Employment Law Solicitors: Redundancy   A redundant employee may claim statutory redundancy pay. Some may have a greater contractual entitlement. Those incorrectly made redundant may have a potential dismissal and/or discrimination claim. Individuals in this position should be careful as there are different time limits for such claims. Whereas a tribunal claim for redundancy pay must be made within 6 months, a claim for dismissal or discrimination must be made within 3 months.

Definition of Redundancy
There are three main redundancy situations:-

• Closure of the entire business

   

• Closure of the branch where the employee works. Should the employee be offered suitable alternative employment at a different location, such an offer needs to be considered seriously as unreasonable refusal of such an offer could lose them their redundancy pay. Furthermore, should the employee have a mobility clause in their contract (e.g. requiring them to relocate to premises within a reasonable travelling distance of their home) and they reject such an offer, they could potentially be dismissed for gross misconduct instead of redundancy.

   

• Workforce reduction = genuine redundancy. However, where a job has been altered or modernised (e.g. by technology), then the redundancy may not necessarily be genuine. The test is whether the job once upgraded now requires different skills, aptitude, or knowledge. It most certainly is not a genuine redundancy if the employer simply employs a direct replacement for the employee with immediate effect.

Entitlement to Redundancy Pay
Employees made redundant may claim a statutory lump sum redundancy payment. Some have a greater entitlement under their contract. At the very least, they are entitled to the statutory redundancy payment in the following circumstances:-

• Made redundant

   

• Have 2 years continuous service since the age of 18

   

• Worked as an employee.

   

• No suitable alternative employment. Those who unreasonable refuse an offer of suitable alternative employment will lose their statutory redundancy pay. For an offer of alternative employment to be valid, it must be made before the old job ends and must either begin forthwith or within four weeks of the old job ending. Employees have the option of accepting the alternative employment on a trial period of up to 4 weeks where the position differs significantly from the old one. Should the employee decide to leave during the trial period, then they can still claim their redundancy pay. Unfortunately, there is very little guidance on what constitutes ‘suitable alternative employment’ and ‘unreasonable refusal’ of it, although the burden of proof is on the employer to prove both. The criteria relating to ‘suitability’ include pay, location, status, hours, etc and those relating to ‘reasonable refusal’ depend on individual circumstances (e.g. domestic circumstances).

   

• Special rules re lay-off and short-time: Those in a contract which provides for temporary lay off without pay or to be placed on short-time causing a reduction in pay are entitled to claim redundancy pay if laid off or placed on short time for 4 consecutive weeks or for 6 weeks within a 13 week period.

The Statutory Redundancy Payment: How Much?
The amount of statutory redundancy pay an employee is entitled to is the number of weeks which can be taken into account multiplied by the lower of either their average weekly wage or £380.00. The number of weeks which can be taken into consideration depends on how long the employee has been continuously employed by their employer and how their years of continuous service relate to certain age bands. For each complete year of continuous service between the ages of 18 and 21, they will receive half a week's pay. For each complete year of continuous service between the ages of 22 and 40, they will receive one week's pay. For each complete year of continuous service between the ages of 41 and 65, they will receive 1½ weeks' pay. The maximum number of years which can be taken into account is 20. Accordingly, the maximum statutory redundancy payment is £11,400.00 (i.e. 20 x £380 x 1.5)

Unfair Redundancy Dismissal
Redundancy dismissals in certain circumstances can be automatically unfair. (See section on automatically unfair dismissals on the unfair dismissal page). Alternatively, they may be unfair for one or more of the following reasons:-

• Redundancy not genuine: e.g. direct replacement recruited immediately after making the employee redundant

   

• No consultation: Where the employee has not been properly consulted over the redundancy, then the redundancy dismissal is likely to be unfair. Proper consultation includes notifying the employee in advance that their position is at risk of redundancy, holding a meeting to discuss the potential redundancy, looking at ways of avoiding the redundancy such as suitable alternative employment, explaining the selection criteria and procedure, providing a right and opportunity to appeal should the redundancy proceed, etc. In a collective redundancy situation involving 20 or more employees, the employer must follow a fair procedure and must adhere to special rules requiring collective consultation with trade union or employee representatives. Failure to comply with the latter entitles each affected employee to a ‘protective award’ of up to 90 days pay and is one factor in assessing the reasonableness of the dismissals. Furthermore, even in a collective redundancy situation where consultation has taken place with a union or employee representatives, individual consultation is important as individual employees usually like to make representations on their own behalf.

   

• Unfair selection: Discriminatory selection, if it occurs at all, usually occurs at this stage (e.g. highlighted when comparing the composition of the redundant group to the retained one). The criteria for selection should ideally be agreed with any union and/or employee representatives and multiple selection criteria are usually adopted which often includes time-keeping, employee adaptability, length of service, productivity, future requirements, etc.

   

• Failure to offer suitable alternative employment: Employers are under an obligation to determine whether there is any suitable alternative employment within the company available to employees being considered for redundancy. Full details should be provided by the employer to the employee of any alternative positions they offer and the employee should be allowed a trial period where the position differs significantly from the old job. Should the employee unreasonably refuse an offer of suitable alternative employment, they will lose their statutory redundancy pay and their chances of winning an unfair dismissal case or receiving full compensation if they do win will be significantly reduced.

Taking a Claim to Tribunal
A tribunal claim for redundancy pay must be made within 6 months, whereas a claim for dismissal or discrimination must be made within 3 months.

 

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