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Redundancy: 5 Things You Need To Know

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1. What is redundancy?

occurs when an employer needs to reduce the workforce for some reason unrelated to the conduct or capability of the individual(s) concerned.  Generally, your job must disappear for you to be made redundant, but it can also happen if someone else's job disappears and they are moved into your job, making you redundant.  (Note: This is known as "," which often happens when a more senior employee is prepared to take a more junior role to avoid redundancy.  An employer may find it hard to justify bumping as fair, however, which could lead to a claim for .)

2. What are my 'redundancy rights'?

Employees have a number of legal rights in relation to redundancy, including:

  • right to consultation before redundancy to discuss alternatives

  • right to fair and objective redundancy selection criteria and procedures

  • right to an explanation of the reasons for dismissal and the basis of selection

  • right to appeal against redundancy

  • right to try any alternative offer of employment for four weeks

  • right to notice period or payment in lieu of notice

  • right to take reasonable time off, with pay, to look for alternative work or training

  • right to redundancy payment, provided the employee satisfies eligibility requirements

If your employer violates your redundancy rights, you may be entitled to compensation.

3. Do I qualify for redundancy pay?

To work out whether or not you qualify for redundancy pay, you should first look at your contract of employment.  If it doesn't mention a payment or you don't have a contract, you may still be legally entitled to statutory redundancy pay.

Generally, you must have worked for at least two years with your employer whilst you were over the age of 18 to qualify for redundancy pay.  This rule does not apply, however, if you think that your employer has discriminated against you in the way that you were selected for redundancy (for example if you were selected on the basis of your race, sex or because of any disability you might have).

4. How much statutory redundancy pay am I entitled to?

The amount of statutory redundancy pay you receive depends on how long you have been employed, your age, and your weekly pay before tax:

  • For each year of continuous employment between the ages of 18 and 21 you will get half a week's pay

  • For each year of continuous employment between the ages of 22 and 40 you will get one week's pay

  • For each year of continuous employment between the ages of 41 and 65 you will receive one and a half weeks' pay

However, there is an upper limit on the amount of weekly pay you can receive.  Currently, the limit is set at £350 per week, but this will increase to £380 on October 1.

In addition, any period of continuous employment over 20 years will be disregarded and for every month you are over the age of 64 you will lose 1/12 of your entitlement.

There is also a maximum limit on the total statutory redundancy payment you receive.  Currently, the limit is set at £10,500, but this will rise to £11,400 on October 1.

5. What if my employer is declared insolvent or cannot pay redundancy?

If an employer is declared or cannot pay redundancy pay, the redundant employee can apply for a direct payment from the National Insurance Fund.  First, the employee must write to the employer asking for redundancy pay.  If they are unable to pay, the employee should fill out form available from the Insolvency Service.

** Additional Information & Advice ** 

You can obtain further information about redundancy on .

Depending on the circumstances of your case, however, it may be better to speak with a solicitor who specialises in law.  You can be in your area for free via solicitor matching services, which can also help you to understand the best course of action for your situation and whether you are ready to hire a solicitor.

And, again depending on your situation, they may be able to help you find a solicitor who will agree to take your case on a "no win no fee" basis, which means you don't have to pay for the solicitor's services unless you win your case.

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