What Is the UK Law for Making People Redundant?

This article covers making people redundant under UK law. Redundancy is a type of dismissal from employment. Usually, it happens when an employer has to reduce staff/workforces.

The Employment Rights Act 1996 states that an employee that is being dismissed under the term of redundancy has to be dismissed fairly and under one of the following reasons:

  • The business is no longer going to be attainable and is closing.
  • The branch or branches in which the employee is/was working is closing.
  • The needs of the business for employees to continue a specific type of work have ceased or diminished.
  • The needs of the business for employees to continue a specific type of work, in a particular place have ceased or diminished.

How Can We Ensure Making People Redundant is Fair and Legal?

In order for a redundancy to be considered fair, the employee must be selected for redundancy. Ways in which employers do this objectively is:

  • Last in, first out: Newest employees are the first to be made redundant leaving longer serving employees in employment as long as viable.
  • Voluntary/self-selection: An employer can ask if anyone would like to put themselves forward for redundancy.
  • Staff appraisal markings or disciplinary records.
  • Skills, experience, and qualifications

Unfair redundancy/dismissal is being dismissed without good reason. This is also when an employer does not follow company policy for termination of an employee.

Unfair dismissal is always a possibility. For example, if the policy of ‘last-in, first-out is applied, it is imperative that it does not discriminate against one group of employees such as young people.

What are Redundant Employees Entitled to?

Upon being made redundant there are certain things an ex-employee may be entitled to such as:

  • Compensation/Redundancy pay. Monetary compensation for having to finish work.
  • A period of notice. An official amount allotted time, usually pre-written in employee contracts. Also, sufficient for an employee facing redundancy in which for them to find other forms of employment.
  • A consultation with the employer. A meeting underlining why the employee is facing redundancy and any available alternatives.
  • The option to move into a different job: If possible, to be moved to a different area of the business under an official agreement between the parties.
  • Time off to pursue different employment: Time given from work in order to find employment before the period of notice ends.

Therefore, to decide whether or not an employee being made redundant is entitled to a redundancy payment the Trade Union and Labour Relations (Consolidation) Act 1992 is applied.

The definition of which relates is ‘dismissal for a reason not related to the individual concerned’. So, if the individual is being dismissed for a reason concerning their conduct, performance etc they would not be entitled to redundancy.

As a result, you will only be entitled to redundancy pay if you worked for your employer for 2 years or longer.

You may get:

  • Half a week’s pay for each full year you were under 22.
  • One week’s pay for each full year you were 22 or older, but under 41.
  • One and half week’s pay for each full year you were 41 or older.

You may lose your right to statutory redundancy pay if you unreasonably turn down suitable alternative employment.

What About Making People Redundant and Covid-19?

If an employer has made an employee redundant during the pandemic, Covid-19, then the employer may be able to reemploy previously redundant employees at 80% of their previous wages.

Also, see our article on Annual Leave.