When an organisation needs to reduce its workforce it may choose to make some employees redundant.
If you are being made redundant, it means you will lose your job. But may be entitled to certain rights including pay.
The two-year time frame
You are only entitled to statutory redundancy pay and rights if you have worked continuously as an employee for two years.
That means your employer is legally required to provide them.
You may have a contract that entitles you to some pay if you are made redundant before two years of service. But this depends on what you agreed with your employer when you joined.
Either way, the process of selecting who is going to be made redundant must be fair.
Reasons for redundancy
There are several reasons people are made redundant. For example:
- The business you work for closes.
- The business needs to cut costs by reducing staff numbers.
- Technology has been introduced that makes your job unnecessary.
- Your job is no longer needed.
You cannot be made redundant if your job will continue to exist. If you have been made redundant and somebody else takes on your position, you can dispute it legally.
Being chosen for redundancy
Whatever the reason for redundancies your company must decide who will lose their job fairly.
Your employer should specify a pool of at risk people.
A fair pool is likely to include everyone in one part of a company or everyone doing a certain kind of job.
If that isn’t the case, if you are the only person at risk who does your job, you may have been chosen unfairly for a reason other than those mentioned above. If you suspect this, you can challenge the redundancy.
Once you are in the at risk pool your employer may initially ask for volunteers to take redundancy.
The next step is to either ask those left in the pool to apply for new jobs or decide a fair way to choose who is to be made redundant. This could involve a system that measures factors such as:
- Disciplinary records
- Timekeeping
- Performance.
Whatever process they put in place, you must be told in advance how it will work. It must then be applied to everyone in exactly the same way.
How much notice will you get?
Your employer must carry out a consultation when they are making redundancies. This involves telling you why redundancies are taking place and what any alternatives are.
If more than 19 people are being made redundant, employers must follow certain time frames.
If the number of redundancies is between 20 and 99, the consultation must start at least 30 days before dismissals begin. For 100 or more, 45 days is the cut off point.
Your notice period only begins once you have been told formally that you are being made redundant and given a finish date. It doesn’t start when you are told you are at risk of redundancy.
Legal redundancy notice periods vary depending on how long you have worked for a company:
- If you’ve been employed between one month and two years, you’re entitled to one weeks’ notice.
- From 2 to 12 years you are entitled to a minimum of one week for each year worked.
- For more than 12 years service you are entitled to a minimum of 12 weeks’ notice.
You may have a longer notice period in your contract, but these are the minimum periods.
How much will you get paid?
Statutory redundancy pay is the minimum amount you can expect if you have worked somewhere for two years, although you may have a contract that entitles you to more.
It is based on your total earnings before tax and worked out by your age and length of service:
- Those up to age 22 receive half a week’s pay per full year worked.
- 22 to 41-year-olds receive one week’s pay per year.
- Those over 41 receive 1.5 weeks’ pay per year.
The maximum weekly amount you can get is £538 and the years of work used to calculate your payment are capped at 20. If you have annual leave days remaining you will be paid for those as well.
You can work out how much your payment will be using the government’s redundancy calculator.
It’s worth noting, all the rights we’ve mentioned above apply if you are on furlough when you are made redundant.
Support after you’ve been made redundant
Benefits
Losing your job can be very stressful, especially in times of economic uncertainty. As soon as possible you should check what benefits you can claim to help you while you look for a new role.
These could include universal credit, housing benefit, council tax reduction, jobseeker’s allowance and tax credits. If you’re not sure what you are entitled to, try using a benefits checker.
Mortgage holiday
If you own a home your mortgage provider may be able to give you a mortgage holiday to prevent you from falling into mortgage arrears, or temporarily switch your payments to interest only.
Debt management
If you are worried about falling into debt, be sure to speak with a debt management organisation to best handle your finances during your redundancy.
Sell your house fast
In some cases, a sell house fast route could give you the financial security you need to help you through a difficult time. If you’re considering this option we’d be happy to talk through the service we provide.
We can buy your home in just seven days if necessary, which means you’ll quickly have money in your account and your mortgage repayments will stop.
