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Being made redundant

Losing a job, especially if you have been with a firm for a long time can be a difficult and traumatic experience. However, knowing your rights at this time will be of some assistance and will help remove a little of the extra burden at the very least.

Defining redundancy

Redundancy is one of the five potentially fair reasons for dismissal and occurs where there is a situation in which an employer decides to reduce the number of its employees, either within the business as a whole, or within a particular site, business unit, function or job role. An employer may decide to make redundancies for a variety of reasons, including:

  1. Recession or other economic pressures making business closure or reduction in staff numbers necessary.
  2. Changes in the nature of products or services provided.
  3. Internal reorganisation to make more efficient use of roles and duties.
  4. Technological developments resulting in change to some or all job functions.
  5. Relocation of business.

Although redundancy is a potentially fair reason to dismiss someone, the employer nevertheless has to follow procedures:

If an employer is seeking to reduce the staff numbers they have to:

  • Identify an appropriate pool from which to select those suitable for redundancy
  • Use a fair selection criteria
  • Consult with employees about possible alternatives
  • Consult with trade unions/staff representatives though this only applies if over 20 redundancies are being considered

If an employer fails to follow a fair and reasonable procedure this may give grounds for an unfair dismissal claim. If this was to be the case then compensation would normally be awarded. The person would be able to claim a basic award which is worked out the same way as a statutory redundancy payment (taking into account the person’s length of service, age and salary.

The person will also be entitled to be paid in lieu of any untaken holiday and any other contractual payments owed.

The person would also be entitled to claim for a compensatory award which compensates for the loss of employment going forwards. This is capped at the lower of either one year’s loss of employment or £76,574.; the first £30,000 of this award is tax free.