Facing redundancies? It does not matter whether you are an employer or an employee, the process entailed can be extremely daunting and emotional!

In a redundancy situation employees have rights to:

  • a redundancy payment;
  • a fair redundancy procedure being followed; and
  • reasonable time off work to look for alternative employment.

Employers must treat employees fairly and follow the correct process if they are considering making redundancies. They should consult, consider all alternatives and use a fair selection process to identify the pool of people who are at risk of redundancy, in addition to fair selection criteria to decide who amongst that pool is to be made redundant.  If an employer fails to do this employees may have an employment claim.

So when does a redundancy situation arise?

To determine whether or not a redundancy situation has arisen, meaning that the employee will be entitled to a redundancy payment, but that the dismissal is fair, the dismissal must be for one of the following reasons:

  • the employer is ceasing to carry on the business within which the employee worked;
  • the employer is ceasing to carry on the business in the place where the employee worked; or
  • the business requires fewer people carrying out work of the particular kind which the employee carried out.

Redundancy payments

An employee who has been employed for two years or more should be entitled to a redundancy payment, which is calculated using a set formula based on the employee’s age, weekly wage and their number of years continuous service.

It is important to note however that an employee can lose their right to a redundancy payment in certain circumstances, for example:

  • they are reinstated or re-employed in suitable alternative employment within a certain period of time
  • they unreasonably refuse an offer of suitable alternative employment or try out a new position and unreasonably terminate it during the trial period

Settlement Agreements

It is also worth noting that it is now becoming more common place for employees to be asked to sign a Settlement Agreement when they are made redundant, even in a clear genuine redundancy situation. Why? To give the employee and employer a clean break, where they both know what their obligations are, what payment is being made to the employee, and the employer does not have to look over their shoulder for the next few months to see if an employee attempts to bring a claim, to say the dismissal was unfair.

These types of agreement are also used to prevent a full redundancy procedure having to be completed on occasions, potentially in return for offering some other benefit to the employee being dismissed.

For more information on how these types of agreement work, see our Settlement Agreement page.

Seeking advice

Whether or not a redundancy situation exists can be confusing as employers move employees around, or fail to consult properly. Our Employment Team can guide you through the potential pitfalls and help you understand whether the redundancy is genuine, the process has been dealt with correctly, what an employee is entitled to and what they could receive if a dismissal is dealt with incorrectly.

If you want to understand your rights and obligations as an employee or employer better, to ensure you do not act to your own detriment, contact us now on 01709 510999.

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