  • show you your scores (but they don’t have to show you everyone else’s scores)
  • only choose the people with the lowest scores for redundancy

In certain circumstances, there may be a genuine redundancy situation, but the selection criteria used for redundancy is automatically unfair. For example, it is automatically unfair to select an employee for redundancy for any reason connected to pregnancy, disability or another ‘protected characteristic’. If your employer selects you for redundancy because of these reasons, you may be able to make a claim for discrimination and potentially unfair dismissal.

If you are on maternity, adoption, shared parental or paternity leave and your employer is making employees redundant, you have extra protection in a redundancy situation.

Did your employer consider appropriate alternative roles before making you redundant?

As part of the redundancy procedure, your employer must consider whether there is another role that you could do, with or without a reasonable period of training. This may be in a group company or another department. Your employer should carry out a sufficiently thorough search for alternative roles, but they do not have to create alternative jobs if there are none available.

Employers should provide you with sufficient information about any vacancies to allow you to take an informed view about whether the alternative job is appropriate for you.

If your employer offers you a suitable alternative role and you reject it, you will lose your right to a redundancy payment. For the role to be suitable, your employer has to consider:

  • the nature of the job offered (status, work and terms, especially pay, hours and location)
  • the employee in question (whether the job is a good match for you)

If you are unsure about accepting the alternative role, you can agree to trial the role for up to 4 weeks without putting your redundancy payment at risk. If you decide during the trial period that the job is not suitable, you still have a right to a redundancy payment.

If your employer does not offer you a suitable alternative role even though there is one available, you could have a claim for unfair dismissal.

If there are no suitable alternative roles, and you are made redundant fairly, you will still be entitled to redundancy and notice pay (provided you have worked for your employer for long enough). See the question on redundancy and notice pay below for more information.

Frequently asked questions

If I am being made redundant, can I take time off to look for a new job?

Yes, if you have worked for your employer continuously for two years by the date of your notice period ending. If this applies to you, you are allowed a reasonable amount of time off to find a new job, or arrange training to help you find a new job.

What should I do if I think there wasn’t a genuine redundancy, or my employer didn’t follow a fair process or offer me an alternative role when one as available?

In these circumstances, 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 (but there are exceptions to this requirement). If you don’t have two years’ service, unfortunately you won’t be able to claim unfair dismissal, even if your employer didn’t follow the redundancy 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 consider raising a grievance and/or starting an employment tribunal claim.

There are strict time limits for making claims so you should not delay doing this. You can get more general advice on redundancy from Acas or contact Working Families for more advice.

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 time limits for making claims so you should not delay doing this. You can get more general advice on redundancy from Acas or contact Working Families for more advice.

What payment will I receive if I am made redundant?

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

  1. redundancy pay
  2. notice pay, or pay in lieu of notice
  3. accrued annual leave 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.

1. Redundancy pay

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. 

2. Notice pay

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. If you’ve worked for 5 years, you’ll get 5 weeks’ 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 always 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.

3. Pay for accrued annual leave/holiday that you have been unable to take

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. 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.

You continue to accrue annual leave – just as you continue to accrue all of your other contractual rights (including pension contributions, tax free allowances etc.) – during your notice period.

Bear in mind that if your employment ends part way through the annual leave year, you will only have accrued holiday for the proportion of the year that you were employed. For example, if you were only employed for half of the annual leave year, you will only have accrued half of your annual leave allowance for that year.

If your employer is paying you in lieu of giving you notice (this is often called a PILON agreement) then you may accrue less annual leave during your notice period. This is a quite complicated area of law, and you are encouraged to seek further advice if this applies to you.

Can I volunteer to be made redundant?

Employers may ask for volunteers for redundancy. If your employer asks for volunteers, you can volunteer. But in the end, it is up to your employer whether they actually select you for redundancy, so volunteering does not necessarily mean you will be made redundant.

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

If you are on maternity leave, adoption leave, paternity leave or shared parental leave who 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 separate page on redundancy if you are on maternity, adoption, shared parental or paternity leave which you can read for more information.

Why is my employer asking me to sign a settlement agreement?

Many employers, when making large scale redundancies, want to make sure that employees cannot bring employment tribunal claims, even when they have followed a proper redundancy process. Asking you to sign an agreement doesn’t mean there is something sinister 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 time limits for making claims so you should not delay doing this. You can get more general advice on redundancy from Acas.

 


This advice applies in England, Wales and Scotland. If you live in another part of the UK, the law may differ. Please call our helpline for more details.

If you have further questions and would like to contact our advice team please use our advice contact form below or call us.

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