What Are My Rights If I’m Made Redundant?
Key points
- Employees qualify for statutory redundancy pay after 2 years' service.
- Employers must consult early and meaningfully on redundancies.
- Selection criteria must be objective and non-discriminatory.
- Challenge unfair processes via ACAS and employment tribunal within 3 months.
- Always get written confirmation of payments and calculations.
- Consider alternatives like redeployment during consultation.
What Counts as Redundancy in UK Law?
Redundancy under UK law occurs when your employer closes the business, closes your workplace or no longer needs employees for your type of work.
The Employment Rights Act 1996 defines redundancy in section 139. It applies if the employer has ceased or intends to cease carrying on the business for which you were employed, or in the place where you worked, or the need for employees to do work of a particular kind has diminished or ceased.
For example, if a factory closes or a company relocates and stops needing sales staff at your site, that's genuine redundancy. But if they hire someone else for the same role soon after, it might not be genuine and could be unfair dismissal.
Voluntary resignation or performance issues are not redundancy; they fall under different dismissal rules.
Am I Eligible for Statutory Redundancy Pay?
You qualify for statutory redundancy pay after two years' continuous employment with the same employer.
Employees with at least two complete years of continuous service by your dismissal date are entitled to statutory redundancy pay. This is separate from notice pay or unfair dismissal claims.
Continuous service includes time with associated employers or during certain breaks like maternity leave. Self-employed individuals, workers or those under 2 years don't qualify for statutory pay but may negotiate severance pay.
Use GOV.UK calculator to confirm your exact qualifying period.
How Is Statutory Redundancy Pay Calculated?
Redundancy pay is based on age, length of service and weekly pay, capped at 20 years and £700 weekly (2024 rates).
Statutory redundancy pay uses a formula from the Employment Rights Act 1996: half a week's pay for each full year under 22, one week's pay aged 22-40, and one-and-a-half weeks aged 41+. Maximum 20 years' service, with weekly pay capped at £700 from April 2024.
For instance, a 45-year-old with 10 years' service earning £600/week gets 15 weeks' pay (1.5 x 10), so £9,000. Employers can offer more via enhanced severance pay schemes.
Your employer must provide a written statement showing the calculation.
Even high earners get pay based on the weekly cap, not actual salary.
What Consultation Must Your Employer Carry Out?
Employers must consult meaningfully with you individually before final redundancy decisions, and collectively if 20+ affected.
ACAS Code of Practice requires consultation to start as early as possible, discussing alternatives like redeployment. For individual redundancies, this means at least one meeting to explain reasons, consider alternatives and hear your views.
If 20-99 employees are at risk, minimum 30-day collective consultation with representatives; 100+ requires 45 days. Failure to consult properly can make dismissal unfair.
Real-world example: An employer announcing redundancies without meetings breaches consultation rules, opening them to protective awards.
Keep notes of all consultation meetings for potential tribunal claims.
How Should Employers Select for Redundancy?
Selection must use objective, measurable criteria applied fairly, without discrimination.
Employers should use a fair redundancy process with criteria like skills, qualifications, standard of work and attendance, scored objectively within a pool of similar roles. Subjective factors like 'attitude' need evidence.
Selection can't discriminate based on protected characteristics under the Equality Act 2010. Last-in-first-out (LIFO) is lawful if fair overall but risky if it disadvantages protected groups.
If you're selected unfairly, e.g., lowest score due to biased criteria, you can challenge as unfair dismissal.
Pools too narrow (just you) often indicate unfairness.
Notice Periods and Other Payments in Redundancy
You're entitled to statutory minimum notice (1 week per year up to 12) or pay in lieu, plus any holiday pay owed.
Statutory notice is one week for each complete year of service up to 12 weeks maximum. Contractual notice may be longer. In redundancy, you get notice pay based on normal wages if not worked.
You also get accrued but untaken holiday pay and any other contractual payments. Garden leave during notice is common.
Employers must issue a formal redundancy notice stating effective date.
Check your contract; PILON allows immediate payment instead of working notice.
What If the Redundancy Process Is Unfair?
Challenge via ACAS early conciliation then employment tribunal within 3 months minus one day for unfair dismissal.
If no genuine redundancy, poor consultation, unfair selection or procedural flaws, claim unfair dismissal. Basic award mirrors redundancy pay; compensatory award up to £115,115 (2024).
Time limit: 3 months less one day from dismissal; early conciliation pauses it. Tribunals expect employers followed ACAS Code.
Success examples include awards for failure to consult or discriminatory selection.
Free early conciliation often resolves issues without tribunal.
For more on Discover what an employment tribunal is, the process including ACAS conciliation, hearings and remedies in employment law England. Learn step-by-step how tribunals work for unfair dismissal and more., see here.
For more on Learn how to make an employment tribunal claim in the UK, including ACAS early conciliation, completing the ET1 form, and time limits. Step-by-step guidance for unfair dismissal, discrimination, and more., see here.
For more on Understand employment tribunal claim deadlines, including the standard three months from EDT, ACAS early conciliation effects, and reasons for late claims. Don't miss your time limits tribunal window., see here.
Frequently asked questions
What is the difference between statutory redundancy pay and severance pay?
Statutory redundancy pay is the legal minimum calculated by formula after 2 years' service; severance pay is any additional amount offered by the employer, often tax-free up to £30,000. Severance can be enhanced based on company policy but statutory is mandatory.
How long must an employer consult before redundancy UK?
For individuals, as early as possible with meaningful discussions; collectively, 30 days for 20-99 employees, 45 days for 100+. Failure leads to unfair dismissal risks.
Can redundancy be challenged as unfair dismissal?
Yes, if no genuine redundancy, inadequate consultation, unfair selection or discrimination. Claims go to employment tribunal with time limit of 3 months minus one day.
What is a fair redundancy selection process?
Objective criteria like skills and performance, applied consistently in a fair pool. Must avoid discrimination and allow employee input.
Am I entitled to notice pay in redundancy?
Yes, statutory minimum (up to 12 weeks) or contractual, paid in lieu if not worked. Plus holiday pay.
Facing Redundancy? Take Action Now
Contact ACAS for free advice or start early conciliation. If needed, prepare for tribunal with our guides.
This is not legal advice, this post is for information purposes only, legal advice should be from legal professionals only.
