Can my employer make me redundant and what should I do?

In this blog we will be setting out some advice on what to do if your role is placed at risk of redundancy and answering some questions that you may have.

What is the definition of redundancy?

Redundancy is a potentially fair reason for dismissal. Under the Employment Rights Act 1996, the definition of “redundancy” encompasses three types of situation:

1. Business closure (e.g. ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it).
2. Workplace closure (ceasing or intending to cease to carry on that business in the place where the employee was so employed).
3. Reduction of workforce (i.e. having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work).

Your employer will therefore need to identify which of the above situations is relevant. You will normally be informed of this at an early stage so that you can raise any questions that you may have.

What process does my employer need to follow?

As a starting point, your employer will need to identify the employees that are going to be placed at risk of redundancy. This is known as the “redundancy selection pool”. This could be a small group of employees (possibly only one) or it may be part of a much larger redundancy exercise.

If there are several individuals at risk, your employer will need to apply suitable selection criteria to decide who will be retained and who will be provisionally selected for redundancy.

There are different types of selection criteria that your employer may use. Possible selection criteria includes:

• Performance
• Length of Service
• Skills
• Qualifications and training
• Attendance record
• Disciplinary record

It is preferable (and safer for the employer) for selection criteria to be objective rather than subjective. Objective criteria can be measured against data such as attendance data or measurable performance data. Subjective selection criteria depends upon the personal view of your manager. Examples of subjective criteria include flexibility and adaptability or attitude. Sometimes it’s impossible to avoid some subjectivity but it can lead to disputes arising (and can be a factor in deciding whether the process has been fair).

The selection criteria used should not be discriminatory and it should then be applied in a fair way.

Does my employer need to consult with me before reaching a decision on making me redundant?

Your employer should consult properly with you before reaching a final decision on whether your role will be made redundant. During these meetings you should raise any matters or concerns that you may have. Typically, during these consultation meetings your employer would discuss the reasons for the redundancy situation, the pool for selection, the selection criteria to be used, and the way you were scored. Your employer should allow you to put forward suggestions of ways to avoid your redundancy.

At the end of the consultation period your employer will confirm whether it is making you redundant, or whether an alternative to redundancy has been found.

If your employer is proposing to make 20 or more employees redundant within a 90-day period at one establishment, it will also have a duty to undertake “collective consultation” with representatives of affected employees, rather than just meeting with each employee on an individual basis.

Does my employer need to consider alternatives to redundancy?

Yes, during the consultation period your employer is obliged to consider ways to avoid your redundancy. This can include considering alternative plans, or more typically will involve your employer considering any suitable alternative vacancies that become available. If there are several employees that are interested in an alternative role, your employer may offer a competitive interview process to decide who to offer the role to.

If you unreasonably reject an offer of suitable alternative employment, you may lose the right to a statutory redundancy payment.

Employees on maternity leave or shared parental leave have the right to be offered any suitable alternative employment first.

If you are interested in an alternative role, you are entitled to undertake a 4-week trial period to help you decide if it is suitable for you. If it isn’t suitable, you could still be made redundant and you would not lose the right to any statutory redundancy payment due. If the trial is successful, you would not be entitled to a redundancy payment (as your employment will continue).

If I am made redundant what sums will I receive?

• Statutory redundancy pay – If you have over two years’ service, you will normally be entitled to a statutory redundancy payment. This is calculated using a formula based on your age, length of service and weekly pay, subject to an upper limit. You can check your entitlement using the online Government calculator.
• Company/enhanced redundancy pay – Some employers offer enhanced redundancy pay. You should check to see if your employer has a redundancy policy which sets out your entitlement.
• Notice pay – Your employer may not require you to work all of your notice period and they may make a payment in lieu of notice (“PILON”). In some cases, you may be placed onto garden leave during your notice period.

The length of your notice period and how your PILON is calculated will depend on the terms of your employment contract. Your notice period is subject to a statutory minimum which is one week per year of complete service (up to a maximum of 12 weeks).

• Pay in lieu of accrued but untaken holiday – If you have accrued but untaken holiday entitlement, you will be entitled to pay in lieu of that holiday. Alternatively, if you have taken more holiday than you are entitled to, your employer may be able to deduct this from your final salary.

I’ve been given a settlement agreement– what should I do?

Settlement agreements are often used as an alternative to the time and cost associated with following a fair redundancy process.

Signing a settlement agreement essentially means you waive or settle all possible claims against your employer, usually in return for an additional compensation payment. The agreement will include details of any payments to be made, the claims that are being waived, and often a confidentiality clause. The agreement is also likely to include a contribution by your employer towards the cost of your legal fees.

We would be happy to advise you on the terms of any proposed agreement.

Can I appeal against the redundancy outcome?

Yes, if you are dismissed for redundancy, you should usually be given the right to appeal the decision. If your employer doesn’t offer you the right to appeal, this can give rise to a claim for unfair dismissal (if you have over two years’ service), depending on the circumstances.

What should I do if I think the process is unfair?

If there is a genuine redundancy situation and the employer follows a fair procedure in selecting the employee for redundancy, it may be able to fairly dismiss for that reason. However, if you believe that there is not a genuine redundancy situation or your employer has not followed a fair procedure you could potentially have a claim for unfair dismissal. We can give further advice on this.

Unfair dismissal claims can generally only be brought by employees who have been employed by the dismissing employer for at least two years. Before bringing a claim for unfair dismissal in the employment tribunal, you would have to contact ACAS (the Advisory Conciliation and Arbitration Service) to start a process called early conciliation. ACAS is an impartial organisation that will try to resolve the dispute with your employer without the need to bring proceedings in the tribunal.

If you are worried about being made redundant or require any further assistance about your role please contact Sarah Hayes.