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Redundancy rights

A redundancy situation occurs where an employer wishes to dismiss employees and can do so fairly provided certain criteria are met and the procedure used by the employer is fair.

There are 3 situations that are recognized when an employee may be made redundant:

  • Closure of a business as a whole;

  • Closure of a particular workplace where the employee was employed;

  • Reduction in the size of the workforce; where the requirements of the business for employees to carry out work of a particular kind or carry out work of a particular kind in the place they were employed have or are expected to cease or diminish.


If you are dismissed and none of the above apply, you should first follow the employer's grievance procedure but remember that any claim you may wish to take to the Employment Tribunal must be done within 3 months of the date of the dismissal.

As a redundancy is still a dismissal, an employer is expected to follow a form of dismissal procedure - what this may consist of will depend on the size of the employer, the amount of employees being made redundant and the time at which the employer knew redundancies may be possible.

Collective redundancies happen when an employer proposed to make more than 20 employees redundant within a period of 90 days. Employers have to consult with employee representatives for at least 30 days where there are less than 100 proposed redundancies, and for at least 45 days if more than 100 roles are affected. 

Employees who have been employed for more than two years are entitled to redundancy pay. In addition they should be given notice that their employment will be terminated on the grounds of redundancy.  If you're required to work during your notice period, you'll be entitled to your normal pay, contractual benefits and will still accrue holiday entitlement.  Sometimes an employer may pay the employee in lieu of their notice, when employment is terminated immediately and the employee is paid the equivalent of their basic pay/salary as if they had worked their notice period. Unless the employer has confirmed otherwise, there is no automatic right to receive payment in lieu of any contracted benefits - e.g. pension contributions, health benefits, car allowance - when a lawful payment in lieu of notice is made.

The amount of redundancy pay received is dependent upon:

  • The employee's age

  • The employee's amount of continuous service, subject to the minimum of two years and  a maximum of 20 years

  • The statutory limit on gross weekly pay of £538 from 6th April 2020 to 5th April 2021 

If the employer goes into liquidation then any claim for unpaid wages/redundancy pay can be made to the liquidator but a claim may also be made to the Insolvency Service - the amount that will be paid is subject to restrictions - please see Insolvency Service

Suitable alternative employment

Where possible an employer should offer alternative employment - what is suitable will be dependant upon the facts of each case but would take into account the salary, status, location etc that is being offered.  Where a suitable alternative is offered employees are entitled to a 4 week trial period to see if the job is indeed suitable - where they believe it not to be, they can refuse the position and still claim the redundancy payment.  If an employee unreasonably rejects a suitable offer of alternative employment then they will lose the right to redundancy pay.

Any claim made to an Employment Tribunal claiming unfair dismissal (i.e. that there was unfair procedures, no redundancy or were unfairly selected for redundancy) must be made within 3 months of the date of dismissal.

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