“I am sorry to say that your role is at risk of redundancy”.
More people than ever have been hearing these unfortunate words this year as a result of the COVID-19 pandemic; and more will be hearing them for sure in the months coming. If your job has been put at risk too, you may have questions about the process and your rights.
I asked employment lawyer Priya Magar at law firm EMW a few commonly asked questions around the redundancy process. Her answers are set out in this article to assist you in deciding what to do next should your job be put at risk.
Please note that Priya’s answers:
- do not apply to redundancies where an employer proposes to dismiss 20 or more people within a period of 90 days. This would be known as a “collective consultation” which follows special rules. You can contact Priya directly if you have questions about collective consultations.
- only apply to UK law.
I have been told my role is “at risk” of redundancy. What does this mean?
It means that your employer is considering to terminate your employment on the grounds that your role is no longer needed. This could be due to lack of business or because the employer is proposing to close your place of work.
Can my employer dismiss me at will as you often see in movies?
The answer to this depends on how long you have been with your employer. If you have more than two years’ service, you gain a number of employment rights, including the right not to be unfairly dismissed. This means that in order for an employer to terminate your employment they need to show that:
- the reason for the dismissal falls within 5 categories set out in legislation (which includes redundancy); and
- it follows a reasonable process.
Redundancy is a fair reason for dismissal but that’s not enough. Your employer will need to show it has followed a reasonable process which includes:
- warning and consulting with you about the proposed redundancy;
- identifying an appropriate selection pool and criteria; and
- considering alternative employment.
If you have less than two years’ service, whilst your employer does not necessarily have to follow the process above and therefore could terminate your employment unexpectedly without following a process, they are not permitted to terminate your employment if the reason for your dismissal is discriminatory or because you have made a protected disclosure.
If my job is “at risk” does that mean I have definitely lost my job?
Short answer is no.
Being put at risk of redundancy is only the first stage in the redundancy process. Your employer should consult with you before reaching a decision on whether your role is redundant. You should have at least two meetings as part of the consultation process.
The purpose of consultation is to discuss with you the rationale behind the proposed redundancy and the basis for your selection (including the pool and selection criteria). The consultation meetings give you an opportunity to put forward any suggestions which you may have to avoid your redundancy for your employer to consider.
If you disagree with the rationale for the redundancy and your selection, this is also your time to tell your employer why you disagree with it. Your employer is required to consider your proposals as part of the process and then come back to you as to whether they agree with them and if not, why not.
Sometimes, the suggestions/objections that are made can be accepted by your employer which could avoid your redundancy; however this is not always the case.
In any event, even if your role is confirmed to be redundant, your employer is obliged to look for and consider you for any suitable alternative vacancies that become available in the business or any associated companies. As such, depending on the circumstances surrounding the redundancy, there could be opportunities for you to move to a new position.
What am I entitled to if I am made redundant?
If you have more than two years’ service and you are made redundant, you are entitled to receive:
- A statutory redundancy payment: This is the minimum payment required under mandatory law. It will be calculated based on your age and length of service at the time of your dismissal.
- Any contractual entitlements: Many employments offer a contractual entitlement that exceeds the statutory minimum. As a minimum you will be entitled to work or be paid in lieu of your notice. In addition, you are also entitled to be paid any accrued but untaken holiday. Things to look out for are whether your contract provides for any other remuneration, for instance a contractual bonus and what the terms of payment of that bonus are.
If you have less than two years’ service, you will not be entitled to receive a statutory redundancy payment, but check your employment contract whether you have a contractual entitlement.
Can I get more? What about those big redundancy payments everybody in the City seems to be getting?
It is true that senior employees who have been in service with the same company for a long time often receive substantial redundancy payments. This will depend on the terms or your employment contract and whether your employer has a redundancy policy.
Check to see whether your employer has a redundancy policy which provides for an enhanced redundancy payment. You may also be entitled to an enhanced redundancy payment if your employer has a custom and practice of paying more so it is worth asking this question as part of your redundancy consultation process.
What else can I claim?
Often, employees don’t just want extra money but also non-financial assistance, for instance through the provision of outplacement services, counselling or career coaching. Unfortunately, there is no obligation for an employer to offer these but it’s definitely worth asking about this as part of your consultation process. Many of Hans’ clients had their career coaching paid for in this way by their ex-employer.
Quite often, employers offer enhanced redundancy packages in exchange for entering into a settlement agreement (see more details below).
What is a settlement agreement?
Very simply, it is an agreement in which you agree to waive all claims that you may have against your employer. In return, your employer will agree to a termination payment or other consideration.
This is an important document to get right. In order for it to be valid, you need to seek advice from an independent lawyer. Employers will usually pay, or at least contribute to, the legal fees you will incur in obtaining this advice.
If you have agreed additional elements to your redundancy package, such as payment of career coaching, this would usually be included in this agreement.
Does my employer have to give me a reference?
Unfortunately not, unless you are in certain regulated jobs in financial services. Most employers provide references voluntarily though and you can also make it a contractual requirement in any settlement agreement and agree what is to be included.
If your employer does provide a reference, it must be true, accurate and fair.