A redundancy process can be stressful and difficult. 

If you are an employee about to be consulted, or you are in the process of being consulted about a potential redundancy, it is important you know your rights. 

Your redundancy rights generally

• You have the right not to be unfairly dismissed. In a redundancy situation this means:
  
  • You should be warned and consulted about the proposed redundancy.
  • Your employer must adopt a fair basis on which to select for redundancy. An employer must identify an appropriate pool from which to select potentially redundant employees and must select against proper criteria.
  • Your employer must consider suitable alternative employment if appropriate.

• The right not to be unfairly dismissed only applies to employees who have been employed continuously for two years or more at the termination date. 

• You have rights from day one of employment not to be dismissed for an automatically unfair reason (for example because you have raised a whistleblowing concern, a health and safety reason or for asserting a statutory right) or where your redundancy is due to discrimination due to any of the protected characteristics (sex, maternity or pregnancy, marital status or civil partnership, age, race, disability, sexual orientation, gender reassignment, or religion or belief), victimisation or harassment or for less favourable treatment due to your fixed-term or part-time status.

• If you are on maternity (or adoption or shared parental) leave, you have an automatic right to be offered any suitable alternative vacancies that may be available.

• Where your employer proposes to make large scale redundancies of 20 or more employees within a period of 90 days or less (collective redundancies), it must consult on its proposal with representatives of the affected employees and also notify the Secretary of State.

Your rights if redundancy is confirmed:

• If you have been employed for two years or more, you have the right to take reasonable paid time off to look for other work or to arrange training.

• You will be entitled to your contractual notice subject to statutory minimum notice. You may be asked to work your notice, or you may be asked to go on “garden leave” if your contract allows for the notice period. Alternatively, your contract may allow your employer to give you notice immediately and to pay you in lieu of your notice period.

• If you have been employed for two years or more, you will have the right to receive a statutory redundancy payment calculated according to a formula based on your age, length of service (capped at 20 years) and a week’s pay (subject to a statutory limit currently £643 as of April 2023).  If you unreasonably refuse an offer of suitable alternative employment, you may forfeit your right to a statutory redundancy payment.

• You may also be entitled to a contractual redundancy payment, if there is an express or implied right to one or your employer may offer you an enhanced redundancy package in return for you signing a settlement agreement.

• A redundancy payment can be paid tax free (up to £30,000). All contractual payments (such as notice, holiday or bonus/commission) are subject to normal deductions for tax and national insurance.

• If your employer is insolvent or refuses to pay, you have the right to apply to the National Insurance Fund for unpaid “employer’s payments”. This includes a payment for statutory redundancy and certain other sums due under your employment contract.

Other tips

In addition to knowing your rights, you should also consider:

• The alternatives to avoid a redundancy – these can be discussed as part of your consultation.  Alternatives could involve allowing you working less hours, job-sharing, a sabbatical, recruitment freeze, reduction to pay and benefits, or redeployment/training.

• Explore other roles internally if you wish to try to stay with your employer. Most employers will provide basic information, but you will need to follow this up actively. If you are offered an alternative role, you may be able to trial this for 4 weeks.  

• Raising an appeal to any decision on redundancy where you consider your selection for redundancy is unfair. Whilst an appeal is not legally required for the dismissal to be fair, your employer may include this right within a redundancy policy

• Voluntary redundancy – in some cases an employer will invite employees to apply for an enhanced redundancy package as an alternative to try to avoid a compulsory process. 

• Consider your finances and the effect a decision of redundancy will have on you. You should also check to see if you have any insurance backed products in place that will cover a period of no income for you to cover liabilities such as mortgage or income protection schemes. 

• Check whether your employer provides you with access to an Employee Assistance Programme (EAP) scheme. If you have access to this, it may include free access for you to a financial advice/financial wellness service and counselling generally.

• Check the position on references if you are to leave – will the employer provide the standard factual reference based on dates of employment and job title or will a more enhanced reference be provided. Who is the contact for that reference?

• Will your employer provide you with outplacement support if your role is confirmed as redundant.  Typical outplacement services include CV guidance, interview skills training, job search tips and LinkedIn advice.

• If you have health insurance cover as part of your benefits package, you may want to ask for the cover to remain in place for a period after you leave to cover any existing claims in process. Cover for these benefits are usually paid in advance and, depending on the terms of the scheme, you may be able to remain on cover until this lapses. If you retain this benefit, it will still be seen as a taxable benefit by HMRC, so you would continue to pay tax for receiving it. 

• If you have life insurance as a benefit to your employment, this will end when you leave so you may need to arrange separate cover.

How our employment lawyers can help

Our employment lawyers have extensive experience in guiding employees through the redundancy process, as well as challenging unfair processes. Where a settlement agreement is offered to you, we can provide you with independent legal advice on this.

We would advise you take advice early in the redundancy process to ensure you are aware of your rights and any time limits to make a claim for unfair dismissal and/or discrimination, victimisation or discrimination. 

Please contact our employment solicitors for an initial free, no obligation conversation (020 8475 7401) or email us at employment@edslaw.co.uk. Our employment solicitors can meet with you via Teams or Zoom or face to face by arrangement at one of our offices in London Waterloo, Stratford, Wanstead or Ilford.