Even if it’s not entirely unexpected, being selected for redundancy can provoke a strong emotional response. Perhaps the decision feels unfair – or even personal. Or, conversely, perhaps it feels like an unexpected bonus.
In some circumstances, you might question whether you have been selected for a discriminatory reason (for example, if you’ve recently been on maternity leave or have been absent from work due to sickness). It’s important to note at this juncture that the term “redundancy” refers to very specific circumstances: your employer must either be ceasing business in the place where you are employed or – more often – have a reduced need for the type of work you carry out. It doesn’t apply to termination of employment for other reasons, such as performance or misconduct. If you suspect a proposed redundancy is not genuine, you should seek legal advice without delay.
Assuming that you find yourself facing a redundancy, there are a few important questions to ask.
What Do I Want?
Whatever your reaction to the news, emotions are likely to be running high – so it’s good to take a couple of days to reflect before making decisions. When you’ve had time to catch your breath, ask yourself: do I want to leave, or do I want to stay? If I do want to stay, is that a realistic aim? Being put at risk for redundancy doesn’t necessarily signify a foregone conclusion, though being selected can be damaging for morale/motivation, so it could be that you feel it’s time to move on.
Bear in mind that if you are at risk for redundancy, you may be offered an enhanced package if you’re willing to go quickly and with minimal fuss; should you decide that leaving would be a good outcome for you, swift acceptance of the situation may yield additional benefits.
What Should I Do?
In the early stages you might not be sure what the ideal outcome looks like for you; at such times, it can be hard to know what to do next. Here are some practical steps you can follow to ensure that the proper process is being adhered to, and to gather the information required to make your decision.
Before your redundancy consultation meetings:
- If you do not have them, ask for a copy of your employment contract and any relevant policies.
- Ask if there is a contractual or established or written redundancy policy/practice (this might be detailed in a staff handbook).
- Try to understand the stated reason for the proposed redundancy. What does your employer say is the basis for potentially making you redundant?
- You should be invited to bring a colleague or Trade Union official with you.
- Be prepared to take detailed notes – and consider how best to do this. After an emotional conversation it’s often difficult to remember the exact details; however, taking notes during a tense encounter can also be tricky. You should not record such meetings without your employer’s consent, but your companion may be able to take notes, or you may choose to rely on your employer’s notekeeper to circulate a summary of the discussion to all parties afterwards.
During the consultation process:
- You should expect at least two meetings to discuss your employer’s proposals and, if appropriate, to confirm the redundancy. The first meeting is a key opportunity to challenge the proposed redundancy, if you wish to do so.
- After an initial explanation has been given about the redundancy, ask lots of questions (even if you have less than two years’ service). Questions might include:
- Why is there considered to be a reduced need for the type of work I do? Is my work going elsewhere? If so, who is going to do it? Why has it been proposed that this role/person will do my work rather than me?
- What alternatives to compulsory redundancy have been considered (for example, a recruitment freeze; ceasing to outsource certain types of work; voluntary redundancies)? If you have proposals of your own, put them forward.
- Are others at risk of redundancy in my location? If so, how many and when? This information will be useful when working out if it should be a collective consultation.
- If there is simply a reduced need for the work I do, why and how have I been placed at risk? Try to understand the “pool” of people considered for redundancy, the selection criteria used and the basis on which you have been scored. Provide feedback if any of these do not seem fair.
- Are there alternative roles for which I could apply?
If you note any inaccuracies or inconsistencies in the answers you are given, be prepared to challenge these. In addition, be prepared to say if you would like a follow-up meeting to discuss further questions. It is common to feel overwhelmed by all the information that is given at these early meetings, and you may wish to gather your thoughts and return to the topic at another time. Finally, ask for key information to be set out in writing. If the redundancy is confirmed, there should be a further meeting to discuss this.
When considering your position and any offer made by your employer:
- Keep your eye on internal and external vacancies for suitable alternative roles and to make sure your responsibilities are not being advertised (sometimes with a different job title).
- When looking at the proposed package, ask if this has been applied to other redundancies, and if there is a practice of paying more than statutory redundancy.
- Ask if the employer could provide outplacement support and/or extend any benefits (such as medical insurance) beyond your termination date and to the date of renewal.
- Ask if you can be released from any restrictive covenants post-termination to help you find another job.
- Confirm whether you have insurance that will help with income after you have been made redundant, and/or if you have cover for any legal fees.
- Consider whether being on garden leave – so technically remaining employed – might be better than being paid out in lieu of notice for the purposes of getting a new job (this will increase your length of service, and some people believe that it is easier to find a job when you are still employed).
- Remember you should have the right to appeal any decision to make you redundant. In addition, you might choose to raise a grievance and/or make a Data Subject Access Request for information identifying you in relation to your selection for redundancy.
- Take legal advice.
What Am I Entitled To?
There are two types of redundancy pay: statutory and contractual.
If your employer follows a fair process and there is a genuine redundancy situation, you’ll probably be entitled to statutory redundancy pay (provided you’ve been working there for at least two years).
Statutory redundancy pay is calculated as follows:
- Half a week’s pay for each full year you were under 22.
- One week’s pay for each full year you were 22 or older (but under 41).
- One and half week’s pay for each full year you were 41 or older.
- Length of service is capped at 20 years.
However, “a week’s pay” is capped (at £525 as of April 2019). You can calculate your statutory redundancy entitlement on the GOV.UK website.
On top of that, you will also have rights under your employment contract. You’re entitled either to work your notice or be paid in lieu of notice, for example. It may be that your employer would agree to – or insist upon – you not working your notice. In this case, you would either have your employment terminated with immediate effect and be paid in lieu of notice (often this entitles you to basic pay only) or be put on garden leave, which would see you remaining employed but not attending work, and receiving your salary and benefits in the usual way. These are points on which you could negotiate to ensure you get the deal that is best for you.
In addition, if you have long-term incentives such as deferred bonus or options, these may be subject to ‘good leaver’ provisions. What this entails depends on the wording in the individual contract, but often employees who are made redundant (as opposed to resigning or being dismissed for performance or conduct reasons) are able to retain anything that has vested by the date on which they leave.
In many cases there will be room for negotiation. The redundancy process can be time-consuming, distracting, and damaging to staff morale: as such, it’s often in the employer’s interest to bring it to a close as swiftly as possible. With this in mind, many employers will be willing to discuss the redundancy offer – and, in fact, many large companies offer enhanced redundancy packages as a matter of course if the employee is willing to go quickly. As part of this process, you would enter into a settlement agreement and waive your right to bring any claim against your former employer.
While there isn’t a legal formula for calculating enhanced redundancy, in practice it tends to be related to length of service: often, an employer will pay a number of weeks’ full salary for each year of service. However, it’s worth considering how the package relates to what you might receive if you were to bring a claim against your employer. Compensation for unfair dismissal is capped at £86,444 (as of April 2019) or 52 weeks’ gross salary (whichever is lower). There is no cap in discrimination or whistleblowing cases.
Aside from the financial particulars, it is commonplace for some (or all) of the following to be included in a settlement agreement:
- A small contribution to legal fees (as your agreement to waive statutory rights will only be binding if you have been advised). This is usually a small sum – about £500 + VAT.
- An agreed reference (and sometimes an internal announcement about your departure).
- Outplacement counselling.
- Waiver of restrictive covenants, although this will depend on individual circumstances.
Remember: You Always Have Options
No matter how bleak the scenario seems, redundancy is not a ‘one size fits all’ process. In fact, there are often a number of options available for employees facing redundancy.
With this in mind – whatever outcome you wish to achieve – it’s recommended that you seek legal advice without delay. A solicitor can check the particulars of your redundancy to ensure your employer is following a fair, correct process, as well as making sure that you receive all the benefits and compensation you are entitled to.
If you are at risk of redundancy and require advice, Bellevue Law’s expert employment lawyers are here to help. Please contact us today to organise a no-obligation discussion with our experienced team.
Disclaimer: this material is a general overview only, and is not intended to provide legal advice.