The coronavirus outbreak is putting huge financial pressures on our workforce and many organisations are facing very difficult decisions related to staffing as we come out of lockdown. Even with support measures in place from the Government, like the Job Retention Scheme, some industries have ceased operations altogether while others cannot retain staff on a long-term basis due to financial issues.
Redundancy – Your Rights
If you are made redundant, it’s important to know your rights. You can only be chosen for redundancy fairly — never based on your age, gender, disability or mental health status, if this is something you have disclosed with your employer. If you’re legally classed as an employee and have over two years’ service, you have rights related to redundancy and unfair dismissal.
UK workers could be put at risk of redundancy over the coming months as the government’s furlough scheme ends in September this year.
It’s important to know your rights and entitlements. The following offers an overview of these.
Redundancy Rights and entitlements
You’ll only get redundancy pay if it is a genuine redundancy.
There are 2 types of redundancy pay you could get:
- ‘statutory’ redundancy pay – what the law says you’re entitled to
- ‘contractual’ redundancy pay – extra money your contract says you can get on top of the statutory amount
- You’ll have to pay tax on a redundancy payment if it’s more than £30,000. Your employer will deduct any tax for you.
If you’re entitled to either type of redundancy pay, it’ll be paid by your employer.
Who can get statutory redundancy pay
You’ll get statutory redundancy pay if you:
- have been employed by your employer for 2 years continuously
- have lost your job because there was a genuine need to make redundancies in your workplace
- are a particular kind of worker called an ‘employee’ – this includes part-time employees
If you’re on a fixed-term contract
You will be entitled to statutory redundancy pay if your employer doesn’t renew your fixed-term contract because the job doesn’t exist anymore and you had either:
- a fixed-term contract for 2 years or more
- shorter contracts that followed on from each other and added up to 2 years or more
Who won’t get statutory redundancy pay
You won’t get statutory redundancy pay if you:
- have worked in your job less than 2 years
- are self-employed
- are a police officer or in the armed forces
- are a Crown servant, parliamentary staff or holder of public office (for example, a Justice of the Peace)
- are a share fisherperson
- are domestic staff working for your immediate family
- are an employee of a foreign government
Even if you can’t get statutory redundancy pay, you might be able to get contractual redundancy pay. Make sure you check your contract to see what it says about redundancy pay.
When you could lose your right to statutory redundancy pay
Even if you’re entitled to statutory redundancy pay, you could lose your right to it if you:
- turn down a suitable alternative job your employer offered you without a good reason
- want to leave before the job is due to end – for example, because you’ve found another job
- are fired for gross misconduct before your job finishes
How much statutory redundancy pay you can get
You can see how much redundancy pay you’d get using the redundancy pay calculator on GOV.UK.
Redundancy pay is based on your earnings before tax (called gross pay).
For each full year you’ve worked for your employer, you get:
- age 18 to 22 – half a week’s pay
- age 22 to 40 – 1 week’s pay
- age 41 and older – 1.5 weeks’ pay
If you turned 22 or 41 while working for your employer, the higher rates only apply for the full years you were over 22 or 41.
You won’t pay any tax on your statutory redundancy pay.
There are some limits to how much money you’ll get:
- the maximum weekly amount you can get is £538 – even if you earn more per week
- you can only get redundancy pay for a maximum of 20 years’ work (for example, if you’ve worked at your job for 23 years, you’ll only get redundancy pay for 20 years)
Paying tax on contractual redundancy pay
Getting advice about contractual redundancy pay
- If you’re a member of a union, speak to your union rep first – they should have been involved in the redundancy negotiations.
- If there isn’t a union at your work, you might have an employee representative to help you understand the redundancy agreement.
- If you don’t have any representatives at work, contact your nearest Citizens Advice. Ask your employer for a copy of your redundancy agreement for an adviser to look at.
Getting your redundancy pay
- Your employer should pay you your redundancy pay on the date you leave work, or an agreed date soon after.
- They’ll pay you in the same way they paid your wages, for example into your bank account.
- You should also get a written statement saying how your payment was calculated.
Should you have any questions regarding redundancy and your rights contact your local citizens advice bureau.
