Redundancy relates to the reduction in the size of a company workforce, the closure of a company workplace, or the closure of the whole business. If any of these are the case, the employer has certain responsibilities to his or her staff which include: letting the staff know as soon as possible, considering alternatives to redundancy put forward by staff member representatives or unions and entering into consultation with representatives and unions if 20 or more people are to be made redundant.
When going through the selection procedure, the employer is also obliged to explain why the demand for certain workers has decreased or stopped and why only certain employees with the same job description were selected for redundancy (if this is the case). The employer is also obliged to attempt to reach an agreement over selection criteria (such as 'last in, first out' or a points system) with employees as the process for choosing redundancies. The employer must consult each affected employee before notice of their dismissal is formally given out. This is to ensure a forum is created for real consultation and to give the employee time to respond.
The employer must explain why an employee may be selected for redundancy and be given a couple of days to respond. Both parties must try to come up with other work the employee could do, or other possibilities for him/her to say in their present job. Any opinions expressed by the employee must then be given careful consideration. When the final selection is made a second interview should be made with those affected. At this point, formal dismissals are handed out.
Redundancy pay
To qualify for statutory redundancy pay, employees must be under 65 years old and have been at the company for at least two years. The amount paid is based on the length of time worked, age and weekly pay. Generally the amount works out as being between a half and one and a half week’s pay for every year of service (up to a maximum of 20 years). Those who have been given notice of redundancy are also entitled to paid leave from their present job to look for a new one, again, provided they have worked for two years. The amount of time off permitted is defined as ‘reasonable’.
The calculation for your statutory redundancy pay is based on:
how long you have been continuously employed
your age
your weekly pay, up to £380
You will get:
0.5 week’s pay for each full year of service where your age was under 22
1 week’s pay for each full year of service where your age was 22 or above, but under 41
1.5 week’s pay for each full year of service where your age was 41 or above
Certain professions, usually government related (such as civil servants, the police service) do not qualify for statutory pay – their contractual arrangements are often much better. Others might be disqualified if they turn down a suitable alternative position within the company, or leave before the decided end of employment date.
Many redundant employees are not obliged to rely on statutory pay however. Workers are often entitled to much larger pay outs thanks to pre-existing contractual agreements made with their employers. If any agreement made is less than the statutory entitlement, however, the employee will receive the latter.