A Guide to Being Made Redundant

What You Need to Know

Redundancy is a form of dismissal from your job because your employer needs to reduce the workforce. It does not apply if you resign from your job voluntarily.
If your employers asks that you take voluntary redundancy, however, then you may still be entitled to redundancy pay.
There are a number of reasons why an employer may make you redundant. These can include the fact that new technology has taken over your role, or simply that the business has gone bust.
If it appears your employer has no genuine reason for making you redundant, you may be able to complain of unfair dismissal to an Employment Tribunal.
An employer has to state in writing why they are making you redundant. They must then give you the option to discuss it and appeal against the decision.
The amount of a statutory redundancy pay that you can receive depends on your age, your weekly pay and how long you have worked for your employer.
As well as all the wages owed to you, you should also receive a P45 form for tax purposes, a letter stating in writing the date of your redundancy and payment for any holidays owed that have not been taken.

If you have been made redundant or told that you soon will be, then there are certain steps that you may need to take. You might also be entitled to redundancy pay to help you get by whilst trying to find a new job.

What Is Redundancy?

Redundancy is a form of dismissal from your job because your employer needs to reduce the workforce. It does not apply if you resigned from your job unless you have been forced to resign due to excessive pressure to take a worse job.

If you have worked for your company for more than two years, then you might also be entitled to redundancy pay.

Reasons for Redundancy

The business has gone bust and can no longer afford to operate.
The business has had a reduction in a particular type of work, meaning that your job no longer exists.
The business has moved to a different place.
New technology or a new system has made your job unnecessary.
Cost cuts have forced redundancies.

Normally your job must no longer exist for you to be made redundant. However, it can still be a genuine redundancy if someone else's job disappears and they are moved into your job, making you redundant. This is known as “bumping”, but it may be difficult for your employer to justify it as fair. Meanwhile, ‘collective redundancies’ occur when 20 or more employees are made redundant by a single employer within a 90-day period.

Unfair Dismissal

There are a number of reasons that a dismissal could be seen as unfair:

If your employer did not have a fair reason for dismissing you.
If your employer did not follow the correct process when dismissing you.
If you were dismissed for an automatically unfair reason such as wanting maternity leave.

In some cases, employers have claimed that an employee was made redundant, when in actual fact they have been unfairly dismissed, so that they do not have to pay compensation. If you are a victim of unfair dismissal you may be entitled to compensation for discrimination as well as redundancy and should take your complaint to an Employment Tribunal.

Voluntary Redundancy

Sometimes an employer may ask his employees if they want to be made redundant to avoid having to choose which person is made redundant. Voluntary redundancy is equivalent to a dismissal and all the same rules apply as a normal redundancy, including your right to redundancy pay.

Redundancy Procedures

The process of choosing employees for redundancy is a set one. First of all the employer has to state in writing why they are making you redundant. They must then give you the option to discuss it and appeal against the decision. If these procedures are not followed properly, the redundancy may be deemed unfair.

There are also rules governing the process for choosing candidates – unfair selection may also make be grounds for an unfair dismissal case.

Redundancy Pay

When a person is made redundant they may be entitled to redundancy pay. This is statutory payment from your employer and is only available to you if:

Under 65 years of age.
Have worked with the company for at least two years.

If you do not qualify for redundancy you need to check your contract to see if there is a clause that states you can get some kind of alternative compensation if you are made redundant.

Calculating your Redundancy Pay

The amount of a statutory redundancy pay that you can receive depends on your age, your weekly pay and how long you have worked for your employer. The method by which payments are worked out can be complicated and varies from one employee to the next. You can expect your employer and their accountancy department to help you with this.

For further advice about work related issues you should contact your trade union if you have one, or a consumer advice organisation such as the Citizen’s Advice Bureau.