Senior solicitor Andrea Corr, in our Employment Law team, explains the process of redundancy and answers the common questions that employees have in this situation.
What is redundancy?
It most commonly (but not always) arises in a situation where an employer has a reduced need for either work of a particular kind, or work at a particular location, and as a result proposes to dismiss employees in order to reduce its workforce. This can range from an entire closure of the workplace to restructuring or reorganisation.
I have been placed “at risk” – what does this mean?
This is usually where an employer is proposing to make redundancies and wishes to formally notify the employees who are potentially affected that they are at risk of redundancy. It is usually around the beginning of the consultation process.
How does consultation work?
Employers are required to consult employees in order to discuss their proposals and to discuss ways in which redundancies may be avoided, or reduced. Depending upon how many employees are expected to be affected, consultation may take place on either a collective basis, with elected staff representatives, or directly with the affected individuals.
How are employees selected for redundancy?
There is no template process. The legal requirement is that the process must be reasonable. This could include, for example, a matrix of scoring or assessment across groups of affected staff. What is reasonable may vary widely between small family employers and large corporate organisations.
Can my employer consult with me regarding redundancy whilst I am on furlough?
Yes, providing that they are able to provide sufficient information to make the consultation meaningful.
Am I entitled to be offered another role?
You may be entitled to be considered for a suitable alternative role if one exists. However, there is no requirement for your employer to create another role. If you are currently on maternity leave we suggest that you take advice about your situation as you are generally entitled to preferential treatment in respect of any role which does exist.
What happens at the end of the consultation process?
This is usually the point where an employer confirms to the affected staff what will happen next. If they remain at risk then usually the employer either serves notice of termination of employment, or actually terminates employment (with payment in lieu of notice).
Can my employer make me redundant before the end of the Coronavirus Job Retention (“furlough”) scheme?
Generally, yes, subject to having followed a reasonable process, including any consultation periods. Your employer is not obliged to wait until the end of the scheme.
Will I be expected to work my notice period or be given a payment in lieu of notice (PILON)?
This depends upon your contract of employment and your employer’s business needs.
Can my notice period run during furlough?
Generally, yes. Your employer is not obliged to wait until the end of the scheme before serving notice.
Would my notice period be paid at full pay rather than the furlough rate?
Sometimes. It may be at full pay but this depends upon the interaction between your contractual notice period and the minimum notice to which you are entitled by law. You will therefore need advice about your own individual situation. Alternatively, employers may choose to offer notice pay at full pay.
Can I appeal against my selection for redundancy and/or redundancy dismissal?
Many employers do offer internal appeal processes but it is not a legal requirement.
Am I entitled to a statutory redundancy payment?
Usually yes, provided that you have two years’ continuous qualifying service. In certain circumstances you may forfeit your right to such a payment e.g. where you unreasonably refuse an offer of suitable alternative employment.
Will my employer enhance my redundancy payment?
Some employers do offer enhanced redundancy payments, often in return for you signing a settlement agreement. We can provide further advice should you be offered such an agreement. You may find our blog article, 'What is a settlement agreement?' of interest.
How is a statutory redundancy payment calculated?
It is based on a combination of the number of years of completed service and your age.
What is the maximum number of years’ service which can count towards a statutory redundancy payment?
How much is the current cap on weekly earnings for the calculation of a statutory redundancy payment?
From April 2021 it is £544 per week.
What is the maximum amount of a statutory redundancy payment?
From April 2021 it is £16,320 (20 x 1.5 x £544) (but bear in mind most will not reach this maximum).
Will any accrued holiday be paid at full pay, rather than furlough rate?
Our specialist Employment Law team can advise you on your individual situation and on all aspects of redundancy.
For further information or legal advice, please contact email@example.com or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.