Employee guide to the redundancy process and your rights
Published 30 January 2023
The collapse of budget airline Flybe, reports of other high profile and large scale job losses and the cost of living crisis means of the spectre of redundancy is never far away.
Employers are constantly being forced to make difficult choices and decisions in the current economic climate.
Opting to drastically reduce the size of the workforce, restructure a business or scale back operations are feasible options many organisations will implement to tackle any financial woes.
They can be necessary but unfortunate steps, which can often lead to a requirement to reduce the number of employees required for an organisation to be able continue to function effectively.
Worst case scenario is that a business will have to cease trading all together, which can make job losses inevitable.
At the weekend the airline Flybe announced on its website that High Court administrators had been appointed and it had ‘ceased trading’ [1cited 30.1.23]
It was reported the administrator confirmed 277 of the 321 staff are being made redundant. The reports state the financial advisory firm Interpath said the rest of the company's staff would be retained. [2 cited 30.1.23]
The news came a week after Google’s parent company Alphabet announced 12,000 jobs are to be axed globally.
It means that more than five thousand workers in the UK and Ireland now face an uncertain future [3 cited 30.1.23]
The news came hot on the heels of tech firm Microsoft revealing plans to cut about 10,000 jobs by the end of September. It is currently unclear what the impact will be on UK-based employees [4 cited 30.1.23]
In November, the Bank of England warned the UK stood on the brink of the longest recession in 100 years [4 cited 30.1.23]
With difficult economic times ahead, news of many more job losses is likely to be a recurring theme.
Redundancy is undoubtedly stressful for both employees and employers.
It is a situation in which members of staff face an uncertain future and employers are legally obliged to follow a fair redundancy process, be transparent and support affected workers while considering the impact on morale.
Redundancy is justifiable if an employee’s role is no longer needed. For employers redundancy should be a last resort if part or all of the organisation is:
- Going to shut down, or has already closed.
- Altering the type of roles needed or number of employees required to do certain work.
- Moving location.
Redundancy can be a fair reason for dismissal. So as an employee it is important that you know what your rights are during the redundancy process and how a fair process should be conducted.
Here is an employee’s guide to key stages of the redundancy process.
Your rights if your employer goes out of business.
If your employer is insolvent and cannot pay its debts it may make you redundant, ask you to keep working or transfer you to a new employer (if the business has been sold).
The government provides the following guidance on your rights as an employee if you find yourself in this situation [5 cited 30.1.23]
There are different types of insolvency:
Company voluntary arrangement
Individual voluntary arrangement
Debt relief order
Depending on your situation, you can apply to the government for:
- A redundancy payment
- Holiday pay
- Outstanding payments like unpaid wages, overtime and commission
- Money you would have earned working your notice period (‘statutory notice pay’)
You may be eligible for unemployment benefits if you lose your job. If you do not apply for benefits after you lose your job, you might get less money in your statutory notice payment.
If your role is no longer needed
Your employer may offer you voluntary redundancy, which means you can opt to take redundancy and terminate your contract.
If it is an option you want to take, you should be provided with details about the procedure for volunteering for redundancy.
It is also worth bearing mind that your employer may choose to reject the request. This is because it may prioritise its own needs and want to retain you if you have a particular skillset or experience.
If enough employees do not volunteer for redundancy, or the option is not offered, your employer should start a redundancy process.
An employer must follow ‘collective consultation’ rules if it is making 20 or more employees redundant within any 90-day period at a single establishment[6 cited 30.1.23]. Your employer has to hold a group consultation if there is a collective redundancy.
There are no set rules to follow if there are fewer than 20 redundancies planned. However, it is good practice for your employer to fully consult with you and your representatives in workplaces where there is a trade union, or other form of agreed representation.
If you perform a unique role which is no longer required you could find that you are the only person at risk of redundancy. Your employer should still consult with you.
When a redundancy situation has been announced you are entitled to reasonable time off to look for a new job.
Your employer must hold genuine and meaningful consultation with you before it finalises any redundancies.
This should involve meeting with you, the number of times this happens can vary, talking about the situation and answering any questions you have and listening to you.
The consultation can be used discuss any suitable alternative roles to redundancy, any selection criteria that will be used to select employees for dismissal and to address any concerns you may have.
Consultation is a crucial part of the redundancy process. If it is not sincere and you are dismissed as a result, you could make a claim to an employment tribunal for unfair dismissal [6 cited 30.1.23]
The selection process.
Any process that can lead to you being selected for redundancy must be fair.
You could be placed in a selection pool with colleagues that perform the same or a similar role to you.
A selection criteria, which should be discussed with you beforehand, will be used to identify who will be made redundant.
You will be assessed and scored on criteria, which can include your standard of work and performance, skills, qualifications, experience, attendance record and disciplinary record.
You have a right not to be selected for redundancy for a reason that is automatically unfair e.g. pregnancy and maternity, disability or age or any other protected characteristic covered by the Equality Act 2010 [7 cited 30.1.22]. Or, as a result of any concerns you raised about whistle-blowing.
The redundancy consultation outcome
If you are offered a suitable alternative role with your employer or an associated company, you have the right to a four-week trial period. If during this time you decide the role is unsuitable you should inform your employer. It will not affect your employment rights, including your right to statutory redundancy pay.
If you are selected for redundancy and you believe the decision or the process was unfair, you should submit an appeal.
If you employer does not have an appeals process, you can still write to it with the reasons you think the redundancy is unfair. You can also raise a formal grievance.
If your redundancy is confirmed, you should be paid at least the legal minimum (‘statutory’) amount of redundancy pay if you have worked for your employer for two years or more [8 cited 30.1.23]
Some employers may opt to make an enhanced redundancy payment on top of any statutory payment, but it will depend on each employer’s process.
You could lose your statutory redundancy pay if you turn down a suitable alternative job offered to you without a good reason, want to leave before the job is due to end e.g. you have secured another job or are dismissed for gross misconduct before your job finishes.
You should be provided with details of what you will be paid if you are selected for redundancy.
Any redundancy process can be difficult, but knowing what to expect and how you should be treated can help you to navigate it