Search

Redundancy

 

The law requires employers to consult with employees who are at risk of redundancy. Consultation must begin at least:

  • Thirty days before the first of the dismissals takes effect (that is, when the employment contract is terminated) in a case where between 20 and 99 redundancy dismissals are proposed at one establishment within a period of ninety days or less;
  • Ninety days before the first of the dismissals takes effect (that is, when the employment contract is terminated) in a case where 100 or more redundancy dismissals are proposed at one establishment within a period of ninety days or less.
  • The law does not provide definitive time scales for consultation when less than 20 employees are to be made redundant, but employers are still required to carry out reasonable consultation in these circumstances.

    All employees given notice of dismissal because of redundancy are entitled to reasonable time off with pay to look for another job or to make arrangements for training for future employment, providing they have been continuously employed by their employer for at least two years. The law does not specify the amount of time off which would be regarded as reasonable. The obliged statutory payment is limited in law, to a maximum of two-fifths of a week’s pay calculated on the appropriate hourly rate.

    Redundancy Payments

    Employers must make a lump-sum ‘redundancy payment’ to employees who are dismissed because of redundancy and who qualify for a payment.

    Generally, the employee must have at least two years’ service with the employer and have been made redundant to qualify for a payment. Statutory redundancy pay is not taxable.

    Statutory Redundancy Pay

    The total amount an employee should be paid for redundancy will be based on:

    • how long they have been continuously employed;

    • their age; and

    • their weekly pay, up to a legal limit (currently set at £350).

    They can expect:

    • half a week’s pay for each complete year of continuous service where age is less than 22;

    • a full week’s pay for each complete year of continuous service where age is 22 or above, but less than 41; and

    • a week and a half’s pay for each complete year of continuous service where age is 41+.

    The employer must provide a written statement showing how the payment has been calculated. Employees may also qualify for a redundancy payment if they are laid off, put on short time or are on a fixed-term contract.

    Employees may not qualify for a payment if, without good reason, they refuse an alternative suitable job with their employer. If employees disagree with their employer about whether they are redundant or the amount they may be due, they can apply to an Industrial Tribunal.

    If employees have been continuously employed for two years by the date their notice expires they are allowed a reasonable amount of time off during their notice period to look for another job or arrange training. How long they can take will depend on their circumstances.

    Click here to go back to the menu.


    change text size

    Sub Pages