Redundancy is when you are dismissed from your job. This usually happens when your employer needs to reduce the workforce for financial reasons. Redundancy must be carried out fairly and on reasonable grounds, it cannot be due to age, gender, disabilities or if you are pregnant. Fair reasons for redundancy can include skills and aptitude, attendance and disciplinary records.
If you are made redundant, it is important to remember you have rights. You might be entitled to some of the following:
- Redundancy pay
- A notice period
- Time off to find a new job
- A consultation with your employer
- The option to move into a different role
As the information around these rights can be complicated and confusing, we want to make it as straightforward and easy to understand as possible. If you need additional information, visit the government website, Citizens Advice or Acas.
If you have worked for your employer for at least two years, you will normally be entitled to statutory redundancy pay. Whether this has been in full-time, part-time or contractual capacity, if you are being made redundant because of a genuine need for a reduced workforce after two years, you will usually be eligible.
There are of course exceptions to this, which includes if your employer offers to keep you on or provides a suitable alternative which you refuse without good reason.
Statutory redundancy pay is worked out based on your age, and how long you have worked for the employer. For each full year, you have worked for the employer, at a certain age, you will get a certain amount:
- age 18 to 22 – half a week’s pay
- age 22 to 40 – 1 week’s pay
- age 41 and older – 1.5 weeks’ pay
Some important things to note:
- You do not pay tax on redundancy pay
- You cannot get over £538 a week, even if your payment entitles you to more
- You can only get redundancy pay for a maximum of 20 years’ work
Alongside statutory redundancy pay, there is also contractual redundancy pay. This is when an employer offers extra pay on top of the statutory minimum and will be written within your contract. This extra money is taxable over £30,000 and cannot be less than your entitled statutory pay.
If you feel that your redundancy is unfair, you can call for unfair dismissal and take it to an employment tribunal. By law, redundancy must be selected ‘reasonably’ and cannot be issued because any of the following reasons:
- Religion or belief
- Marital status
- Sexual orientation
- Your membership or non-membership of a trade union
- Working pattern e.g because you are part-time or fixed-term
- Health and safety activities
- Maternity / paternity leave
- You are exercising your rights
- You had to do Jury service
- You have taken part in lawful industrial action lasting 12 weeks or less
- Taking action on health and safety grounds
- You have been a whistle-blower for illegal activity in the business
You are a trustee of a company pension scheme
If you feel like your redundancy is in any way based on discriminatory grounds, this is unfair dismissal and is illegal. Visit the government website for more information on Unfair dismissals.
What do I do next?
Before looking for new jobs, be aware that if a new opportunity arises in the same company you have been working for for two years, your employer must offer it to you as a form of suitable alternative employment instead of making you redundant. You do not have to accept this job if you believe it is not suitable, but you must provide good reasoning. If you both agree after a trial period that the job is not right for you, then you can still receive redundancy pay.
When you are looking for a new job, take some time to consider what you want to do next. If you were unhappy in your previous job, consider this as time for a possible career change. Alternatively, if you’re wanting to continue in your career in a similar position but feel like you need to refresh your skills, you might consider taking a night course or enrolling for part-time study.