Handling
Redundancy
This document gives general information about the redundancy payments
scheme under the Employment Rights Act 1996 (referred to as 'the Act' in
this document). It outlines provisions relating to time off to look for
work or to make arrangements for training when facing redundancy and
explains how a complaint is settled.
It also explains the rules for offsetting pension and lump sum payments
under occupational pension schemes against statutory redundancy payments.
It is not a complete or authoritative statement of the law; only the
courts can provide that. If in doubt, you should seek your own independent
legal advice.
The Redundancy Payments Offices can give you more information about
entitlement in cases where an employer fails to pay a statutory redundancy
payment for which an employee qualifies..
HELPLINE
There is a helpline to answer your questions. The number to ring is 0845
145 0004 (calls are charged at local rates).
Redundancy payments
When is a redundancy payment due?
Your employer must give you a lump-sum payment if:
you are made redundant;
you have at least two years continuous service since the age of 18; and
you meet the other conditions set out in this document.
You may also be entitled to other - non-statutory - payments if this has
been agreed in your contract of employment.
Who can qualify?
You will receive payment only if you are an employee working under a
contract of employment. Self-employed people and members of a partnership
do not qualify under the Act though they may have separate contractual
agreements..
Directors and other office holders may be employees if they work under a
contract of employment. They will not qualify if they do not work under a
contract of employment..
Contracts of employment may be spoken or written and last for any length
of time or be fixed. In law, employees generally have a contract as soon
as they start work and by doing so prove that they accept the conditions
offered by the employer.
For further details see: Contracts of Employment (PL810).
A few groups of employees do not qualify for a statutory redundancy
payment. See Employees who may not be entitled to a redundancy payment
What 'dismissal' means
In general, to be due a payment, you must have been dismissed by your
employer rather than have resigned and the reason for dismissal must have
been redundancy.
If you are laid off (that is, you receive no wages) or put on short time
(that is, you receive less than half a week's pay) for four weeks in a row
or six weeks out of 13 weeks, you may also claim a redundancy payment
without waiting to be dismissed for redundancy. You must make your claim
in writing to your employer, who may refuse to pay if he or she believes
normal working is likely to return within four weeks.
If you are on a fixed-term contract and it ends without being renewed,
this counts as a dismissal and you may be due a redundancy payment.
If your employer says that redundancies will be needed and asks for
volunteers you will qualify for a payment if you volunteer, as long as
your employer actually dismisses you.
If your employer changes in circumstances covered by the Transfer of
Undertakings (Protection of Employment) Regulations 1981, your contract of
employment will be transferred automatically to the new employer. You have
the right to tell the new or previous employer that you do not want to be
transferred. However, this will be treated as a resignation, and you will
not be entitled to a redundancy payment. The document Transfers of
undertakings (PL699) explains the Regulations.
If you have been given notice of redundancy, you may leave early by
agreement with the employer and still qualify for payment. But the minimum
period of notice which the employer has to give (by contract or by law)
must have started by the time you give your notice.
What 'redundancy' means
You will be entitled to a payment under the Act only if the reason for
your dismissal is redundancy. This means that your dismissal must be
caused by your employer's need to reduce his or her workforce. Redundancy
may happen because a work place is closing down, or because fewer
employees are (or are expected to be) needed for work of a particular
kind. Normally your job must have disappeared. It is not redundancy if
your employer immediately takes on a direct replacement for you. But it
will not matter if your employer is recruiting more workers for work of a
different kind, or in another location (unless you were required by
contract to move to the new location).
If you are dismissed because of a need to reduce the work force, and one
of the remaining employees moves into your job, you will still qualify for
a redundancy payment so long as no vacancy exists in the area (type of
work and location) where you worked.
General rules on length of service
You must generally have at least two years' continuous service with your
employer to qualify for a payment. Service before the age of 18 does not
count for these purposes. The rules on length of continuous service are
described briefly in the What are the payments? section and in more detail
in Continuous employment and a week's pay: rules for calculation (PL711).
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