Redundancy: Your Questions Answered
What Can You Expect From Redundancy?
We are fast approaching the end of Rishi Sunak’s Furlough scheme, designed to save the jobs of millions who worked for businesses affected by the Covid-19 pandemic. As of mid-August, approximately 9.6 million jobs, from 1.2 million different employers were on the government’s job retention scheme according to Statista.
With the end of the Furlough scheme in sight, many people are at risk of redundancy as businesses struggle in the economic climate.
Here we answer some of the questions you may have as an employee.
Am I entitled to anything if I haven’t been with the company for 2 years or more?
Unfortunately, you are not entitled to statutory redundancy pay if you have been with your employer for less than two years. Your employer doesn’t have to meet with you or follow a redundancy process.
However, your employer must be fair in redundancy and there are still rules which must be followed. Check out Citizens Advice Bureau to ensure that you have been treated fairly.
Does my employer have to follow a certain process?
By the time your job ends, if you have worked for your employer for more than 2 years, they must follow a fair redundancy process. Check in your company handbook to see if your employer is following the process which they told you they would.
Your employer should invite you to at least 1 individual meeting to discuss redundancy.
Apart from your individual meeting there isn’t a set process. Your employer still needs to have a clear process, but there are no rules about what it should be.
How do I know that the redundancy process is fair?
When a number of staff are being selected for redundancy, your employer must ensure that the basis for selection is fair and does not unfairly discriminate against you. Your employer should consult with the workforce on proposed, planned redundancies.
An employer has a legal obligation to inform affected employees of proposed redundancy dismissals of 20 or more within one organisation within a period of 90 days.
People cannot be chosen for redundancy on the basis of race, age, disability, gender, pregnancy/maternity, marriage/civil partnership, sexuality, religion, belief, or for being transgender.
There are other reasons which the law call “automatically unfair” , which could be cause for an unfair dismissal case.
I have 2 years + service – what pay I entitled to?
If you are an employee (under a ‘contract of employment’ you have a number of statutory and contractual rights) with at least 2 years’ service, you are entitled to statutory redundancy pay. This is the minimum an employer must pay you if they have deemed your role to be redundant or diminishing.
Many employers choose to offer a redundancy package and a union may be able to negotiate a settlement, however if you are only getting the legal minimum, this is what you will get:
- Half a week’s pay for every year of service while you were under 22 years old.
- One week’s pay for every year of service between 22 and 40.
- One and a half week’s pay for every year of service over 41.
There is a ceiling of 20 years’ service considered with a limit to a week’s pay for statutory redundancy purposes. This was set to £525 in April 2019. This means that the maximum payment under the statutory scheme is currently £15,750 (i.e. 30 weeks at £525). To get an estimate and plan your finances, check the redundancy calculator from GOV.UK.
My Employer is bankrupt – will I still be paid?
If your employer has gone bankrupt or declared insolvency, you can apply for your statutory redundancy pay to be made from the government’s national insurance fund. There’s more information about your rights if your employer is insolvent on the GOV.UK website, as well as the necessary forms for making a claim.
We have answered the questions above to clear up areas that may have been unclear for employees during this difficult time.
Being made redundant can feel very personal, and cause many different emotions. If redundancy has impacted your mental health, please reach out to speak to somebody.
The Samaritans are available, anytime, no matter what you are going through. Call 116 123 for FREE from any phone or contact them via their website.
Please note: The information provided above is a generalist look at redundancies. You should not consider it as legal or financial advice. Make sure to speak with an expert concerning your individual circumstances.
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Author: Lorna O’Brien, Director of Marketing