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Redundancy law explained | What are my rights if I’m made redundant?

October 21, 2020

Being made redundant is never a nice situation to find yourself in, especially if you think it constitutes an unfair or discriminatory dismissal.

Find out all about redundancy below, including what it is, what the law is, how much pay you are entitled to and more.

What is the meaning of redundancy?

Redundancy is the name given to a situation where either: 

  1. A business is completely closing down and all the staff are being dismissed 
  2. A business is partially closing down i.e., where one branch of the business is closed down or where one of the employer’s offices is shut down with the staff being moved elsewhere; or
  3. Most commonly, where the need for staff of a certain role is reduced, therefore meaning fewer employees are needed.

What is voluntary redundancy?

In law, there is no such thing as “voluntary redundancy”. The term is often used simply to describe a situation whereby someone agrees to leave voluntarily during a redundancy situation, as opposed to being made redundant against their wishes.

Redundancy law during covid

Whilst redundancy has continued to operate as normal during the Covid-19 pandemic, the Government introduced the Job Retention Scheme (i.e. the furlough scheme) in an effort to avoid companies having to make staff redundant. This does not, however, affect an employer’s ability to still make staff redundant in any event.

What is the legal notice period required when being made redundant?

The notice period required when being made redundant is dictated either by the terms of the employee’s contract or by the minimum notice period set out under the Employment Rights Act 1996. Any notice period is completely independent of any consultation period which is carried out as part of the redundancy process.

What is the law on redundancy pay?

A person’s redundancy pay is calculated according to a number of factors. In particular, a person’s entitlement to redundancy depends upon the following: 

  1. The date they were made redundant
  2. Their age at the time they were made redundant
  3. Their length of service; and
  4. What their weekly gross pay was prior to being made redundant.

A redundancy payment is in recognition of the employee’s past service. It cannot therefore be reduced by other payments owed by the employee, unless the employee either agrees to this, or such a deduction is within the contract terms. Likewise, in order to be eligible for a redundancy payment in the first place, an employee has to have worked for the employer for at least 2 years.

Redundancy law when pregnant / on maternity leave

An employer can still select an employee for redundancy even if that employee is on maternity/parental leave. This is however subject to there being a ‘genuine redundancy situation’, as well as the employee not having been selected for redundancy due to their pregnancy or parental leave. If an employee is dismissed for such reasons, then this can count as an automatic unfair dismissal as well as an amounting to discrimination.

Furthermore, additional protection is available for anyone on maternity leave or shared parental leave, as an employer is expected to give them priority over other employees in terms of offering suitable alternative work (if such work is indeed available).

What is last in first out?

‘Last in first out’ is the idea that the most recent employee to have joined the business will be the first one to be made redundant should a redundancy situation arise.

Is last in first out discriminatory in the eyes of law?

Whilst employers are permitted to use ‘last in first out’ when considering who to make redundant, the employer must tread very carefully. This follows the fact that the use of such criterion can potentially amount to indirect age discrimination (this of course being because the younger members of staff are more likely to have a lesser period of continuous service when compared to the older members of staff who have been there for some time). 

For that reason, Courts have confirmed that –whilst the length of service can be used as a factor– it must be fairly applied and requires objective justification in order to stand the best chance of demonstrating that it is fair. For that reason, it may be advisable that some employers simply avoid this situation altogether by focussing on other methods of assessment, e.g., disciplinary records of staff, quality of work, etc.

Redundancy law for part time employees

Part-time employees are just as entitled to the same redundancy due process as full time employees. Naturally, any redundancy payment will be calculated based on the part-time worker’s reduced earnings compared to their full time colleagues.

What constitutes unfair dismissal?

A claim for unfair dismissal is where an employer: a) is unable to identify a potentially fair reason for dismissal; or b) In the event such a reason can be identified, then the employer has failed to act reasonably in treating the reason given as a sufficient basis for dismissing the employee. In respect of the latter requirement, this almost always means the employer must have adopted a fair and reasonable process in dismissing their employee in order to be able to demonstrate that they have acted reasonably.

Where can I get legal advice about redundancy?

AFG LAW have more than 100 years’ experience providing business clients with expert commercial legal advice, support and guidance through a range of legal services, including redundancy law. Contact us today to see how we can help.