The latest official figures show that redundancies are on the rise this year. Expected redundancies are up from 22,525 in June to 23,975 in July, based on the number of HR1 forms filed to HMRC. While this data lags behind real-world figures because of the way it is collated, many big companies have already announced redundancies.
The biggest so far includes Wilko. Its collapse has put around 12,500 jobs at risk. But it is far from alone in making layoffs. Deloitte is expected to lose around 800 of its UK staff, while even behemoths like Google, Amazon, Yahoo and Meta have made redundancies this year. As early as February, the Retail Gazette highlighted that 15,000 jobs in retail had been cut by the time this story was published.
Employees can do little to avoid the cull, but the least you can do is understand what you can expect from your employer. If you’re an employer, then you also need to understand your legal obligations.
Responsibilities of an employer
Let’s start with the employer’s responsibilities. To make a person or people redundant, their job or jobs must no longer exist. If this isn’t the case, it won’t be considered a genuine redundancy. Then you must choose who to make redundant.
This must be carefully considered, especially if you are making compulsory redundancies, as the people you choose must be chosen fairly. For example, under the Government’s fair selection criteria, you can consider:
- skills, qualifications and aptitude,
- standard of work and/or performance,
- disciplinary record.
You can use the ‘last in, first out’ approach legally too, providing it doesn’t unfairly impact one group over another. However, you cannot choose people based on:
- pregnancy, including all reasons relating to maternity,
- family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants,
- acting as an employee representative,
- acting as a trade union representative,
- joining or not joining a trade union,
- being a part-time or fixed-term employee,
- age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation,
- pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage.
For voluntary redundancies, you must be clear about how you are going to choose people, and ensure they understand you may not give them redundancy just because they applied for it. Another way to reduce staff numbers voluntarily is to offer people incentives to take early retirement. This must be offered across the entire workforce to comply with legislation. But you can’t force someone to retire early.
At all times, good communication between employers and employees is paramount, so everyone knows where they stand, and trust is maintained.
What employees need to know
Employees want to know they are being treated properly, and there are different rules employers must follow depending on how many redundancies they’re making. If it is less than 20, there are no hard and fast rules, but you should still be fully consulted on plans and kept informed of what is about to happen.
If more than 20 people will be made redundant within the same ‘establishment’ as the Government puts it, within a 90-day period, then the company must go through a ‘collective consultation’. Staff or union representatives should be informed initially if they are in your workplace, or the company must speak directly to the staff.
The consultation period must last for at least 30 days if 20-99 people are being made redundant, or 45 days if it is 100 or more. Once this is done, then you will be given notice of your redundancy. At the very least this should include:
- the reasons for redundancies,
- the numbers and categories of employees involved,
- the numbers of employees in each category,
- how you plan to select employees for redundancy,
- how you’ll carry out redundancies,
- how you’ll work out redundancy payments.
How is redundancy pay worked out?
How much redundancy pay you will get depends on a variety of factors, but there are rules around the minimum statutory redundancy pay that should be offered. For example, anyone not under an employment contract, those with the company less than two years, and those who have taken early retirement won’t get statutory redundancy pay. Your employer may still pay you, but it is not compulsory.
Any employee receiving redundancy pay should be told exactly how it has been worked out in a written statement. The statutory redundancy pay rules allow for amounts equivalent to:
- 5 weeks’ pay for each full year of employment after your 41st birthday,
- one weeks’ pay for each full year of employment after your 22nd birthday,
- half a weeks’ pay for each full year of your employment up to your 22nd
The length of service is capped at 20 years under these rules, and the amount you will receive is based on the average of the amount you earned in the previous 12 weeks prior to you being made redundant. Even so, weekly pay is capped at £643 per week, and the total statutory redundancy payout is capped at £19,290. But remember, your employer can decide to pay you more, or you may be able to negotiate more.
This payment should be made when you are made redundant, but if not, or your employer doesn’t agree with the amount, you have up to three months to claim the payment due from an employment tribunal. So, even though this might be an emotional time, keep your eye on the calendar to make sure you don’t miss out. The good news is that even if you miss this deadline, the tribunal would have up to six months to decide whether you should receive the money.
We can help you
If your business needs to make redundancies, or you’re an employee about to be made redundant, please get in touch with us and we will help to either make sure you are complying with all of the relevant regulations, or receiving what you expect.