What do I do if my job is at risk of redundancy?
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What is a redundancy situation?
A redundancy situation may arise where a workplace is closing or moving, or the business ceases trading altogether. It can also arise when an employer has a reduced need for employees to carry out a particular kind of work.
An employer should warn anybody who could be at risk of redundancy as early as possible before any decisions have been made.
Selection for redundancy
It is important that the selection criteria are fair and that they do not discriminate against those with a protected characteristic (see our factsheet on discrimination). The best way ensure that selection criteria are fair is to use more than one criteria for review and apply the criteria equally to all staff in the selection pool. Criteria often include:
- Length of service.
- Qualifications and training.
- Attendance record.
- Disciplinary record.
An employer should hold several meetings with employee’s who potentially will be made redundant to discuss the redundancy situation and allow them to put forward ideas to avoid making redundancies, alternative vacancies, job shares, the selection criteria and all concerns.
The employer should also put forward any potential alternative roles which they think the employee would be suitable for.
At the end of the consultation period, the employer will confirm whether it is making an employee redundant.
If 20 or more employees will be made redundant within a 90-day period then collective consultation should also take place in addition to individual consultation and there are set time limits for the length of the consultation period
If your role is made redundant you will be entitled to:
- Redundancy payment (https://www.gov.uk/calculate-your-redundancy-pay) based on age, length of service and gross weekly pay subject to a cap of £464; and
- To work your notice period.
Sometimes employers offer enhanced redundancy packages for example if an employee volunteers for redundancy. The employer will usually require the employee to sign a settlement agreement.
What compensation could I get?
Compensation for unfair dismissal is broken into 2 parts – basic award and compensatory award.
The basic award is calculated in the same way as a statutory redundancy payment (https://www.gov.uk/calculate-your-redundancy-pay ) based on age, length of service and gross weekly pay subject to a cap of £464. If you have been paid a statutory redundancy payment, this will cancel out the basic award.
The compensatory award takes into account net loss of earnings from the date of termination, however the employee is under a strict duty to mitigate their losses by finding another job of the same value.
It is really important to keep a full record of all job searches carried out from the date of termination. The tribunal could reduce compensation if they found that the employee had not made enough effort to mitigate loss.
The tribunal could reduce the amount of compensation due if it finds that you have contributed to your dismissal; or if they find that you would have been dismissed anyway had a fair procedure been followed.
Right to appeal
If you have been dismissed by your employer because of redundancy you should have been given the right to appeal the decision. Your employer should have provided you with information about how to appeal. The grounds for your appeal should be set out in writing and the appeal should be heard by somebody impartial who has not already been involved in the process. This person could be an external HR consultant.
Even if you do not think your employer will change their mind or you do not wish to go back it is important to appeal the decision. The reason for this is that if you bring a claim for unfair dismissal and do not appeal the tribunal could reduce any compensation awarded by up to 25%. In addition deciding not to appeal could weaken the prospects of your potential claim.
Unfair dismissal claim
You will only be able to bring a claim for unfair dismissal if you have been employed for 2 continuous years (or one year if you started before April 2012). There are some exceptions to this rule if you believe that you have been discriminated against.
When deciding whether a dismissal was fair the tribunal will look at the following:
- Was the dismissal for one of the 5 potentially fair reasons? The potentially fair reasons are conduct, capability (this usually includes poor performance and sickness absence), illegality, redundancy and some other substantial reason. If an employer dismisses for any other reason it is likely to be unfair and will give rise to a claim for unfair dismissal.
- If the employer is unable to show the tribunal that there was a fair reason you will succeed in your claim. If the tribunal finds that there was a fair reason they will go on to look at:
- Whether the employer acted fairly in all of the circumstances? This will usually involve following a fair procedure. The procedure will be different for each of the fair reasons. The tribunal will also take into account the size and administrative resources of an employer.
This blog focuses on the potentially fair reason redundancy.
There are 2 main claims connected with redundancy, one for unfair dismissal and the other for redundancy pay.
The tribunal will look at whether a redundancy situation existed and whether a fair procedure was followed.
An employee has 3 months less a day to bring a claim for unfair dismissal from the effective date of termination (EDT). If an employee is dismissed without notice, or with a payment in lieu of notice the EDT is the date of dismissal. If the employee works notice or is put on garden leave the EDT is the end of their notice period.
If you are at risk of redundancy, have been dismissed as a result of redundancy or have any queries in relation to this blog, please do not hesitate to contact me at firstname.lastname@example.org.