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Redundancy

Unfortunately, redundancy can effect all trades and professions.

It seems that no organisation is exempt from having to make the difficult decision of declaring redundancies. Everyone involved in the process knows only too well just what an emotional and anxious time it can be.

What is Redundancy?

It is important to realise that it is the job that becomes redundant and not the employee.

A lot of unfair stigma is attached to the label of redundancy. Being selected for and subsequently being made redundant has no reflection upon an employee’s ability or skills.

Redundancy is a form of dismissal from a job and various reasons can include:
1. The introduction of new technology or a new process which has made your job unnecessary.
2. The job you were engaged to do no longer exists due to varying reasons.
3. The need for an employer to cut costs dictates that the workforce needs to be reduced.
4. The workplace is closing down or moving location.

Once a decision has been made to declare redundancies an employer must treat its employees fairly and there are certain steps they must follow.

If you have been declared “at risk” or if you have received notice of redundancy you should first check upon whether your employer has an agreed Redundancy Policy in place. This may be either contained within your contract or terms and conditions of employment or in a separate document which you are entitled to view. There is no automatic right of “last in first out”.

Procedure

In a redundancy situation the employer should determine the areas or “pool” of employees who are likely to be affected. Once this has been determined you should be consulted at the earliest possible stage about the risk of redundancy and the consultation must be a three stage process.

You should be selected fairly and this may be based upon various criteria or points system which the employer may use.

Throughout the whole process the employer will be under a duty to continually review the situation and to consider any alternatives to redundancy including suitable alternative employment.

Consultation

There are two ways in which this can occur i.e:
• Collectively (consulting the whole group that is being considered for redundancy).
• Individually (speaking to each person directly).
In the latter case you can request to have a work colleague or union representative present.

If you work in a union recognised establishment the employer should first consult with the elected representative or full time official before anyone is given notice.

It should be remembered that consultation is a two-way process and should cover ways to avoid a redundancy situation and/or how to keep the number of dismissals to a minimum. In appropriate cases you may be able to suggest job sharing or the introduction of flexible working

If consultation does not happen your dismissal will be considered automatically unfair and an employment tribunal can award you compensation which can be increased by up to 50% depending upon the seriousness of the employer’s breach of procedure.

Alternative Employment

Whether an alternative job offered to you is suitable depends on the pay (including benefits), status, hours and location. It also depends upon the terms of the job being offered i.e. full time etc. The offer should be made before your old job ends by redundancy and you should be given enough information about what it involves to enable you to make an informed decision.

You have the right to a four week trial period in an alternative job and, if you need training for it, this period can be extended by agreement. If you decide that the new job is not suitable you can give notice during the trial period without affecting your right to a statutory redundancy payment. If you haven’t given notice by the end of the trial period your right to statutory redundancy pay ends.

You should therefore be careful to consider any offer made and not unreasonably refuse it out of hand. If there is a dispute as to whether a job is considered suitable or not and whether your refusal is unreasonable an employment tribunal can decide the issues and you may lose your right to redundancy pay.

Time Off

If you have been continuously employed for two years by the date your notice of redundancy is to expire you are allowed a reasonable amount of time off during the notice period to look for another job or to arrange training.

If you find a new job whilst under notice of redundancy and the new firm want you to start before your redundancy notice has expired you should try to negotiate with your current employer for early release without losing your redundancy pay. Employers are often happy to make some arrangements but if they say that they can’t let you go early you can give what is called a written “counter notice” stating when you would like to finish. Your employer must write back to you and say whether or not you can leave early.

If you leave early without your employer’s permission you run the risk of losing some or all of your redundancy pay.

Notice and Notice Pay

In addition to a redundancy payment you are also entitled to notice and notice pay. The amount of notice you are entitled to is normally set out in your contract of employment if it isn’t then there are Statutory notice periods which you are entitled to. An employee is entitled to a statutory minimum period of notice based upon length of service:

1 week for continuous employment between 1 month and 2 years.

1 week for each complete year (up to a maximum of 12) if you have been continuously employed for 2 or more years. For example if you have been with an employer for 3½ years service you will be entitled to 3 weeks’ notice.

Redundancy Pay (Compensation)

In a redundancy situation you have the right to receive a redundancy payment if you are an employee who has worked continuously for your employer for at least 2 unbroken years. Statutory redundancy pay isn’t taxable.

You should check your contract of employment to see if there is a clause dealing with the amount of pay you are entitled to in a redundancy situation. This may be greater than the bare statutory rate. If the contract is “silent” on this point then the bare statutory amount applies.

Statutory redundancy pay is based on:
• Your length of continuous employment.
• Your age.
• Your weekly pay up to a certain limit (the current maximum is £330 per week).

You will get:
• Half a week’s pay for each complete year of continuous service below the age of 22.
• A full week’s pay for each complete year of continuous service between 22 and 40.
• 1½ week’s pay for each complete year of continuous service above the age of 41.

If you have been informed that you are at risk of redundancy or if you are currently serving a notice period you are entitled to receive an itemised pay statement from your employer showing the amount of redundancy entitlement due to you.

If you feel that there is not genuine redundancy situation existing at your workplace or feel that you have been unfairly selected you should initially raise this as a grievance with your employer under the Statutory Grievance Procedure. If this is not resolved to your satisfaction you have a right to make an application to the employment tribunal seeking compensation for unfair dismissal. There are time limits which are strictly adhered to in respect of applications to employment tribunals.

In respect of all matters concerning redundancy and redundancy entitlement a claim must be made to an employment tribunal on a prescribed form within six months of the termination date otherwise you will lose the right to a payment.

The time limit in respect of unfair dismissals is 3 months from the date of termination. These time limits are strictly observed.

Where a redundancy situation is accepted and there is agreement over the severance terms it is always advisable for both employer and employee to have those terms set out in a document called a Compromise Agreement. This protects both the employer and the employee from any later argument.

It is always useful to have an agreed reference incorporated into the Agreement which the Employer will agree to send out to any future potential Employer.

It is normal for an employer to contribute towards the cost of the employee taking independent legal advice concerning the Compromise Agreement which advice must be sought in all cases.

This article is intended as a general guideline only. Employment law is extremely complex and individuals are strongly advised to seek independent legal advice concerning their individual circumstances before taking any action.

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