It is known that Covid-19 is having a negative financial impact on many businesses. Sadly, this frequently resulted in many individuals having their role being put at risk of redundancy. This blog is considering the key factors every affected employee should consider in protecting their rights to ensure the best possible outcome.
What is a redundancy and how does it work?
The starting point for the employee is to assess whether a redundancy has occurred or not. This is vital because only employees made redundant are entitled to certain rights such as redundancy notice period, redundancy pay, consultation right. If you think you have been made redundant unfairly, get in touch with an expert. Redundancy lawyers will be able to work with you to establish the best steps to take.
Employee redundancy is a type of dismissal that occurs when the workforce is reduced, and the employee’s job is no longer needed. But not every reducing of workforce amounts to a redundancy, and should be checked whether an employee’s situation falls within the statutory definition or not.
There are instead instances where the technical conditions for redundancy are not satisfied. For instance, a business reorganization does not constitute a redundancy. On the same vein, the employer may use a disguised redundancy hiding an unfair dismissal or discrimination. It is important to consider the circumstances in which the employer claims that there is a need to make the employee redundant.
Reasons for redundancy
If a dismissal fulfils the above condition and a redundancy has occurred, does not mean that the redundancy is fair. In addition, a fair procedure must have been followed.
The right to a fair selection process
The employer has the flexibility to decide which criteria of selection should apply and also to identify the group of employees from which the ones being made redundant will be selected. As the employee has the right to a fair selection process, the employer must use a fair and objective way of selecting job roles and also must apply the criteria correctly. If the employee has reasons to believe that the employer has acted unfairly, this should be flag it up to the employer and if not resolved, lodge a claim to the employment tribunal.
Right to consultation
The employee has the right to be consulted individually about the redundancy before any notice of dismissal is given. The consultation stage is very important to decide whether the employer acted reasonably in reaching the decision to dismiss.
Although not a mandatory requirement, an advanced warning to the employees of the potential redundancy is common practice. This is an announcement given by the employer that the redundancy might affect the employee. Together with this information, the employer might include the employee’s score on the selection process and explain why they are at risk. This will allow the employee the time to prepare for the potential dismissal and also give them the opportunity to have a say in the redundancy process.
Consultation is not only a way of employer conveying the information to the employee, but rather a meaningful dialogue between the employer and the employees. The employee should consider whether the employer followed the procedure correctly and acted fairly. If the employer allows, the employee may be accompanied during consultation. In the first meeting, the employee should be informed that their role is potentially at risk and about the following steps in the redundancy process, selection criteria, ways to avoid redundancy and any potential redundancy package. After giving sufficient time to consider the information, a second meeting should be held. At this stage, the employee has the opportunity express their views and suggestions. The employer may need to adjourn and then to reconvene or address those views raised by the employees. If no alternative has been agreed upon, the employer may proceed with carrying out selection process and holding a final meeting to confirm to the employee the outcome. The employee can challenge the selection process and also suggest alternative employment.
Employees have a right to be offered alternative employment and consider the offer. In other words, if there a suitable vacancy the employee will have priority before other external applicants. If the employee accepts the alternative employment, they are entitled to four weeks trial period. Unless the contracts terminate either by the employee or by the employer during this trial period, the employee will no longer be entitled to redundancy pay.
Top Tip: Use this redundancy pay calculator to establish how much redundancy pay you are entitled to.
If, however, the employee unreasonably turns down an offer of suitable alternative employment, the employee loses his right to a redundancy payment. Conversely, if the employee’s refusal is reasonable, then the employee should still get their redundancy payment.
Besides the individual consultation, where an employer intends to make 20 or more employees redundant over a period of 90 days or less, the employees have a right to collective consultation. The employer should provide the employee representatives with certain specified information and also consult with the employee representatives.
What redundancy pay do I get?
If the employee worked for at least a month, the employee is entitled to a minimum statutory notice. The notice period is the time between the day when the employer lets the employee know that they will be made redundant and the last day of work. The lengths of statutory notice depend on how long the employee worked for the employer. Accordingly, an employee is entitled to at least one weak notice if they have been employed between one month and two years, one weak notice for each year if employed between two and twelve years and twelve weeks’ notice if employed for twelve years or more.
It is worth checking whether the contract of employment contains a provision of notice. If the notice stated in the contract is longer or the same with the statutory notice, this contractual notice should apply.
It is noteworthy that the notice period starts when the employer announces the employees that they will be made redundant and not when the employee is informed that they are at the risk of redundancy.
The employer may decide that the employee doesn’t need to work during the notice period, and they can offer instead a sum called pay in lieu of notice. The pay will cover the basic pay and the other benefits or compensation for the loss of certain benefits such as the use of company car, medical insurance. Alternatively, the employer may agree for the employee not to work during the notice period, but the employee will still be legally employed. This is known as ‘gardening leave’.
During the notice period employees are entitled to take time off to look for a job or to take training.
Dismissal after two years
If the employee has worked in the same job for at least two years and the employee has been made redundant, they are entitled to a statutory redundancy pay. What this means in plain words is that the employee is entitled to a minimum pay laid out in the law and the employer can’t pay less than this. The amount that a redundant employee receives depends on the employee’s age, the length of service in that job, and the weekly salary. Under the law, the employees are entitled to half a week’s pay for each full year they were under 22, one week’s pay for each full year they were 22 or older but less than 41, and a week and a half pay for each full year they were 41 or older. Weekly salary which is capped at £538 per week and there is also an overall cap for the redundancy pay at £16,140.
The contract of employment and/or staff books should be checked to see whether they mention a redundancy pay. If the contract states a higher amount of redundancy pay, the employer should pay this sum.
Employees should be mindful of the holiday pay as if there are holiday owed, the employer should include this in the redundancy pay as well.
Dismissal within two years
The employment rights do not apply automatically to all employees. The redundancy rights and the right to claim unfair dismissal do not apply unless the employee has the qualifying continuity in service of two years. Therefore, it is easier for the employer to dismiss or to make redundant employees with less than two years in service.
However, there are some lawful exceptions. For instance, no qualifying length of service is required for automatic dismissal such as dismissal related to discrimination, pregnancy, acting as a trade union representative, health, and safety rules.
If an employee is dismissed just before the two years anniversary, the Employment Tribunal may add the minimum notice period that the employee is entitled to (1 week) to give the employee the necessary extension to qualify to pursue a claim.
Also, if the employers do not provide the relevant notice period, employees can claim wrongful dismissal for breach of the contract regardless of their length of service.
Employees have certain statutory rights when they are made redundant. When in doubt, employees should seek legal advice from a solicitor in the event of redundancy. If you are having queries or need assistance on how the redundancy works or you need assistance with the negotiation of the terms of the settlement agreement, please contact our team of employment specialists today. Call us on 0330 221 0684 or email firstname.lastname@example.org.
P&O ferries and the importance of following a process
The latest on IR35
GET IN TOUCH
Do you need help? Request a consultation now.
KLG are always here to help. To arrange a free 15 minute introductory consultation call, where we can identify your needs and show you how we can support your business or you as an individual. Please complete our form.