What are you entitled to if you’re made redundant?

Statutory redundancy pay is normally given if you’ve been employed for two years or more. This is age-based so you could get:

•     Aged under 22: half a week’s pay for each full year you worked
•     Aged between 22 and 40: one week’s pay for each full year you worked
•     Aged 41 and over: one and a half week’s pay for each full year you worked.

Statutory redundancy is capped at 20 years and a maximum of £538 a week. The first £30,000 of redundancy pay, including pay for notice, is tax-free. You can calculate what you might be entitled to on the Government website. 

If your employer has a more generous redundancy policy than the statutory procedure – known as ‘contractual redundancy’ – you could perhaps get more. Check your employment contract as this information will be there. 

There’s been some reports in the news that those on furlough might only be paid their smaller, furloughed wage. But the Government passed a new law at the end of July 2020 stating that if you have been made redundant while on furlough, your redundancy will be based on your full salary, not your furloughed wage.

The statutory notice periods are:    

• Employed from one month to two years: one week’s notice
•  Employed between two to 12 years: one week’s notice for each year
• Employed more than 12 years: 12 weeks’ notice.

Your employer may give you longer notice periods. You should be paid through the notice period too. If your contract says you can be paid ‘in lieu of notice’ that means they can let you go before your notice ends, but you are still paid for the full notice period.

You may hear about being put on ‘gardening leave’ for a set time. This means you are not actually working for your employer, but you are legally still employed, which means you can’t start a new job during this period. In theory, you might be recalled and you have to stick to your work contract rules.  

You are entitled to a consultation to discuss the situation with your employer.

If 20 or more people are being made redundant at the same time and the company is still trading, it has to enter into ‘collective consultation’. This will be between the employer and a nominated representative – a union rep if you are represented by a trade union, or an employee-elected rep if you are not. 

Collective consultation must cover potential ways to avoid redundancy, the reason for redundancy, how to keep dismissals to a minimum and how to minimise the impact on those affected. There’s also a minimum length of time:

• Between 20 and 99 redundancies – consultation starts at least 30 days before any dismissals
• 100 or more redundancies – consultation starts at least 45 days before any dismissals.

Your employer may offer you what is considered a suitable alternative role. In fact, if there is one available and it is not offered to you, this could be a case for unfair dismissal. 

You can choose to turn down the role, but be aware that if you do and it was a genuinely suitable alternative, you may lose your right to statutory or contractual redundancy pay. You also have the right to a four-week trial period in the new role – and if you give notice within that time your redundancy rights are reinstated.

If your role is placed at risk of redundancy you may be asked by your employer to sign a compromise or settlement agreement. 

This will often mean more money in your pocket, and a lot of people do take this option if it’s offered, but if you sign it, you will lose:

• Your right to appeal the termination of employment in, for example, an employment tribunal
• Your right to be selected for suitable alternative roles that may appear at the company within six months of termination.

If you are offered a compromise agreement your employer must pay for independent legal advice so you can be advised exactly on where you stand should you accept. 

If you’ve been employed by your company for two years by the time your notice period ends, you will be entitled to take a reasonable amount of time out of work to look for a new job. 

Your employer has to pay you up to 40% of a week’s pay to cover this – so, for example, you could  take two days off in a five-day working week to attend interviews and be paid for it.

Fed up with the whole process? You can take holiday during your notice period – if your employer says it’s okay. But they must pay you for any untaken holiday.

Many businesses will be looking nervously at the amount of holiday accrued over lockdown, so it’s possible you may be asked to take holiday during this period. They can make you do this, but they have to give you two days notice for every day of holiday they want you to take. So if you have seven days of holiday they need to give you 14 days notice in advance of when they want you to take the holiday. 

Your redundancy pay should still be based on your normal salary if you’re on maternity or sick leave, even if you’re earning less than your usual wage. Your HR team or the business itself should ensure that you are fully involved in any consultation and decisions made about your job too.

Remember that you have statutory employment rights as well as your contractual rights with many employers too. Covid-19 and furloughing has left many people feeling in limbo with their jobs and prospects, but the law has not changed. 

That’s not to say that every business will stick to the letter of the law (they’d be foolish not to though). If you feel your rights are being ignored, make a formal complaint. Speak to ACAS before calling in the solicitors as their advice is free.