The rules of redundancy

Covid-19 will lead to more job losses – Paul Lewis explains the rights of those affected

Young business woman made redundant

The dark cloud of redundancy hangs over the UK jobs market. From August, employers will have to pay towards the cost of furloughed staff (nine million in total) and the subsidy will be phased out each month until it ends in October. A million employers – many of them very small – will have to judge if they can survive. Many may have to lay off staff or close completely.

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Firms who want to make staff redundant must follow rules, and any decent employer will want to treat staff fairly and keep them informed.  If you’ve worked at the firm for less than two years, you have almost no rights and can be dismissed without any reason. But you must be given a week’s notice and you should be consulted. You cannot be chosen for redundancy on discriminatory grounds such as race or sex.  You have no rights to redundancy pay, though any outstanding wages, including for holidays, must be paid.

If you’ve worked at the firm for two years or more, any dismissal, including redundancy, must be fair. Employers have a right to get rid of staff if their business no longer needs them, but you must be consulted and the employer must try to find you other work at the firm.

You must get one week’s notice for each year you’ve worked there, with a maximum of 12 weeks. You are also entitled to redundancy pay, normally one week’s pay for every year of employment, but under-22s only get half a week’s pay per year and over-40s get 1.5 weeks per year.

Pay is your full pay, not your 80 per cent furlough pay, but there is a cap of £538 a week (£560 in Northern Ireland) and a cap of 20 years’ service. Your contract may
specify more. Redundancy pay up to £30,000 is not taxable. If your firm goes bust and cannot pay you, then the statutory redundancy scheme will pay the minimum.

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Your employer cannot keep you on at reduced pay unless you agree.  But of course, if you say “no”, you can be made redundant instead.  More information Go to gov.uk or acas.org.uk or citizensadvice.org. uk and search “redundancy”.