Redundancy is a word that is making itself comfortable in everyone's lexicon.
Recent data from the Office of National Statistics ("ONS") has recently revealed that 730,000 workers have lost their jobs during lockdown – meaning between March and July 2020. These are staggering numbers and whilst the ONS believes that the fall in paid employment is slowing down but between June and July alone the number of people who have lost their jobs is 81,000.
Unfortunately, more and more businesses across all industries are having to consider redundancies in order to stay afloat. The numbers of companies proceeding with redundancies, or even considering it, are the largest that we have seen since the 2008 recession.
Here at Gepp, we know that redundancy is often scary for employers and employees, whether it is planned or somewhat forced upon the business and the employees for matters outside of their control and despite their best efforts. For employees, there are always a lot of questions that would arise, and we have tried to collate some of the most frequent and common ones in one place to help you out.
The first and most important thing to bear in mind is that this usually applies to employees that have at least two years' service. Whilst good practice dictates that all employees should be put through the process if facing a redundancy situation, the legislation offers protection only to employees who had two or more complete years of service.
What is the selection process?
The specifics will differ depending on the company's individual needs and, of course, the reasons for the redundancy. Employers could adopt different considerations for the selection of the employees to be made redundant but it absolutely has to be fair and non-discriminatory.
For example, companies cannot select people for redundancy on the basis of their age or gender, whether they are a member of trade union, whether they are on maternity or parental leave and especially not the old school thought of "last in, first out"!
What consultation is required of my employer?
Employers have the duty to consult the employees. This will start with a notification of the redundancy process to all of the employees that are 'at risk' of redundancy – namely those that are likely to be affected by the redundancies. The consultation process requires a reasonable time for both sides to consider any alternatives to redundancy and / or any alternative roles for the employee.
The number of employees being made redundant is also important – because, if there are more than 20 employees then a longer process is required known as collective consultation. We will not touch on that herein, but can advise on it if companies feel that it is necessary for them.
Bear in mind that some companies may ask for volunteers for redundancy which will be in place of a formal process and then they may have a 'without prejudice' or 'protected' conversation to reach an agreement for a smooth departure of those volunteers.
How can I find another job?
During the consultation process, the employer is required to consider, together with the employee, whether there are any suitable alternative roles within the business. The question of suitability is subjective and usually requires that the duties of the role be substantially similar and that the pay grade and seniority be similar enough. This will vary between companies and between industries.
At the same time, employers must also allow for reasonable time off to find alternative employment elsewhere so for things such as interviews, for example. Most of those time should also be paid. To know what your employer is willing to offer, all you have to do is ask. Having time off to seek alternative employment should not affect whether you are more or less likely to be made redundant and would not mean that you are not entitled to your redundancy pay.
What redundancy payments am I entitled to?
You will be entitled to your contractual notice pay, whether it is in lieu of notice of whether you might be required to work your notice period and get paid for it. What matters, is that you receive the money. With this, you will also get paid your annual leave that has been accrued but that you have not used. Bear in mind that your employer can require you to take your annual leave during your notice period if you are working it or are placed on garden leave.
You will also be entitled to receive redundancy pay which is calculated based on your gross weekly salary (capped at £538), your age and your length of service (provided that it is at least two years). Some companies will offer a more generous package, but this is not required by law.
Can I be made redundant because I was furloughed?
The simple answer is No. Just because an employee has been furloughed by the business, does not mean that they should be made redundant. That is not to say that they cannot be, which is why the selection and consultation process that we have outlined above is so important.
An employee that is to be made redundant can also be left on furlough (within the scope of the Coronavirus Job Retention Scheme) for the duration of their notice period but the employer will be expected to top up their salary to the full 100%.
Another important thing to note is that, as of 31 July 2020, the law changed and anyone being made redundant following furlough will have their redundancy pay calculated based upon their full salary and not the furlough salary. This means that the weekly wage used in the redundancy calculation will be 100% of the employee's salary and not the 80% under the furlough scheme.
Can my employer pay me more or give me other benefits?
Yes, it is entirely at the employer's discretion whether to offer a higher redundancy package or not. The employer does not have to, and there is nothing that can be done to force this, but this will be seen more often for those taken a voluntary redundancy or when having the 'without prejudice' or 'protected' conversations.
Often, when an employee is offered a higher redundancy package then the employer will require them to enter into a settlement agreement and the employee will be required to take independent legal advice from a suitably qualified legal professional that is not acting for the company. We have more information about Settlement Agreements [HERE – Not sure that we have updated the website yet on this one].
What to do next…
We trust that you will have found this useful, it is important that employers and employees are well informed on their rights and obligations. Of course, this does not replace the need to take independent legal advice in some situations and this is solely intended for information. Therefore, if you are not sure or you want to ask anything further, please do not hesitate to contact us and we will be happy to assist.
Our expert employment team can assist you
Whether you are an employee that wants to know their rights or has been offered a settlement agreement, or if you are a business that has to undertake redundancies and want to make sure that it is done fairly and properly. Please do get in touch with us for a no-obligation initial conversation.
This is not legal advice; it is intended to provide information of general interest about current legal issues.