Employee Redundancy Rights
When managing redundancy, employers must follow legal guidelines to ensure employees’ rights are protected. As a leading Payroll, HR, and time and attendance software company, we know how important it is to stay compliant within your business therefore we have put together a guide for employers and staff redundancy.
Employee rights in redundancy
Employees have a right to challenge redundancy if they feel the process has been unfair. If an employer does not follow the correct procedure, fails to consult with the employee, or discriminates, the employee may bring a claim for unfair dismissal.
Key rights include:
- The right to receive a written explanation for redundancy
- The right to appeal the redundancy decision
- The right to a redundancy consultation before dismissal Employers must ensure they follow all steps to reduce the risk of legal action.
Key Considerations for Employers
Redundancy Rate and Notice periods
The redundancy rate reflects the percentage of employees made redundant within a specific period, often yearly. It indicates economic trends and job market stability. Read more on our blog.
Employees are entitled to a statutory notice period before redundancy takes effect. The length of the notice period depends on the employee’s length of service; One week’s notice for each year of service, up to a maximum of 12 weeks.
For example:
- Employees with 1 to 2 years of service: Minimum of 1 week’s notice
- Employees with 10 years of service: 10 weeks’ notice
- Employees with 12+ years of service: 12 weeks’ notice (the statutory maximum)
Employers may offer longer notice periods, but the statutory minimum must always be provided. During this notice period, employees continue to receive their full salary and benefits, unless they are placed on garden leave, in which case they may be asked not to attend work but still receive pay.
Lay-offs and Short-Time Working
If an employer faces temporary downturns or reduced demand, they may choose to lay off employees or reduce their hours (short-time working). Employees laid off for four consecutive weeks, or for six weeks within a 13-week period, may have the right to claim redundancy. Employers should be clear about the duration of any lay-off or short-time working period and ensure that these options are used appropriately to avoid unnecessary redundancies.
Whistleblowing for Employees
Employees cannot be selected for redundancy as a form of retaliation for whistleblowing. If an employee reports misconduct or wrongdoing within the company, they are protected by law, and any redundancy selection related to whistleblowing can be challenged as unfair dismissal.
Disciplinary Procedures and Redundancy
If an employee is involved in a disciplinary process during the redundancy consultation, the two matters should be kept separate. Disciplinary procedures must be handled according to the company’s existing policies and should not influence redundancy decisions.
If the redundancy is viewed as a cover for dismissal due to misconduct, the employee could bring an unfair dismissal claim. Employers must ensure that disciplinary issues are dealt with fairly, without impacting the redundancy process.
Tax and National Insurance
If an employee is involved in a disciplinary process during the redundancy consultation, the two matters should be kept separate. Disciplinary procedures must be handled according to the company’s existing policies and should not influence redundancy decisions.
If the redundancy is viewed as a cover for dismissal due to misconduct, the employee could bring an unfair dismissal claim. Employers must ensure that disciplinary issues are dealt with fairly, without impacting the redundancy process.
Being Selected for Redundancy
Redundancy selection must be objective and fair, avoiding any form of discrimination. Employers can base selection on criteria such as:
- Skills and qualifications
- Performance and productivity
- Attendance records (excluding absences due to parental or sick leave)
- Conduct and disciplinary records
However, employers must not use factors like age, gender, race, disability, or pregnancy as criteria for redundancy, as this constitutes unlawful discrimination. A transparent selection process helps minimise disputes. Employees should be consulted before any final decisions, providing an opportunity to understand the process and suggest alternatives. Failure to follow fair procedures can result in claims for unfair dismissal, so clarity and communication are essential throughout the process.
Statutory Redundancy Pay
Employees with two or more years of continuous service are entitled to statutory redundancy pay. The amount is calculated based on:
- Age of the employee
- Length of service (years of continuous employment)
- Weekly earnings (subject to a weekly cap set by the government)
- The calculation is as follows:
- Half a week’s pay for each full year under the age of 22
- One week’s pay for each full year between ages 22 and 40
- One and a half weeks’ pay for each full year aged 41 or over
For example, an employee aged 45 with 10 years of service could receive one and a half weeks’ pay for the five years they were over 41, and one week’s pay for the remaining five years. UK redundancy pay is a legal entitlement governed by the Employment Rights Act 1996. Factors like continuous service, age, and weekly pay determine the final amount.
Employee Redundancy FAQs
Can a pregnant employee be made redundant?
Yes, but employers must ensure that the redundancy is not due to the employee’s pregnancy. Pregnant employees are protected from discrimination, and employers must offer any suitable alternative role available to avoid redundancy.
Can an employee ask for redundancy?
Yes, employees can express interest in redundancy, but the decision ultimately lies with the employer based on business needs. Employers are not obligated to offer redundancy unless it is part of the redundancy process.
Can an employee ask for redundancy?
Yes, employees can express interest in redundancy, but the decision ultimately lies with the employer based on business needs. Employers are not obligated to offer redundancy unless it is part of the redundancy process.
Can an employee ask for voluntary redundancy?
Yes, during a redundancy process, employees may request voluntary redundancy. Employers may consider this to reduce compulsory redundancies, but they are not required to accept all voluntary requests
Can an employee be made redundant while on sick leave?
Yes, an employee on sick leave can be made redundant if the redundancy is due to business reasons unrelated to their illness. Employers must ensure that the selection process is fair and not based on the employee’s absence due to sickness.
Can you rehire a redundant employee?
Yes, there are no legal restrictions on rehiring a redundant employee, but the redundancy must have been genuine. If business circumstances change, an employer can offer a new role to a previously redundant employee.
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