The Basic Facts about Redundancy

Posted By Lisa Hoare

Redundancy is a pretty hot topic at the moment and it is keeping the ergo employment team busy. So we thought we would share some tips.

Here are the top ten basic points to consider if your business is considering the need for making redundancies or if you have been notified that your job is ‘at risk' of redundancy.

Eligibility
1. An employee needs a minimum of two years continuous employment to be entitled to statutory redundancy pay.
2. Remember that redundancy is about the work requirements of the employer and not about capability or the performance of any individual employee(s).
3. An employee being dismissed by reason of redundancy is entitled to notice.

Relationship to Unfair Dismissal
4. Remember that a redundancy is a dismissal and The same minimum statutory dismissal procedures must be observed when a dismissal is by reason of redundancy as when dismissal is for any other reason.
5. In general statutory redundancy pay is calculated in the same way as the basic award component of unfair dismissal compensation. Redundancy pay is set off against unfair dismissal basic award if the dismissal is subsequently found to have been unfair (so as a general rule they cancel each other out).
6. The fact that an employee is dismissed by reason of redundancy does not prevent him or her bringing a tribunal claim for unfair dismissal.

Money matters

7. Maximum amount of a week's pay which can be taken into account in calculating statutory redundancy pay is (currently) £330.
8. Maximum statutory redundancy pay for an individual is (currently) £9,900, achievable only by an employee aged over 61 with 20 years continuous service. Maximum unfair dismissal compensation is generally £72,900 (in some cases there is no statutory limit).
9. If 20 or more employees are to be dismissed within a 90 day period and employment tribunals can award very substantial "protective awards" if these special consultation rules are not followed.
Age Discrimination
10. Since October 2006 age limits for entitlement to redundancy pay have been removed, however the age-related parts of the formula for calculating statutory redundancy pay have not been removed.

If you are a business seeking to make redundancies, always seek expert advice (we would say that!) and similarly if you are an employee and need some questions answered give the ergo employment team a call on 0845 300 6441.