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If you’re facing redundancy, it can be a trying and difficult time. Here’s the Howells’ essential guide to the redundancy process:

What is redundancy?

Redundancy occurs when your employer dismisses you after deciding that your job is no longer necessary in the business.

There are a number of common reasons for getting made redundant, but it can include:

• New technology making your job unnecessary

• The role you were hired to perform no longer exists or the need for such a role has diminished

• Employers needing to cut costs

• Companies folding, moving to a new area or being bought by another business

Redundancy is very rarely to do with the employee’s ability to do the job. However, you’re entitled to know exactly why you’re being made redundant without any prejudice from your employer. They may include some disciplinary reasons such as poor attendance or bad work performance but your dismissal mustn’t be because of these motives alone.

In the event of your employer looking to make reductions from a number of staff, for example they are looking to reduce the number of admin staff they employ from 5 to 3, all admin staff should be pooled together and scored against objective criteria, e.g. attendance record, lateness record, disciplinary offences on record.

Many employers fail to deal with scoring fairly, therefore putting them at risk of making an individual redundant unfairly and having to deal with a potential claim.

What is voluntary redundancy?

Voluntary redundancy offers you all the same statutory notice period and rights as regular redundancy and it’s used for the same reasons. Where it differs is how it allows employers to ask groups of their employees whether they’d like to volunteer for redundancy.

Once some members of staff have indicated that they’d be willing to take voluntary redundancy, the employer will select which individuals to proceed with. Just because you volunteer for the process, it doesn’t mean you’ll definitely be selected. Your employer will have the final say and is fully entitled to keep you on.

In some cases of voluntary redundancy the employer will offer more than the statutory minimum payment in order to make the process more attractive.

Click here to see our guide on Voluntary Redundancy

Redundancy notice periods

If you’re being made redundant, an employer has to give you notice and agree a leaving date. This is known as a redundancy notice period.

The minimal length of the notice period varies by statute in accordance with how long you’ve been in your place of work:

• 1 month to 2 years – 1 week’s notice

• 2 years to 12 years – 1 week’s notice for every year employed

• More than 12 years – 12 weeks

It is recommended that you check your contract of employment as sometimes you may be entitled to more than the statutory notice.

It is possible to leave your place of work before your notice period is over. In this instance, you’ll receive any outstanding pay that’s due to be paid (including pension, healthcare and other contributions) over your notice period in a lump sum. This is known as a Payment in Lieu of Notice (PILON).

If your employer is paying you PILON, it is advised that you check whether your contract allows employers to make such a payment. If PILON is not provided for within the contract, the employee is entitled to receive other benefits, for example holiday entitlement, that they would have earned had the employee worked their full notice. It may also give you the right to claim that the notice period should be paid to you without any tax or National Insurance deductions.

Redundancy payments

Some people are entitled to redundancy pay, with a written statement that details the payment. It comes in two forms:

• Statutory redundancy pay – set down in law by the UK Government

• Contractual redundancy pay – set down in some individual contracts by employers. These are usually more lucrative than the statutory minimum.

Statutory redundancy payments

Only some people are entitled to statutory redundancy pay. To be eligible, you need to have worked for your employer for at least 2 years of continuous service. How much money you receive from your statutory redundancy depends on your age and how long you’ve been employed. You’re entitled to:

• 1.5 weeks’ pay for every year of employment after your 41st birthday

• 1 week’s pay for every year of employment after your 22nd birthday

• Half a week’s pay for every year of employmeny before your 22nd birthday

You’re also entitled to any holiday pay that you’ve accrued but not used. However, your statutory redundancy payment is capped. Your entitlement is based on a salary of £23,400 per annum and the maximum statutory redundancy pay that you can receive is £13,500.

If you would like help calculating your statutory entitlement, please call us.

Contractual redundancy payments

Your employer has the discretion to offer you enhanced redundancy pay. Many employers offer private payment schemes in your employment contract. To see whether you would be eligible for extra payment you should check your contract.

Is redundancy pay taxable?

Your redundancy pay is tax free up to £30,000. What’s more, you won’t be deducted any national insurance contributions.

If you stand to earn more than £30,000 from your redundancy it’s worth talking to an employment expert.

Claiming benefits after redundancy

If you’ve been made redundant, you’ll probably be able to claim benefits. These can include:

• Tax credits

• Housing benefit

• Council tax support

• Job Seeker’s Allowance (JSA)

You can make a claim for unemployment benefits after both redundancy and voluntary redundancy. All benefits depend on your personal circumstances after being made unemployed and so it’s worth making enquiries to check your eligibility.

Redundancy disputes

If you’re being made redundant, it’s a very stressful time. It’s very common for people undergoing redundancy to dispute certain aspects of the situation. Common disputes include:

• Unfair dismissal cases

• Payment disputes

• Tax issues

Every employer should have an appeals procedure in place for you to contest any aspect of the redundancy process or to explain why you’ve been selected for the wrong reasons.

Talk to Howells about Redundancy today

Howells Solicitors are dedicated to helping you through the difficult times in life. If you’ve been offered voluntary redundancy or are facing the redundancy process, our experienced team of employment specialists can help you with their expertise.

Find out how we can help you – book your no-obligation meeting today, call us on 0808 178 2773 or email

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