How to secure the best deal if you’re made redundant

Career

Have you been informed you’re being made redundant? Read more about your legal rights and how to secure yourself the best deal. 

We live in uncertain times and, the days of a job for life are long gone. No one really knows what the effects of Brexit will be and global events beyond our control can have a profound effect on the economy at home.

There has been a steady stream of news stories lately about employers in the retail and other sectors shrinking their workforces. So, should you find yourself at risk of redundancy, how can you ensure the best possible deal to help you on your way to pastures new?

Are you really redundant?

It may be obvious that you are but, it’s worth asking yourself if your employer has assessed the situation correctly.

A failure to correctly identify the reason for your dismissal will potentially mean the dismissal is unfair.  The law recognises that redundancy occurs only:

  • On the closure of a business (for example, where an employer goes bust).
  • On the closure of a place of work (for example, where the business is moving location).
  • Where there is a reduction in work needing to be done (for example, if a customer is lost, a process is automated or, a restructuring occurs).

It is not the person but the role which is redundant. Therefore if your employer is proposing to bring someone else in to do your job, you are not redundant.

What am I legally entitled to if I am made redundant?

If your job is genuinely redundant then you will be entitled to a statutory redundancy payment but, only if you have been employed for at least two years.

This is calculated using a formula which takes into account your age, length of service (in whole years) and weekly pay (subject to a maximum). From 6 April 2018 the most you can be paid is £15,240 (although this increases each year in line with inflation).

When calculating your statutory redundancy payment, it is only completed years of service which count. So if you’re close to a work anniversary, it is worth trying to delay your date of termination of employment.

Are you entitled to an enhanced contractual redundancy payment?

You may also be entitled to an enhanced contractual redundancy payment, depending upon whether your employer offers this.

It will depend upon the terms of your employment contract. Even if there is nothing written in your contract or staff handbook about this, if there has been a regular course of making enhanced payments to staff on redundancy, you may be entitled to such a payment so it is worth investigating this.

Even if you are not entitled to a statutory or contractual redundancy payment you will be entitled to receive notice of dismissal as set out in your employment contract. There is a statutory minimum amount of notice which an employer must give(up to a maximum of 12 weeks) which may be longer than your contact states if you have been employed for a long time so do check this.

What happens if you need to work your notice period?

If your employer asks you to work during your notice period, you will be paid as normal and continue to receive all your usual benefits such as private medical insurance. Or your employer may pay you a lump sum “in lieu” of notice (often referred to as a PILON), in which case your employment comes to an end and your benefits cease.

Check the wording of your contract to determine whether your pay in lieu of notice clause covers just your basic pay or, includes the value of your other benefits.

If your employer is proposing to pay you in lieu and you are only entitled to your basic pay then you could ask to be put on garden leave. That way, although you will no longer be working, your employment contract technically continues for the duration of your notice period and, you still receive valuable benefits such as pension contributions during that time.

During your notice period you may also be entitled to a reasonable amount of paid time off to look for alternative work or make arrangements for training.

Can you claim unfair dismissal if you’re made redundant?

While you may not actually wish to pursue litigation, if your employer is failing to get the redundancy process right, the risk of a claim from you may be a good bargaining chip to enable you to secure a larger ex gratia payment, in return for giving up your potential claim.

It’s important to remember that you can only claim unfair dismissal if you have been employed for at least two years. However, you may bring a discrimination claim regardless of how long you have been employed.

What does a fair procedure for a redundancy dismissal look like?

There is no specific legal procedure but ACAS does give best practice guidelines which employers are advised to follow. No two situations will be exactly the same but, very broadly, the ingredients of a fair procedure will include an employer:

  • Giving due consideration to ways to avoid the redundancies such as reducing overtime, laying off temporarily, agreeing new terms and conditions, offering voluntary redundancy.
  • Giving staff as much notice as possible of proposed redundancies and not rushing through the process unduly quickly.
  • Consulting meaningfully with staff, including giving proper thought to any proposals they put forward. This is likely to involve at least two private meetings with each of those affected.
  • Explaining the selection criteria and scoring to allow staff to appeal against their selection for redundancy.
  • Considering whether there are any suitable alternative roles which could be offered in other parts of the business (including at other group companies), and continuing to do so up until the date of dismissal.

Employers are often keen to conclude the redundancy process as quickly as possible but, don’t be rushed – you are entitled to a proper period of consultation and, if it is inevitable that your role will disappear, the longer you remain employed, the longer you will be paid and receive benefits!

Have you been fairly selected for redundancy?

If the reason for redundancy is a reduction in work then, unless a whole team or division is being made redundant, it will usually be necessary for employees to be selected for dismissal.

This must be done fairly using objective selection criteria which are free from the taint of discrimination of any kind such as sex, race, age or disability. So, for example, if sickness absence is a selection criterion then any absence for a pregnancy related reason should be disregarded. A ‘first in, last out’ selection criterion is likely to be discriminatory on the grounds of age.

Criteria should be related to measurable factors rather than based on subjective concepts such as “enthusiasm” or “attitude”. Scores should ideally be moderated by more than one manager and it should be possible to challenge any obvious mistakes.

If you think you have been unfairly selected then you should challenge this, through your employer’s formal grievance procedure if necessary.

Is collective consultation relevant in your case?

Employers only have to consult collectively, that is with employee representatives, in the event of proposals to dismiss 20 or more employees. If less than 20 employees are at risk of redundancy, in any three month period, then only individual consultation is necessary as part of a fair procedure.

How can you bring a claim if you have to?

You can bring a claim in an employment tribunal for an unpaid redundancy payment, unfair dismissal (if you are eligible) and breach of contract (up to the value of £25,000).

No application fee is payable to bring a claim but you will have to pay for your own legal advice and this is unlikely to be recoverable in full (or at all). If you have home or other insurance you should check with your insurer as your policy may cover you for legal fees.

You can make a claim online or download claim forms here.

Need more legal employment advice?

You’ll find more advice on your rights as an employee in these articles:

Katy Meves is a Partner at Springhouse Solicitors, a niche employment law firm.

Photo by Rokas Niparavičius