Redundancy is a particular kind of dismissal that relates to the situation where an employer dismisses an employee because the role that they had is no longer needed. Redundancy is not a result of the employee doing anything wrong and is different from being dismissed or fired.
There are a number of reasons as to why employers may consider redundancy, including:
- The business is failing;
- The business is pursuing a new venture where the employees’ skills are no longer needed; or
- The business is being taken over by another organisation that does not need the employees’ skills.
Redundancy can be an extremely disruptive experience, especially if you feel it has been handled unfairly. You may have questions relating to your redundancy that your employer fails to provide you with.
We’ve put together a list of the most frequently asked questions about redundancy below. For any other queries relating to redundancy, or to find out how we can help, get in touch.
Is my situation actually a ‘redundancy’?
A: If your situation does not fall in one of the three scenarios outlined above where the reason for redundancy is ‘fair’, it is possible that your dismissal is unfair.
Am I protected under the legislation from unfair dismissal?
A: To be protected from unfair dismissal on the grounds of redundancy, you generally require two years continuous employment at the business. However, if you have been selected for ‘redundancy’ for a discriminatory reason or for whistleblowing, you will not need this two year requirement to bring a claim.
The time limit to bring a claim in the employment tribunal is three months less one day for unfair dismissal claims.
I have been told I am ‘at risk’ of redundancy – what happens next?
A: You should receive written correspondence from your employer confirming you are ‘at risk’ of redundancy. This should ideally contain details of a consultation that you are being invited to. This will either be individual or group consultation, depending on the size of the business.
Contact Kalra Legal Group for a free initial telephone consultation, where we could provide you with some insight into whether we feel this is a genuine redundancy or a sham exercise and provide some guidance on the next steps.
What are the selection criteria for redundancy?
Can I appeal my selection?A: The selection criteria will be different in every business. Some businesses may outline their selection criteria in their handbook, whilst others may introduce them at the start of the redundancy scenario.
Examples of selection criteria include: experience, qualifications, disciplinary record, attendance, skill set, etc.
You are entitled to appeal your selection for redundancy.
What compensation am I entitled to?
A: If you have been employed for two years, you will be entitled to statutory redundancy pay. This is calculated based on your age, length of service and wage (capped). In some circumstances, a business will have an enhanced redundancy pay policy in place which would be higher than the statutory minimum.
You will also be entitled to notice pay. This will be subject to the terms of your contract but again there is a statutory minimum. Some businesses will opt to make payment in lieu of notice as a lump sum and others may place you on ‘garden leave’ during the notice period.
Any accrued holiday pay will also be payable.
I am unhappy with the redundancy offer I have received – what can I do?
A: If you have been offered a redundancy by your employer you may be concerned about negotiating a better settlement.
The most important factor for you is that you are given a fair redundancy package which allows you to move on with your life. Our specialist team can assist you in negotiating a fair deal. We can advise as to whether your employer has made mistakes in the circumstances leading up to the offer of redundancy, which may allow you to negotiate a better deal. We can also advise you of what is a fair deal under your circumstances to better equip you for entering into redundancy negotiations.
Our team have assisted a great number of clients with redundancy negotiations, but each case is different. Get in touch for expert assistance tailored to your specific circumstances, and start negotiating a better redundancy deal today.
I have been given a settlement agreement and require an independent legal advisor?
A: A settlement agreement waives the individuals rights to bring certain types of claims in return for the individual receiving some level of financial payment in return.For further guidance please see our page on Settlement Agreement advice for employees.
What am I entitled to if my employer goes into administration or liquidates?
A: In May 2019 last year Jamie Oliver’s restaurant chain collapsed into administration with 1,000 jobs lost. Many of the employees were given no redundancy payments and with some struggling to get by after being given just 30 minutes notice that they were out of a job. KPMG, the companies insolvency practitioner, took control and started the liquidation process.
Liquidation is the process of bringing a business to an end and distributing its assets to claimants. It is something that usually occurs when a company is insolvent, meaning it cannot pay its bills and debts when they are due.
The first thing to ascertain when the company goes into liquidation is whether the company is actually insolvent. If it is not, it does not become the responsibility of the government and the statutory redundancy scheme. The employee instead needs to take a case to the employment tribunal and recover the money directly from the employer.
However, if the company is insolvent, as in Jamie Oliver’s case, the employee will be entitled to a statutory payment if they fulfil certain conditions. Any employee with a contract of employment and 2 years of continuous employment will be entitled to a ‘statutory redundancy payment.’ The amount that you are entitled to is dependent on age at dismissal and how long you have worked for your employer. The amount you receive is capped at the maximum amount of £525 per week.
The government website has a helpful online calculator: https://www.gov.uk/calculate-your-redundancy-pay.
Payments you can claim after liquidation
Below are other payments you can claim if your employer liquidates the company either through an employment tribunal or through the statutory scheme:
The employee can claim compensation for unpaid wages or bonus or commission, up to eight weeks pay (subject to a £525 cap) either from the government scheme or from the employment tribunal if the company is not insolvent.
This is due to all employees who have been with the company for at least one month, and entitles them to one week’s pay for every complete year of service up to 12 weeks. As with other payments in this scheme if the employer cannot pay and you are claiming through the government scheme there is a cap on payments of £525 a week. If the employer is not insolvent this amount could be more through the employment tribunal process.
If the employee is owed up to six weeks holiday pay in the year they became redundant they can claim six weeks compensation from the statutory scheme again with a cap of £525 a week. More can be claimed if going through the employment tribunal route.
If 20 or more employees claim that the way that they were made redundant was not done in the right way, that there was a failure to inform and consult the employees, they can claim up to 90 days pay. This is done to punish the employer, rather than to compensate the employee. This can only be claimed through the employment tribunal and not through the statutory scheme.
It is important to be aware that there is a time frame that you need to claim, which is within three months less one day from the date of dismissal.
If you would like more information on what you can claim please get in touch by calling us on 0330 221 0684
What are Redundancy and Settlement Agreements?
Your employer has just mentioned the words ‘Settlement agreement’ to you. What does it mean? How will it affect you?
A settlement agreement is a legally binding contract made between an employer and employee either towards the end or just after leaving employment and brings your employment to an end. It usually provides a severance payment for the employee who in return promises not to pursue any grievance in the future in an employment tribunal. They are also known as Gagging Clauses, Compromise Agreements, Ex-gratia Payments, Golden Goodbyes or Termination Agreements. The proper legal term however is ‘Settlement Agreement’.
What is a Settlement Agreement for?
The main reason for a Settlement Agreement is to create a clean and amicable break for the employer and employee at the end of the employment, whether or not there is a disagreement.
There will be agreements on the reference for the employee going forward and clauses included which ensure that the employee is not undermined in the future. It will also usually involve a tax efficient payment. The employee waives their ability to take the employer to an employment tribunal in the future. The employee normally has three months once they have left employment to take the employer to tribunal, if there is a settlement agreement they will not be able to use the tribunal avenue.
It is very important that the employee takes legal advice on the agreement so that they are not disadvantaged in the future. Indeed, if the settlement agreement is to be valid in law the employee must take independent legal advice and the employer has a duty to pay for that advice. The solicitor for the employee has to attach a certificate to the agreement stating that advice has been given.
Should you be worried about signing away your rights in this way?
As long as an agreement is checked by your lawyer who is working on your behalf, it can be a good system. The lawyer will check the payment to be made and when it will be made and make sure that the first £30,000 is free from deductions. Indeed, the lawyer might also suggest that the payment is increased. You will also be able to agree to the reference and terms of leaving, especially if you are leaving in bad circumstances.
It could also be that your lawyer suggests that a settlement agreement be drawn up in the first place. Many employers would be open to this suggestion as ultimately it is much more costly to go down the employment tribunal route.
Looking for further guidance?
Read our article ‘How to Handle Redundancy’ which provides additional guidance on redundancy to ensure you are aware of your redundancy rights.
Sign up for the latest employment law updates by clicking here.
If you want advice on Settlement Agreements then contact our team today to book an appointment with an independent legal advisor to execute this agreement. Should you wish to negotiate a higher settlement package, this is something we can explore.
Call Fixed Fee Redundancy Legal Consultants in London, Reading, Slough, Watford, Maidenhead & Henley, KLG Law today on 0330 221 0684 or fill out our contact form.
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