Redundancy pay and rights

If you have been selected for redundancy, certain employment rights may apply. You should be given:

• A notice period, which may vary depending on how long you have worked for your employer.
• Statutory redundancy pay, if you have been an employee for at least two years or contractual redundancy pay.
• A consultation to explain the reasons for your redundancy, how you were selected, and any alternatives to your redundancy.
• Offers for suitable alternative employment within the organisation.
• Paid time off to look for a new job, if you have worked for your employer for at least two years.

Settlement agreements

In certain situations, you may also be offered a settlement or compromise agreement by your employer. These are increasingly being used to reach resolutions which benefit both the employer and employee. DAS Law can help support you through the process to a suitable outcome.

More on settlement agreements

Notice periods for redundancy

Your notice period determines the minimum amount of time you have left between your employer telling you that you are being made redundant and the actual end date of your employment. Your employment contract may give you a longer notice period, but if not, the legal minimum requirements are:

• A week’s notice if you have worked for your employer for between 1 month and 2 years;
• A week’s notice for each year of employment if you have worked for your employer for between 2 and 12 years; or
• 12 weeks’ notice if you have worked for your employer for over 12 years.

You should receive full pay throughout your notice period. Alternatively, your employer may have the contractual right to give you a payment in lieu of notice. This means that your employment will end immediately, but you will still receive the basic wage you would have been paid during the notice period.

If there is no clause allowing payment in lieu of notice in your employment contract, you should be given compensation for any benefits that you would have received over the duration of your notice period.

Redundancy pay

If you’ve been with your employer for two years or more before being made redundant, you will usually be entitled to redundancy pay.

The amount you will be paid is:

• Half a week’s wage for every full year of employment in which you were aged under 22;
• A week’s wage for each year of employment in which you were aged 22 or over, up to the age of 41;
• A week and a half’s wage for every full year of employment in which you were aged 41 or over.

For the purposes of calculating redundancy pay, the figure for a week's wage is cap and the cap changes every April.  Please visit https://www.gov.uk/redundancy-your-rights/redundancy-pay for more details. Any amount over this cap will be disregarded. Redundancy pay also caps out at 20 years' service.

If your employer offers you the option to continue working for them, or suggests a suitable alternative role which you turn down for no good reason, they do not have to give you any redundancy pay.

Redundancy consultations

If you’re facing redundancy, your employer should organise a consultation to discuss it. This discussion should cover the reason redundancies are required, why you have been selected, and any alternatives they can offer, such as another suitable role that you could switch to.

If 20 or more employees are to be made redundant at once, your employer should instead arrange a consultation in which they will meet with an employee representative.

They will discuss the reasons why the redundancies are taking place, as well as potential ways to avoid or minimise the number of dismissals, and what help could be offered to those facing redundancy.

In these situations, full written details of the redundancy plans and procedures should be supplied to staff members or their representative. When a collective consultation takes place, the employee representative will either be a trade union representative (if the employees have a union) or simply an employee elected by the other employees to represent them.

If you’re facing redundancy, your employer should organise a consultation to discuss it.

There are minimum periods which dictate when a collective consultation must take place before any dismissals can be enforced. If there are to be 20 to 99 redundancies, it must start at least 30 days before dismissals begin; with 100 or more redundancies, this increases to 45 days. There is no upper limit on how long a collective consultation can take.

Suitable alternative employment

If you have been selected for potential redundancy, your employer may instead offer you a similar role within the company, or a position at another organisation which has close ties to yours. This is known as ‘suitable alternative employment’.

It is important to note that if you turn down such an offer, you may no longer be entitled to receive redundancy pay, as you are effectively refusing to continue working for your employer.

However, this depends on whether the job truly is ‘suitable’. In order to count as suitable alternative employment, a number of points need to be considered, such as:

• How the work involved compares to your current job;
• Whether the hours, wage, location, and so on are acceptable;
• Whether your skills, abilities and personal circumstances match the role.

Your employer needs to offer the alternative role to you before your current job comes to an end, and must supply enough information about the position for you to judge how similar it is. You are also entitled to a four-week trial period to try out the new job and see if you feel it is right for you. If not, you should let your employer know that you think it is unsuitable before the trial period is up.

If you and your employer disagree about whether a job they have offered is suitable, and there seems to be no other way to handle the issue, you may be able to make a claim to an employment tribunal.

On the other hand, if your employer has a suitable role available but fails to offer it to you as an alternative to redundancy, this may count as unfair dismissal, and you could take action against them.

If you are on maternity leave and you are faced with a redundancy situation, you are entitled to be offered any suitable available vacancy with your employer or associated employer without the need to apply for it.

Taking time off to find a job

If, by the time your employment ends, you have been working for your employer for at least two years, you have the right to take a reasonable amount of time off in your notice period, in order to look for a new job or to sign up for training which will help you find employment.

What is considered ‘reasonable’ will vary on a case-by-case basis; there are no rules covering this, and you will have to reach an agreement with your employer.

Unless your employment contract states otherwise, your employer only has to pay you 40% of one week’s wage for any time you take off to find a job during your notice period. So, if you usually work five days a week and you take six days off during your notice period for job-hunting, you will only be paid for two of those days – 40% of your five-day working week.

If you feel that your employer failed to follow any of the above procedures when making redundancies, you should take a look at our post on problems at work.

Problems at work