Employment - In England

This information applies to England, Wales, Scotland and Northern Ireland

About this information

In Northern Ireland, Employment Tribunals are called Industrial Tribunals.

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What is redundancy

If you are facing redundancy and are a member of a trade union, the trade union is the first place you should go to for help.

Redundancy is a form of dismissal. Therefore, in order to claim redundancy, you must normally have been dismissed from your job. You must have been dismissed because you are genuinely redundant, see below, otherwise you will have been unfairly dismissed.

Has the worker been dismissed

If you resigned, you will not be redundant. You may, however, be able to argue that although you have resigned, you have actually been dismissed. This is called constructive dismissal and occurs when an employee has been put in a position where you have no choice but to resign, for example, you have been made to resign under pressure or you have been made to take another job which is not suitable.

For more information about constructive dismissal, see under heading Step two: have you actually been dismissed, in Dismissal.

If you volunteered for redundancy, this will usually count as a dismissal.

There are special rules which apply if you have been dismissed because the business has transferred to a new owner. There are also special rules which apply if you think you may have been dismissed or chosen for redundancy because of discrimination. For example, if all the people chosen for redundancy are women, this would usually be sex discrimination and unfair dismissal – see under heading Who should be chosen for redundancy for more information about discrimination.

Also, when your employer carries out redundancies, they must not discriminate against older or younger employees. This would be age discrimination. However, they are allowed to choose you for redundancy based on how long you've been working for them.

For more information about age discrimination at work, see Age discrimination at work.

Is the employee genuinely redundant

Employers often claim an employee has been made redundant when the employee has actually been unfairly dismissed. This may be to avoid the employer having to pay compensation for unfair dismissal. If any of the following apply, you are likely to be able to claim unfair dismissal:-

• if there is not a real redundancy, see below; or
• if you have been unfairly selected for redundancy even if it is a real redundancy (see under heading Who should be chosen for redundancy). In such cases, you may be able to claim both compensation for unfair dismissal because of the nature of the dismissal, and redundancy pay, because you are also redundant; and/or
• if you have been dismissed because of a discriminatory reason, such as your employer claiming you are redundant but you feel you are actually being dismissed because you are pregnant (see under heading Who should be chosen for redundancy).

What is a real redundancy

A dismissal will only be a genuine redundancy if:-

• the employer’s business, or part of the business, has ceased to operate; and/or
• the employer’s business has moved to a different place; and/or
• the business’s need for work of a particular type to be done has ceased or diminished.

Examples of when someone may be genuinely redundant include:-

• the work the person does is no longer needed, for example, the employer’s business is failing or the employer is moving into a new line of business which no longer needs the person’s skills, or a new process is introduced which means the job is unnecessary (see under heading Redundancy situations)
• the employee’s job no longer exists because the work is being done by other employees (see under heading Redundancy situations)
• the workplace has closed because the employer has ceased trading but is not insolvent (see under heading Redundancy situations)
• the employer’s business, or the work the person is doing, moves to another area (see under heading Redundancy situations)
• the person is laid off or put on short-time working
• the employer’s business is transferred to a new employer (see under heading Redundancy situations)
• the employer’s business becomes insolvent
• the employer was the sole proprietor of the business and dies.

If you are in any doubt about whether one of the above redundancy situations applies to you, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

‘Sham’ redundancy

Employers often claim that there has been a reduction in the work needing to be done but this is not the real reason for dismissing someone. It is important to look at the circumstances surrounding the ‘redundancy’, as the following may indicate that the real reason for the dismissal is not redundancy:-

• if your employer has recently taken on other people, this could indicate that there has not been a reduction in the amount of work to be done
• if you are the only person being made redundant, or one of only a few in a large company, this might indicate that the type of work you do is still needed
• if you are pregnant, a woman, from an ethnic minority, disabled, gay or of a particular religion, this might indicate you have been dismissed because of discrimination rather than because of a general need to reduce the workforce
• if you had a bad relationship with your employer, this might indicate you have been dismissed for a reason other than a general need to reduce the workforce
• your age. There are rules about age discrimination at work which mean that your employer isn't allowed to choose you for redundancy based on your age. But they are allowed to choose you for redundancy based on how long you've been working for them.

It is not always clear whether someone has been made redundant or not. If you are in any doubt about whether or not you have been made redundant, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Redundancy situations

The need for the worker has diminished or ceased

A redundancy situation may arise where a business continues to operate but there is no longer a need for the skills for which the employee was taken on. For example, a person employed as a skilled carpenter and joiner to help make racing yachts was made redundant when the employer changed the business to dinghies made from fibre-glass. The employer was still in the business of boat building, but he no longer needed the skills of a carpenter/joiner as the fibre-glass was moulded.

Redundancy may also arise if an employer reorganises the business to improve its efficiency, so that fewer people are needed to do the same amount of work.

In each case, it is the need for the work you do which is in your contract which must have been reduced. Even if there is other work available for you to do, the fact that the work you were employed to do is no longer available means that you are in a redundancy situation.

If you have been told you are redundant because the need for you to do particular work has diminished, seek help from an experienced adviser as soon as possible, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

New systems in the workplace

You may be made redundant if a new process or system is introduced into the workplace which means that your job is unnecessary. The introduction of the new system or technology will not automatically mean that someone is made redundant. You will be redundant only if the new system is the direct cause of your work no longer needing to be done. Some new systems or technology may just enable the same job to be done differently, rather than creating a different job. There would then be no redundancy.

If you have been told you are redundant because the need for your particular work has diminished, seek help from an experienced adviser as soon as possible, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

The job no longer exists because other workers are doing the work

You may believe that you should not have been made redundant because the tasks you were doing still need to be done, but have been given to other people to do.

The important point to note is whether the work which you were employed to do is still available for you to do. If it is no longer available, even if it is being done by other people, then your job no longer exists and you are therefore redundant.

If you have been told you are redundant because the need for you to do particular work has diminished, seek help from an experienced adviser as soon as possible, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

The workplace has closed, or is closing down

The most common example of where someone’s work is no longer needed is where the business or part of the business has closed down or is closing down, whether temporarily or permanently. In these circumstances, where the workplace has closed down, the person will be redundant.

The business moves

In the case of a business moving, a redundancy will only arise if the employer has ceased or intends to cease to carry on the business in the place where the person was employed to work. Even if there is a clause in your contract which requires you to work anywhere the employer asks you to, you may still be redundant if the business moves.

If you have been told you are redundant because the business, or your job, has moved, seek help from an experienced adviser as soon as possible, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

The business is transferred to another employer

Where a business is transferred from one employer to another, the transfer does not end the contracts of the people working for the business. They will retain the same terms and conditions of employment with the new employer.

If you are made redundant in connection with a transfer, either by your old employer before the transfer takes place, or by the new employer after the transfer has taken place, the employer would have to show that there was a real redundancy and that the transfer was not the only reason (or the main reason) for the dismissal.

If you have been told you are redundant because the business has transferred to a new owner, seek help from an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

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Who should be chosen for redundancy

Where a job disappears, or is moved, causing a redundancy, the employer must follow a recognised procedure when selecting who is to be made redundant.

Your employer must follow a set dismissal procedure before dismissing you, and this includes making you redundant (except where more than 20 employees are being made redundant – see heading Redundancies of 20 people or more). Before making you redundant, your employer must:

• send you a written statement, telling you why they are making you redundant
• hold a meeting with you to discuss the matter
• hold an appeal meeting with you, if you want to appeal against your employer's decision.

If your employer does not follow the proper procedures, any dismissal will be automatically unfair and you will be able to make a claim for unfair dismissal to an employment tribunal (as long as you have worked for your employer for at least a year). If you win your case, the tribunal will increase the compensation awarded to you because your employer did not follow the procedure.

For more information, about the procedures your employer must follow before dismissing you, see What you need to know, Dealing with grievances, dismissal and disciplinary action at work.

The employer must use a procedure which is fair, objective and non-discriminatory, using objective criteria. Employment tribunals have established principles of good employment practice which employers should follow. These are:-

• the employer will try to give as much warning of the redundancies as possible
• the employer will use objective criteria when deciding who will be made redundant
• the employer will try to ensure that the selection for redundancy is fair and in accordance with the criteria set
• the employer will try to find alternative employment for the employee (see under heading Redundancy pay).

Some employers will have a recognised redundancy procedure which will be part of the contract with workers, and must have been agreed with the trade union at the workplace or with representatives of the workers. In other cases, there may be a procedure which the employer has consistently used previously and which has not been objected to by the workforce. This will therefore be the procedure that should be followed through custom and practice, unless it is not a fair and/or objective procedure.

Unfair selection for redundancy is a type of unfair dismissal. Someone who has been unfairly selected for redundancy may therefore be able to claim compensation for unfair dismissal as well as redundancy pay.

If you think you have been unfairly chosen for redundancy, seek help from an experienced adviser as soon as possible, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB. This is because there is a strict time limit during which you must make any claim for unfair dismissal/redundancy pay to an employment tribunal.

Discrimination

It is unlawful to choose people for redundancy on the basis of their disability, sex, race, religion, sexuality or age. This would be discrimination. However an employer may be able to choose people for redundancy based on how long they have been working there.

It is also unlawful to choose people for redundancy because they are part-time or pregnant, as this would be sex discrimination. This is the case even if you have agreed to be chosen for redundancy on this basis.

You do not have to have worked for your employer for any qualifying period to be able to claim compensation for discrimination from an employment tribunal (industrial tribunal in Northern Ireland).

For more information about discrimination at work, see Basic rights at work.

For more information in England, Wales and Scotland about discrimination at work because of your religion or sexuality, see What can I do if my employer treats me unfairly because of my religion or belief? and What can I do if my employer treats me unfairly because of my sexuality? in Employment fact sheets.

If you think you have experienced discrimination, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

Voluntary redundancy

Where jobs are to disappear, an employer may ask for workers to volunteer for redundancy.

If you are thinking of volunteering for redundancy or believes you have been unfairly selected for redundancy you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Redundancies of 20 people or more

Where an employer is making 20 or more employees at one workplace redundant, this is called a 'collective redundancy'. An employer making a collective redundancy must consult with a recognized trade union where there is one. Where there is no recognized trade union, an employer must consult with employee representatives before issuing redundancy notices.

If your employer is making 20 or more employees redundant at your workplace, you should talk to an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

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Redundancy pay

A redundancy payment is compensation because someone’s job has disappeared. If you are entitled to redundancy pay (see below) you will get a statutory redundancy payment from your employer. You may be entitled to a larger amount of compensation because your employer has a contractual redundancy scheme.

If your contract gives you less redundancy pay than you are entitled to under law, then the statutory amount will apply.

If you have contractual rights to redundancy pay then the way it is calculated and when it should be given will be in the contract.

Who is entitled to a statutory redundancy payment

Only some employees are entitled to a statutory redundancy payment. To be entitled, you must:-

• be an employee. Self-employed people or members of a partnership do not qualify
• have worked for the firm for at least two calendar years continuously since the age of 16
• not be in an excluded occupation (see below).

If you do not meet these conditions, you won't get a statutory redundancy payment, even if you are genuinely redundant. If you are excluded from statutory redundancy pay you may be entitled to contractual redundancy pay. Check your contract of employment.

There used to be an upper age limit of 65 to claim a statutory redundancy payment but this age limit no longer applies if you were made redundant from 1 October 2006.

Excluded occupations

Share fishermen can never claim a statutory redundancy payment.

Most public employees, for example, civil servants and police officers, also cannot claim a statutory redundancy payment as they have contractual arrangements which give them similar or better payments.

Your employer offers you an alternative job

If you are entitled to a statutory redundancy payment, you may lose this right if you reject a suitable alternative job offered by your employer. You may, however, be able to claim unfair dismissal, depending on whether it is reasonable for you to reject the offer.

Whether an alternative job offered is suitable will depend on the terms of the job offered and your skills, abilities and circumstances. Factors such as pay, status, hours and location are relevant when deciding if a job is a suitable alternative. Your employer does not have to offer a similar position or a position in the same workplace.

If your employer intends to make you redundant, they must consider whether there are other jobs available which you would be capable of doing. If such suitable employment is available, It should be offered to you. If it isn't, normally this would mean that you were unfairly dismissed.

The offer of alternative employment must be made before your current job ends. It can be made in writing or can be verbal. It must give you enough details about the new job so you know what the difference is between your existing job and the new job. You must also be offered a trial period in the new job.

Your employer may offer you a number of alternative jobs. Each offer must give sufficient detail and you are entitled to a trial period in each, if you wish.

If you are considering the offer of another job with your employer you have a right to try out the job before you decide whether or not to take it, without losing the right to statutory redundancy pay. You can work in the new job for a trial period of four weeks. The trial period will start immediately the previous job ended. At any time during the period you can decide that the job is unsuitable. If you unreasonably refuse the alternative job after the trial period, you will not have a right to a statutory redundancy payment.

This is a complicated area and if you are in this position you should seek the help of an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Leaving or getting another job during the redundancy notice period

If you are under notice of redundancy and have found another job, you may lose your right to statutory redundancy pay if you leave to take the new job during the notice period. However, it might still be possible to get your redundancy pay, provided certain conditions are met.

This is a complicated area and if you are in this position you should seek the help of an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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How much is a statutory redundancy payment

The amount of a statutory redundancy payment depends on:-

• how long you have worked for your employer (see below); and
• your age (see below); and
• your weekly pay (see below).

If you were made redundant from 1 October 2006, statutory redundancy pay is worked out as follows:

• 1½ week’s pay for each complete year of employment when you were aged 41 or over
• 1 week’s pay for each complete year of employment when you were aged between 22-40 inclusive
• ½ week’s pay for each complete year of employment when you were aged under 22.

If you were made redundant before 1 October 2006, redundancy pay is worked out differently – see under heading Ready reckoner for calculating the number of weeks’ pay due.

The maximum number of years of employment that can count is 20. Employment is counted up to the relevant date, which is the date your notice expires. If you have not been given any notice, it is the date on which the notice would have expired had you been given it.

Notice of redundancy

The required statutory notice is one week if you have been employed for at least one month but less than two years, two weeks if you have been employed for two years, three weeks for three years, and so on, up to twelve weeks. After twelve years service, the statutory notice period is twelve weeks.

If you think that you have not been given the correct amount of notice you should seek the help of an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Weekly pay

The weekly pay which will be used to work out the redundancy payment will usually be your normal weekly gross pay at the time you were made redundant up to the maximum limit. This means that if you changed from full-time work to part-time work and are then made redundant, your weekly pay will be calculated at the part-time rate. Gross pay is pay before deductions such as tax and national insurance are made.

A week’s pay does not include overtime pay unless the overtime was regular and compulsory. Where earnings vary each week, an average of the 12 week period leading up to the redundancy will be used. If commission is paid regularly, this should be included in a week’s pay. An average should be calculated, for example, an amount that could be expected in a year, divided by the number of weeks worked in a year.

There is a maximum limit on the amount that can count as a week’s pay. This applies even if you earned more than the maximum amount. The current maximum weekly pay is:

(For a rough guide to how much statutory redundancy pay you will get, see under heading Ready reckoner for calculating the number of weeks’ pay due).

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How should a statutory redundancy payment be made

When making a payment, your employer must give you a written statement saying how it is calculated.

Claiming a statutory redundancy payment

Your employer is responsible for paying a statutory redundancy payment to you on, or soon after, the date of your dismissal. You do not need to make a claim unless your employer fails to pay or claims that you are not entitled to the payment. If this is the case, you should make a written request to your employer for the payment, and apply to an employment tribunal within six months of the date of dismissal. However, if you want to claim unfair dismissal and/or discrimination or make another claim such as unlawful deduction of wages, the time limit to apply to an employment tribunal is three months.

Effect of statutory redundancy pay on benefits and tax

A statutory redundancy payment may affect your entitlement to benefits and your tax position.

If you want information about the effect on benefits and tax, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

The employer refuses to make a statutory redundancy payment

If you have a right to a statutory redundancy payment, but your employer refuses to make it, you will have to make a claim to an employment tribunal to get the money. In most circumstances you will need to raise a written grievance with your employer first before you can make a claim to an employment tribunal.

For more information about raising a grievance with your employer, see What you need to know, Dealing with grievances, dismissal and disciplinary action at work.

You must make an application to an employment tribunal to claim a redundancy payment within six months of being made redundant and should seek the help of an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

Claiming redundancy pay if the employer has ceased trading

If your employer is insolvent and a receiver or liquidator has been appointed to deal with the company’s affairs, you should claim your redundancy payment from the National Insurance Fund. You can contact the fund on 0845 145 0004.

If your employer has ceased trading but is not insolvent, write to your employer claiming the redundancy payment. If the employer does not pay the statutory redundancy pay, you must apply to an employment tribunal within six months of your dismissal. You will need to raise a written grievance with your employer first – see under The employer refuses to make a statutory redundancy payment. If an employment tribunal decides that you are entitled to statutory redundancy pay but your employer still does not pay it, you can make an application to the National Insurance Fund for your redundancy payment.

If you want information about claiming a statutory redundancy payment from the National Insurance Fund, or applying to an employment tribunal, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Other rights on redundancy

Right to notice of redundancy

Because redundancy is a form of dismissal, you will still be entitled to your statutory or contractual period of notice of dismissal, if your employer plans to make you redundant (see under heading How much is a statutory redundancy payment).

Time off to look for work

If you have been given notice of redundancy, you are entitled to paid time off to look for a new job providing that by the time your notice period ends, you have worked for your employer for two years. The following employees are not entitled to paid time off to look for work:-

• employees who have worked for their employers for less than two years
• overseas employees
• merchant seamen
• share fishermen
• members of the armed forces
• police service employees.

There is no definition of how much time the employer has to give but it must be reasonable. What is reasonable will vary according to the circumstances, for example, the difficulty of finding work in certain areas, the time and travel involved and the range of jobs you are looking at. In addition to these legal rights, you may have rights which have been negotiated by the trade union, if any, or from your contract.

If you have a problem with notice or time off to look for work you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Ready reckoner for calculating the number of weeks’ pay due

The website of the Department for Business, Enterprise and Regulatory Reform (BERR) has a useful ready reckoner to help you work out how much redundancy pay you are entitled to. Go to www.berr.gov.uk.

The details of redundancy pay given here are the legal minimum. Many trade unions will have negotiated better contractual redundancy schemes and you may be entitled to more than the minimum.

When calculating redundancy pay, remember that there is a maximum amount to weekly pay - see under heading How much is a statutory redundancy payment.

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