The Redundancy Survival Guide: What you need to know and do
What is redundancy?
Redundancy is when your employer is closing their business, closing your workplace or needs to reduce its workforce because a job or several jobs are no longer required.
Redundancy is different to a restructure which might change what people do, but essentially has as many roles still to be done after the restructure as before. There has to be a reduction in the total number of roles to be a redundancy.
The most common reasons for redundancy include:
- New technology replacing the need for employees
- The job you were hired to do no longer exists
- The business is closing or relocating
- The business has been bought by another company
Sometimes, you may have to reapply for your job. This process may seem unfair, but it enables your employer make a final decision based on objective criteria. However, if you don’t reapply or are unsuccessful with your application, you will still have a job until your employer makes you redundant.
What is not classed as redundancy?
You must be selected fairly to be made redundant lawfully. If you are selected for any of the following reasons this will potentially be an unfair reason and you might be able to bring a claim for unfair dismissal:
- marital status
- religious beliefs
- whether you are member of a trade union
- maternity leave
- paternity leave
- whistleblowing, for example, exposing your employer's wrongdoing
- doing jury service
- taking part in lawful industrial action lasting 12 weeks or less
- you are the trustee of a company pension scheme
A Fair Redundancy Process – What you need to know
If you have been working for your employer for at least 2 years, they must follow a fair procedure in order to show that any resulting dismissal is fair. This means that you will be part of a redundancy process and your employer must meet with you individually to discuss their proposals before they make a decision.
If you have been working for your employer for less than 2 years, your employer is not required to follow a redundancy procedure and does not have to meet you individually, though many employers will still do so.
However, in both instances we strongly recommend looking at your employment contract or your staff handbook to see if there is a contractual redundancy procedure or policy that your employer says that they will follow if redundancies are necessary.
This individual consultation is in addition to any consultation your employer might be doing with trade unions or employee representatives because of the number of roles that are at risk of redundancy. Consultation with trade unions and/or employee representatives must take place when an employer is proposing to make 20 or more roles redundant within a period of 90 days, and is commonly known as collective consultation.
The consultation process: the initial redundancy meeting
Your employer must make you aware that you have provisionally been selected for redundancy. Your employer must meet you at least once before making their final decision. It is important that no decisions have been made and that your employer genuinely has an open mind to any suggestions or alternatives you put forward. It is also important that consultation starts in good time. During this meeting, you should be able to discuss:
- Why your employer needs to make redundancies
- Why you have been chosen for redundancy and any score you have been given that has led to the decision to provisionally select you
- If there any other jobs available
- Any questions that you may have about the next steps
- What you might be entitled to if you are made redundant
This meeting can also be used an opportunity to highlight any concerns as to why you shouldn't be made redundant. If you think that the process has been unfair or disagree that redundancies are needed, now is a good time to highlight your case. This may help to buy some extra time and keep you in employment longer, it will also be useful evidence in any subsequent claim for unfair dismissal that you may want to consider bringing.
The consultation process: the final redundancy meeting
This is the meeting at which your employer is likely to inform you that you are to be made redundant. They will usually go through your financial and contractual entitlements with you, and it is only after your redundancy has been confirmed that they can serve notice to terminate you employment on you.
Your entitlements are likely to include:
- A Statutory Redundancy Payment (SRP) (provided you have 2 years’ service). The amount of your SRP depends on your length of service and age and your weekly pay (currently capped at £508 per week (06 April 2018) and is calculated as follows:
- 5 week’s pay for each full year of service when you were under 22
- 1 week’s pay for each full year of service when you were 22 or older, but under 41
- 5 week’s pay for each full year of service when you were 41 or older
Length of service is capped at 20 years and up to £30,000 can be paid to you free of tax.
- Notice pay – you should check your contract to find out what this says about notice, but as a minimum the law says that you should receive:
- at least 1 week’s notice if you’ve been employed between 1 month and 2 years
- 1 week’s notice for each year of employment if employed between 2 and 12 years
- 12 weeks’ notice if you’ve been employed for 12 years or more
Actions you can take ASAP:
- Ensure that you are being made redundant for the right reasons.
If you feel you are being treated unfairly or discriminated against it’s best to seek legal advice ASAP.
- Review and update your CV
Have a look at your current skillset. Is your CV up to date? This is a good time to make your CV stand out.
- Start networking with other decision makers on LinkedIn
If you are involved in a particular industry, it makes sense to network with other businesses. You may be surprised that they are looking for more staff. Sometimes it's a case of "who you know “, rather than “what you know”.
- Sign up to jobs sites
Jobsites such as Indeed, Reed and Monster can be great sources of opportunity. If you can apply for jobs and get interviews during the consultancy process, you are one step ahead in safeguarding your income. However, it is also important to remain loyal to your current employer during the redundancy consultation process.
- Look at your finances and cut your cloth accordingly
Have a good look at all your outgoings and highlight what is essential and what you don't need. If your current job situation is uncertain, it's vital to cut costs. You don’t know how long you could be out of work for without a regular fixed income.
- Pay off any debts
If you have any credit card debts or loans and have the means to pay these off, you should consider doing this.
- Have a look at your insurance policies
You may have some income protection insurance schemes in place covering your mortgage and credit cards, and even car loans in the event of losing your job. If you do and can make a claim, this can provide some help in managing and meeting your financial liabilities.
- Raise extra funds by selling unwanted items
You will be surprised at the things that you have around your home that may have value. It may be worth putting items on eBay or even having a car boot sale to try to raise extra cash.
By being proactive as early as possible, you have a better chance of keeping your options open. The consultation process is designed to look at ways of avoiding redundancies, but there is no guarantee that they can, and so being proactive means that you are in the best position you can be.
Settlement Agreements – their role in redundancy procedures
Rather than going through a lengthy and time-consuming redundancy process, it can be common for employers to offer an employee a settlement agreement at an early stage and very often before a formal redundancy procedure starts.
A Settlement Agreement document is a legally binding contract between you and your employer whereby you agree to waive any employment law rights you have or may have in exchange for discretionary enhanced severance pay.
If you sign a Settlement Agreement you won’t be able to pursue a claim in relation to your employment or its termination; and this includes unfair dismissal, discrimination and statutory redundancy payments. A Settlement Agreement gives your employer great peace of mind as they will not have to invest any resources in defending any claims from an Employment Tribunal.
It is important that any Settlement Agreement is seen and reviewed by an employment law solicitor. Your solicitor will review the Settlement Agreement to ensure that the terms and conditions are fair and can also help to advise on whether the level of compensation being offered is fair. If not, your solicitor may also help to negotiate a better deal for you. You may be out of work for a lengthy period until you find another source of income, but on the other hand, you might be able to find other employment relatively quickly. This will all be relevant when deciding whether an offer is reasonable and it’s vital to get this process correct, as after you have signed the Settlement Agreement, your agreement is legally binding and there is no turning back.
Your employer will usually make a contribution to your costs in obtaining this advice.
Settlement Agreements can also be offered during the course of the redundancy process, particularly where you have raised concerns during the redundancy process about the fairness of the decision to put you at risk or the way in which consultation is being handled.
Do you feel that your redundancy decision was unfair?
If you been employed for over 2 years and feel treated unfairly, you should get advice about whether you have grounds to bring a claim for unfair dismissal asap. If you plan to make a claim, you only have three months minus one day after your last day of employment to bring a claim. This time limit passes by very quickly!
If you take your case to an Employment Tribunal, the following will be considered:
- Whether redundancy was the real reason for your dismissal
- Whether your employer followed a fair redundancy process, including any selection criteria that was adopted
- Whether your employer made reasonable efforts to offer you alternative work
- Whether any refusal of another job by you was reasonable
If redundancy was not the reason for your dismissal or the process was unfair you may be able to pursue a successful claim and can claim compensation.
Life after redundancy
After being made redundant, it is important to have a plan of action. You will have more time on your hands and a routine is essential.
Option One: Look for work
Looking for a full-time job is a full-time job. It's important to keep your options open and continue your search.
Option Two: Early retirement
If you have been awarded a good pay-out, you may wish to consider early retirement.
Option Three: Downsizing your property
If you have a larger property and don't need the space, you can consider downsizing your home. This will help to free up the equity tied up in your home and raise additional funds.
Option Four: Start a business
If you have got the funds and contacts, you may wish to start your own business.
Option Five: Change career
Perhaps you feel it is time to move on and start a new career. If you have the time and resources, training for a new qualification can be an option.
Redundancy can be a distressing time for anyone. At Banner Jones, our team of Employment Law specialists have many employees facing redundancy helping them negotiate the best exit possible under a settlement agreement or pursuing an unfair dismissal claim to challenge the fairness of their dismissal. For more information, Call Banner Jones in Confidence on