What us Redundancy?
Redundancy occurs whereyour dismissal is wholly or mainly attributable to the fact that your employer has ceased or intends to cease to carry on the business for the purposes of which you were employed, or in the place where you were employed;
Or the fact that the requirements of your employer for employees to carry out workof a particular kind, or for employees to carry out of a particular kind in the place where you were employed have ceased or diminished or are expected to cease or diminish.
The important feature of the definition is not whether the need for the job (“work of a particular kind”) done by the employee has ceased or diminished (or is expected to do so). Instead, the question is whether the requirements for employees to do that type of work has ceased or diminished. In other words, the amount of work needed to be done might remain the same (or may even increase) but if it can be done with less people, then there is a redundancy situation.
Examples of redundancy situations
- the work the person does is no longer needed due to a downturn of business,a new line of work which requires adifferent skill set, or a new process being introduced
- the employee’s job no longer exists because the work is being done by other employees
- the workplace has closed because the employer has ceased trading or has become insolvent
- the employer’s business, or the work the person is doing, moves to another location;
- the employer’s business is transferred to a different employer
In the event of a genuine redundancy situation, your employer must still follow a redundancy process.
Types of Redundancy
The need for the worker has diminished or ceased
A redundancy situation may arise where a business continues to operate but there is no longer a need for the skills for which the employee was taken on. Redundancy may also arise if an employer re-organises the business to improve its efficiency, so that fewer people are needed to do the same amount of work. In each case, it is the need for the work you do which is in your contract which must have been reduced. Even if there is other work available for you to do, the fact that the work you were employed to do is no longer available means that you are in a redundancy situation.
New systems in the workplace
You may be made redundant if a new process or system is introduced which means that your job is unnecessary. The introduction of the new system or technology will not automatically mean that you are redundant. You will be redundant only if the new system is the direct cause of your work no longer needing to be done. Some new systems or technology may just enable the same job to be done, but differently.
The job no longer exists because other workers are doing the work you carried out
You may believe that you should not have been made redundant because the tasks you were doing still need to be done but have been given to other people to do. The important point to note is whether the work which you were employed to do is still necessary to be carried out by a single person. If it is no longer necessary for the work to be undertaken by a single person, even if it is being distributed to a number of other people or overseas, then your job no longer exists, and you are therefore redundant. The redundancy may still be unfair, however, if you have been unfairly selected or your employer has not followed the correct redundancy process.
The most common example of where someone’s work is no longer needed is where the business or part of the business has closed down or is closing down. You will almost certainly be redundant in these circumstances. If the place where you work, or the whole business is moving, a redundancy will arise if your employer has ceased or intends to cease to carry on the business in the specific place where you were employed. Even if there is a clause in your contract which requires you to work anywhere the employer asks you to, you may still be redundant if the business moves. Your employer should consider, however, if it is possible for youto be moved to a new location, and your employer may still have to consider whether the redundancy selection pool should be widened to include the other sites.
Where a business is transferred from one employer to another, the transfer does not end the employment relationship. Usually, your contract of employment is carried over into the new business, with your existing terms intact (including your old redundancy terms). If you are made redundant in connection with a transfer, either by your old employer before the transfer takes place, or by the new employer after the transfer has taken place, the employer would have to show that there was a real redundancy and that the transfer was not the only reason (or the main reason) for the dismissal. The rules governing such a situation are found under the commonly known “TUPE Regulations”.
Employers can use a number of criteria to select employees. The following are known criteria:
- attendance record
- disciplinary record
- skills or experience
- standard of work performance
- aptitude for work.
- sickness record
- length of Service
If a redundancy situation exists, your employer must consult all employees who are at risk of redundancy as soon as possible, informing them of the situation and discussing with them any alternatives and the implementation of the redundancy situation. Failure to properly consult may lead to a finding ofunfair dismissalby an employment tribunal.
There is no maximum period of consultation, but there are minimum periods employers are required to follow depending on the number of proposed redundancies:
- 20-99 proposed redundancies – 30 days minimum consultation.
- 100 or more proposed redundancies -45 days minimum consultation.
Where an employer is making 20 or more employees at a workplace establishmentredundant within 90 days or less, this is called a‘collective redundancy’. An employer making a collective redundancy must consult with a recognised trade union where there is one. If there is no recognized trade union, an employer must consult with employee representatives before issuing redundancy notices. There must also be standard individual consultation.
Suitable alternative employment
If your employer intends to make you redundant, there is a duty to consider whether there are other jobs available which you would be capable of doing. If such suitable employment is available, it should be offered to you. If it is not, this can amount to unfair dismissal. Whether an alternative job offered is suitable will depend on the terms of the job offered and your skills, abilities and circumstances. Factors such as pay, status, hours and location are relevant when deciding if a job is a suitable alternative.
Your employer does not have to offer a similar position or a position in the same workplace. The offer of alternative employment must be made before your current job ends. It can be made in writing or can be verbal. It must give you enough details about the new job, so you know what the difference is between your existing job and the new job.
You must also be offered a trial period in the new job- usually 4 weeks during which you can still reject the position and claim the original redundancy if it is reasonable for you to do so. Your employer may offer you a number of alternative jobs. Each offer must give sufficient detail and you are entitled to a trial period in each, if you wish. If you are entitled to a statutory redundancy payment, you may lose this right if you reject a suitable alternative job offered by your employer. You may, however, be able to claim unfair dismissal, depending on whether it is reasonable for you to reject the offer.
If you have been employed with your present employer for a minimum of 2 years, you are entitled at the very least to a minimum statutory redundancy payment from your employer. You may be entitled to a larger amount of compensation because your employer has a contractual redundancy scheme, or there is custom and practice of them providing enhanced payments.
The amount of a statutory redundancy payment is calculated using a formula based on:
- how long you have worked for your employer and
- your age and
- your weekly pay
Statutory redundancy pay is worked out as follows:
- 1½ week’s pay for each complete year of employment when you were aged between 41-64 inclusive
- 1 week’s pay for each complete year of employment when you were aged between 22-40 inclusive
- ½ week’s pay for each complete year of employment when you were aged between 18-21 inclusive. Employment before the age of 18 is ignored when working out statutory redundancy pay.
The weekly pay which will be used to work out the redundancy payment will usually be your normal weekly gross pay at the time you were made redundant up to the maximum limit which is £508.00 as from 6th April 2018. A week’s pay does not usually include overtime pay. Where earnings vary each week, an average of the 12-week period leading up to the redundancy will be used. If commission is paid regularly, this should be included in a week’s pay. An average should be calculated, for example, an amount that could be expected in a year, divided by the number of weeks worked in a year. The maximum statutory redundancy payment you could receive is £15,240. This is correct as at 2018 and is likely to change in April each year.
Claiming redundancy pay if your employer has ceased trading
If your employer is insolvent and a receiver or liquidator has been appointed to deal with the company’s affairs, you should claim your redundancy payment from the National Insurance Fund. You can contact the fund on 0845 145 0004. If your employer has ceased trading but is not insolvent, you should write to your employer claiming the redundancy payment. If the employer does not pay the statutory redundancy pay, you must apply to an employment tribunal within six months of your dismissal. You will need to raise a written grievance with your employer first.