Know your rights if redundancy threatens

The worsening economic climate means that thousands of people are being made redundant every month.

It’s a worrying time for everyone but people facing the threat of redundancy should know that they have legal rights to ensure they are treated fairly and get the best possible severance deal from their employer.

To begin with, your employer should consult with you individually or, if there are to be a large number of redundancies, with your staff or union representatives as soon as possible. This should be at least 30 days before the first redundancy if there are between 20 and 99 jobs to go and at least 90 days in advance if the number is over 100.

You should be provided with written details about such things as the reasons for the redundancies, the numbers and categories of people involved and how the employees affected will be selected. The company can decide how the selection process will work but it must be fair and based on evidence rather than who the employer likes or dislikes.

If you are selected then your employer should consult with you individually and explain why. He must also consider whether there are any alternatives to redundancy. If the employer fails to do this then the redundancy may be considered unfair.

If you feel you have been selected unfairly then you can appeal and if necessary take your case to an employment tribunal.

You will be entitled to statutory redundancy pay if you have worked continuously for your employer for two years or more. The entitlement varies from half a week’s pay for each year of service to one and a half week’s pay depending on your age. The statutory maximum weekly pay has just risen to £350 but your firm may have an in-house agreement providing better terms. The first £30,000 of redundancy pay is tax free. 

You are also entitled to work your full notice period or be paid in lieu if your employer wants you to leave earlier.

Your firm may want to enter into compromise agreements with redundant staff. The agreements set out the terms and conditions relating to the termination of employment and once signed will prevent the employee bringing tribunal claims in future, except for personal injuries or pension issues.

The firm may provide an enhanced redundancy package to encourage you to sign. Because you will be waiving the right to bring an employment claim in future, you must receive independent legal advice before entering into a compromise agreement to ensure you know and understand all the implications.

This advice should be provided by a law firm that is experienced in employment matters and is not acting for the company making the redundancies.

The costs are often paid for by the employer of the redundant workers as it provides a cost effective way to reach a settlement.

The agreements are not restricted to financial matters. For example, confidentiality clauses are quite standard procedure these days to prevent the employee from disclosing the terms of the agreement. 

It is also possible to include clauses preventing the employee making derogatory statements about the company or its management.

Of course, the employee may also wish to include conditions such as requesting that the employer provides a reference. There is no legal obligation on the employer to do this but if they do then the reference must be accurate and fair.

Compromise agreements can be beneficial to both sides as long as you are fully aware of what you are doing.

Redundancy can be a very difficult period in a person’s life and the rules and regulations covering it seem daunting so it is always advisable to seek legal advice if there are issues you are unsure about.                                                                                                       

Please contact us if you would like more information about redundancy arrangements or any aspect of employment law.