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Know your rights: Redundancy

To be made redundant, you have to be sacked as part of a reduction in the workforce. Being replaced with a cheaper worker is not redundancy and may be unfair dismissal. Bosses will sometimes redefine work as a “special project” to try to get round this. The law covers England, Scotland and Wales, with similar provisions in Northern Ireland. However, if you aren’t organised you may not be able to enforce your legal rights.

Redundancy is a “fair” reason for dismissal if the employer acts “reasonably”. A claim for unfair dismissal through redundancy can be taken to an Employment Tribunal within 3 months. You may have a company redundancy scheme which should be better than the statutory minimum, and which is part of your contract. Find this out, and make sure you get what you are entitled to. Otherwise, these are the statutory requirements.

One week’s redundancy notice has to be given for each full year employed, up to a maximum of 12 weeks. Redundancy pay is only payable after 2 years’ employment. You have a right to “timely and meaningful” consultation if more than 20 workers are affected. Failure to consult can result in a protective award at an ET.

Selection for redundancy must not be discriminatory – a number of things are automatically unfair, such as singling out union members or activists. (A full list can be found in the online version of this article.) The selection can also be unfair if there was no genuine redundancy, there was a lack of consultation, an unfair selection procedure or a failure to offer alternative employment.

Temporary workers are eligible for redundancy if been employed for 2 years or more. It is unlawful to put a clause in a fixed term contract waiving the right to a redundancy payment. You can be offered alternative work but can turn it down if the pay or status is lower. You have a right to time off during the redundancy notice period to look for work.

Statutory redundancy pay is one week’s pay per year of employment up to a maximum of 20 years, with a maximum week’s pay - £290 per week in 2006-7 (£5,800 in total). If the employer is insolvent, the redundancy pay (and any other pay owing) must be claimed from the Department for Business Enterprise and Regulatory Reform (BERR), and the statutory redundancy pay is subject to tax and national insurance deductions. Otherwise, redundancy pay under £30,000 is not taxable. There is a ready reckoner for the statutory scheme at: http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page33157.html

If different groups of workers have different terms and conditions (e.g. due to TUPE), some may get better redundancy pay. It’s worth checking this because it could potentially be unfair.

For more general information on your rights at work: www.stuffyourboss.com

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