The Covid-19 pandemic has changed the landscape of the UK economy. By the end of May, 8.7 million people were furloughed, with many businesses struggling with forced closures, huge reductions in sales and a sharp downturn in required services.
These business changes and closures will, no doubt, result in redundancies.
There are various steps your employer is required to take to carry out a valid redundancy. If you have been employed for more than two years and these processes are not followed, you may have a case for unfair dismissal.
What is redundancy?
Redundancy happens when your job disappears. You should not be made redundant for any reason other than one of those set out below.
Redundancy situations fall into three categories:
- Business closure (the business closes altogether)
- Workplace closure (closure of one or several sites, or a workplace moves to another site)
- Decreased need for employees to do work of a particular kind
The redundancy process
Your employer must select who they make redundant in a fair way. Was everyone who should have been put at risk, put at risk? The employer will then consider information such as standards of work, attendance, disciplinary records and experience. This information must be applied in a transparent and objective way.
Redundancy should not be used as an alternative for dismissal in place of disciplinary procedures or capability procedures if an employee’s performance is falling below what is reasonably expected.
Your employer must also:
- Give you adequate warning of what is happening
- Consult with you about why you’re being selected
- Consider alternatives to redundancy, including alternative employment for you where this is available.
If 20 or more employees are to be made redundant, employers must consult with trade union representatives (if recognised) or employee representatives if there is no appropriate trade union.
Your employer is legally obliged to offer you statutory redundancy pay, if you are eligible. If you are entitled to contractual redundancy pay, then your employer must pay you that (and it must be at least equal to statutory redundancy pay).
You must be an employee working under a contract of employment and have at least two years’ continuous service to qualify for statutory redundancy pay. However, your employer may choose to offer extra redundancy pay or have a qualifying period of less than two years.
Statutory redundancy pay is calculated using length of service and age. In the UK for 2020/2021 the rates are as follows:
- Five weeks’ pay for each full year of employment after your 41st birthday
- One week’s pay for each full year of employment after your 22nd birthday
- Half a week’s pay for each full year of employment up to your 22nd birthday
The length of service is capped at 20 years and weekly pay is capped at £538. The maximum amount of statutory redundancy pay is £16,140.
You can lose your right to a statutory redundancy payment if:
- You refuse to take your old job back when offered, or if you refuse a suitable alternative
- You are dismissed for gross misconduct during the redundancy notice
- You resign before the end of the notice period.
If you are not required to work your notice, then you should be paid for a period of notice in accordance with your contract or statutory notice. This might be relevant where an employer closes suddenly, for example.
What is unfair dismissal?
Unfair dismissal occurs when your employer has not followed a fair redundancy process. In addition, your employer must not have selected you for redundancy based on any of the following criteria:
- Sexual orientation
- Gender reassignment
- Pregnancy or Maternity (special rules apply in this case)
- Being a member of a trade union
- Working part-time or on a fixed-term contract
If you believe that your employer has not followed a fair process, or you suspect you have been chosen for an unfair reason, you might be able to claim unfair dismissal at a tribunal.
In this situation, your employer might offer you a compromise agreement, or settlement payment which is an agreed cash sum, in exchange for giving up your right to go to a tribunal. Sometimes employers will ask all employees that they make redundant to sign settlement agreements.