What is redundancy?
A redundancy situation is where there is: a closure of a particular site/office, a closure of the whole business or where there is a reduced need for workers to do a particular kind of work.
If you are being made redundant, you are entitled to notice of termination of employment but what other rights do you have?
If you have two years’ continuous employment
If you have two years’ continuous service or more with your employer, you will be entitled to a statutory redundancy payment and also have unfair dismissal rights. In this instance, your employer needs to show that there is a genuine redundancy situation (ie it is not a ruse to “move you on”) and it has followed a correct consultation/dismissal procedure. If this is not the case, you are likely to have an unfair dismissal claim.
If the redundancy situation is caused by a reduced need for employees to do work of a particular kind, there can often be issues of fairness about who gets to keep their job and who is made redundant. Whether a redundancy, in these circumstances is also an unfair dismissal, usually involves considerations about the:
- pool of employees from which redundancies will be made
- selection criteria for redundancies
- consultation which has been carried out about the pool and selection criteria
- consultation, on an individual basis, with the employees selected for redundancy, including considering alternative employment (subject to a trial period).
If you have less than two years continuous employment
If you are being made redundant and have less than two years’ service, you will not usually be eligible to bring a claim for unfair dismissal on the grounds of redundancy or be entitled to a redundancy payment.
However, in certain instances, you don’t need two years’ continuous employment to be eligible to bring a claim for unfair dismissal. This would be the case if you are made redundant due to one of the automatically unfair reasons e.g. you had asserted a statutory right.
Where there are 20 or more employees being made redundant at one establishment over a period of 90 days or less, there are specific duties about information and consultation, including minimum consultation periods. If an employer fails to carry out the required information and consultation, an award of compensation, known as a Protective Award can be made to you by an Employment Tribunal.
In some instances, the selection for redundancy is motivated by a discriminatory reason (e.g. sex, race, disability, age, sexual orientation, religion or belief, gender reassignment, marriage or civil partnership, pregnancy or maternity). You can bring a claim for discrimination without any period of continuous employment.
Some employers will offer Settlement Agreements before or during a redundancy process. A Settlement Agreement is an agreement between an employer and an employee in which the employee agrees not to pursue any employment claims in return for a financial package.
If you are offered a Settlement Agreement in a redundancy situation, your employer will usually pay you the monies which you would have received anyway e.g. redundancy payment and notice. Your employer may also make an additional (ex-gratia) payment in order for you to give up other potential claims, such as unfair dismissal.
Settlement Agreements are legal binding agreements upon which you must receive independent legal advice. The Agreement usually includes a variety of clauses, such as the settlement of claims, confidentiality of the Agreement, an agreement that neither side makes derogatory comments about the other and the provision of an agreed reference for you.
You would be required to take independent legal advice about the terms of the Settlement Agreement and it is usual for your employer to pay a contribution towards those legal costs.
If you are offered a Settlement Agreement, we will check whether you are being offered a good deal, taking into account your contractual entitlements and your potential claims. We can help you achieve an improved financial package in certain circumstances.
If you would like to discuss a redundancy situation or you have been offered a Settlement Agreement, please contact our Employment Solicitor, Julia Woodhouse on 024 7653 1532 or email Julia.Woodhouse@bttj.com.
Our solicitors work across the whole of the Coventry and Warwickshire region including Rugby, Nuneaton, Bedworth, Leamington Spa, Kenilworth, Warwick, Atherstone and Balsall Common as well as further afield.
The above is not intended to provide advice.