Redundancy

Compensation claims for redundancy cases

It can be a shock to be told by your employer that you are now redundant. The first question in most people’s minds is, “How am I going to pay the mortgage and support my family?”

Employees are legally entitled to a basic level of protection – more on that later. For some people, redundancy can act as a catalyst for making a fresh start in a new career or even starting their own business. For others, it means unemployment and money worries. It’s important to understand the redundancy process and what rights you have.

What is redundancy?

There is a legal definition of redundancy and if your employer says you are redundant, you should make sure the situation falls within one of the scenarios below:

  • The business has closed
  • Your workplace has closed
  • There is a reduced need for employees to do the available work.

Companies cannot use redundancy as an excuse to sack you for a different reason. If you think that your job isn’t really redundant, or that you have been unfairly selected for redundancy, you might be able to bring an Employment Tribunal claim for unfair dismissal.

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What am I entitled to?

If your job is redundant and your employer is unable to offer you a suitable alternative post, you will be entitled to:

  1. Notice (or pay in lieu of notice) – check your employment contract and bear in mind the statutory minimum notice:
  • at least one week’s notice if you’ve been employed between one month and two years
  • one week’s notice for each year of employment between two years and 12 years
  • 12 weeks’ notice if you’ve been employed for 12 years or more.
  1. A redundancy payment– you might have a contractual entitlement to a redundancy payment, but even if you don’t, if you are an employee with more than two years’ continuous service, you will be entitled to the statutory minimum redundancy payment. This is based on your age, salary and length of service, but it isn’t very much. For example, a 35 year-old with two years’ service who earns £600 a week who is made redundant between 5 April 2021 and 4 April 2022 would be entitled to £1,088, because there is a current cap of £544 (which is usually reviewed and increased each year).Here’s how it’s worked out:
  • 0.5 week’s pay for each full year of service under the age of 22
  • 1 week’s pay for each full year of service between the age of 22 and 41
  • 1.5 week’s pay for each full year of service aged over 41.

The maximum number of years that can be taken into account is 20 years. If the company becomes insolvent, then you should be able to claim your redundancy entitlement from the National Insurance Fund.

  1. A fair process– your employer should consult with you about the proposed redundancy and allow you the opportunity to suggest ways of avoiding the redundancy. If your employer is planning to make 20 or more people redundant, special rules apply. If you have been selected for redundancy in preference to your colleagues, your employer must be able to show they selected you fairly. They should also let you know about any potential alternative roles for you within the company.

What should I do next?

  • If you’re a member of a union, ask them for support
  • If you want to find out more about your rights, visit www.acas.org.uk
  • If you think you have been unfairly dismissed, speak to a solicitor to find out what options you have. A solicitor might be able to help you write to your employer to try to resolve the situation without the need for a claim.
  • If you have legal expenses insurance, you may be able to use this to cover the legal costs involved in protecting your redundancy rights.
    Legal expenses insurance can be a standalone policy, but it is more common for people to have legal expenses cover as part of another insurance policy, such as their home insurance. It is always worth checking your existing insurance policies to see if any of them provide this cover. For more information on legal expenses insurance, read our guide here.

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