Redundancy FAQs – A Guide for Employees

Andrea Corr, Senior Solicitor, Blandy & Blandy

What is redundancy?

It most commonly (but not always) arises in a situation where an employer has a reduced need for either work of a particular kind, or work at a particular location, and as a result proposes to dismiss employees in order to reduce its workforce. This can range from an entire closure of the workplace to restructuring or reorganisation.

I have been placed “at risk”. What does this mean?

This is usually where an employer is proposing to make redundancies and wishes to formally notify the employees who are potentially affected that they are at risk of redundancy. It is usually around the beginning of the consultation process.

How does consultation work?

Employers are required to consult employees in order to discuss their proposals and to discuss ways in which redundancies may be avoided, or reduced. Depending upon how many employees are expected to be affected consultation may take place on either a collective basis, with elected staff representatives, or directly with the affected individuals.

How are employees selected for redundancy?

There is no template process. The legal requirement is that the process must be reasonable. This could include, for example, a matrix of scoring or assessment across groups of affected staff. What is reasonable may vary widely between small family employers and large corporate organisations.

Am I entitled to be offered another role?

You may be entitled to be considered for a suitable alternative role if one exists. However there is no requirement for your employer to create another role. If you are currently on maternity leave we suggest that you take advice about your situation as you are generally entitled to preferential treatment in respect of any role which does exist.

What happens at the end of the consultation process?

This is usually the point where an employer confirms to the affected staff what will happen next. If they remain at risk then usually the employer either serves notice of termination of employment, or actually terminates employment (with payment in lieu of notice).

Will I be expected to work my notice period or be given a payment in lieu of notice (PILON)?

This depends upon your contract of employment and your employer’s business needs.

Can I be placed on garden leave during my notice period?

Yes, if your contract provides for garden leave, or if you agree to take garden leave.

Can I appeal against my selection for redundancy and / or redundancy dismissal?

Many employers do offer internal appeal processes but it is not a legal requirement.

Am I entitled to a statutory redundancy payment?

Usually yes, provided that you have two years’ continuous qualifying service as at the relevant date – usually this is the date of termination of employment.

Can I lose my statutory redundancy payment?

In certain circumstances you may forfeit your right to such a payment e.g. where you unreasonably refuse an offer of suitable alternative employment.

Will my employer enhance my redundancy payment?

Some employers do offer enhanced redundancy payments, often in return for you signing a settlement agreement. We can provide further advice should you be offered such an agreement. You may find our blog article, 'What is a settlement agreement?' of interest.

How is a statutory redundancy payment calculated?

It is based on a combination of the number of years of completed service and your age.

What is the maximum number of years’ service which can count towards a statutory redundancy payment?

20 years.

What are the relevant age multipliers?

For each completed year of service:

· Age 17 – 21 (inclusive) - 0.5

· Age 22 – 40 (inclusive) - 1

· Age over 41 – 1.5

What is the current cap on weekly earnings for the calculation of a statutory redundancy payment?

For dismissals taking effect from 6 April 2023 it is £643 per week.

What is the maximum amount of a statutory redundancy payment?

For dismissals taking effect from 6 April 2023 it is £19,290 (20 x 1.5 x £643) (but bear in mind most will not reach this maximum).

Is a redundancy payment taxable?

No, it is tax free (up to the first £30,000).

What about holiday pay?

You would usually receive payment for accrued but untaken leave as at the date of termination. Holiday pay is subject to PAYE deductions. You are not generally entitled to holiday pay for the notice period where an employer gives a payment in lieu of notice.

Can you help me further? Yes, our specialist Employment Law team can advise you on your individual situation and on all aspects of redundancy.

For further information or legal advice, please get in touch. Blandy & Blandy’s Wokingham office is located at 5 Market place, opposite the Town Hall. Visit www.blandy.co.uk or or call 0118 951 6888.