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Eight things you need to know if you’re at risk of redundancy as a new law protects furloughed workers’ pay

Worried you’ll lose your job during the coronavirus crisis? Here are your rights and where to find help

Eight things you need to know if you’re at risk of redundancy as a new law protects furloughed workers’ pay

The UK government has recently passed a new law that means furloughed workers will be entitled to redundancy pay based on their normal wages, rather than their reduced furloughed rate.

Despite the government’s efforts to save jobs through the Coronavirus Job Retention Scheme, which pays up to 80% of workers’ salaries who have been placed on furlough due to the coronavirus outbreak, an estimated 150,000 have already been made redundant.

This comes just a day before the scheme begins to get wound down, as employers have to start paying furloughed employees’ National Insurance and pension contributions from 1 August; a change which could spark more job losses as ailing businesses struggle to make up the costs.

Fears are mounting that the UK will see the biggest drop in employment on record over the coming months, with figures from the Office for National Statistics (ONS) revealing this week that 600,000 UK workers lost their jobs between March and May alone.

There are currently more than 9.5 million people on the government’s £64bn Job Retention Scheme, which was designed to help prevent mass job losses caused by the coronavirus lockdown.

Here, Which? explains the key things you need to know if you’re at risk of being made redundant.

  • Which? Legal can offer its members personal advice on redundancy. Visit Which? Legal to find out more.

1. Being ‘at risk’ doesn’t necessarily mean you’ll be made redundant

Redundancy is one of the few legitimate reasons why an employer can terminate someone’s employment and they should notify you that you’re ‘at risk’ of redundancy.

However, this doesn’t necessarily mean that you will be made redundant. In some cases, your employer may try to redeploy you somewhere else.

You do have the right to refuse an offer of alternative employment. However, if you unreasonably refuse an offer of suitable alternative employment, it could mean you miss out on your statutory redundancy pay.

2. Your employer must follow a set of procedures under UK law

If your employer doesn’t follow the procedures required by employment law and you have worked there for more than two years, your dismissal could be deemed unfair.

For example, if your employer is reducing staff numbers in a particular role within the business, they must:

  • Identify a suitable pool of people to select from
  • Use fair selection criteria to decide who from the pool will be made redundant
  • Consult with each employee meaningfully about any possible alternatives to redundancy
  • Consult with trade unions/staff representatives if more than 20 redundancies are completed.

Failure to comply with the law means a claim can be made and may result in an employment tribunal finding the dismissal to be unfair. If the tribunal agrees that the dismissal is unfair, compensation may be awarded.

3. You can’t be made redundant in certain situations

The following is a list of some of the reasons why any selection for redundancy will automatically be deemed unfair:

  • Pregnancy
  • Being on maternity, paternity or parental leave
  • On the grounds of your sex, race, sexual orientation, any disability, gender reassignment, religion or belief
  • For whistle-blowing
  • For making a flexible working request
  • Your role as a representative for, or your membership of, a trade union
  • Working part time or on a fixed-term contract
  • Your membership of a trade union
  • Your work as an employee representative
  • Being a pension trustee
  • Reasons relating to your rights to minimum pay and working hours, including annual leave.

Your employer must give you a full explanation of why you have been selected for redundancy – and it must not include any of the reasons above or any other reasons that are deemed unfair.

4. You’ll usually get a notice period

The length of the notice period can vary depending on what’s in your contract and how long you’ve been with the company.

Statutory minimum notice periods in England, Wales and Scotland are:

  • At least one week if you’ve been with the company for between one month and two years
  • For those employed for between two and 12 years, a week for each year of employment
  • If employed for 12 years or over, 12 weeks.

In some cases, your employer may give you a longer notice period, regardless of how long you’ve worked for them.

If the company is unable to keep you on for your notice period (for example, if it’s going out of business), you’re still entitled to compensation for your notice period.

You may be offered payment in lieu of notice. This means your employer asks you to leave the firm earlier, but still pays you your basic salary for your notice period. Unless your contract says otherwise, it’s unlikely you will be entitled to the monetary equivalent of any entitlements/benefits you would have received had you worked your notice period, eg pension contributions.

5. You’re entitled to a redundancy package

Redundancy pay can depend on a number of factors, including what your contract says and what you agree to in your consultation.

Everyone who has been with the business for two or more years is usually entitled to statutory redundancy, which is worked out based on how long you’ve worked at the organisation (up to a maximum of 20 years’ service) and your age.

Age Redundancy pay per full year’s work
18-22 Half a week’s pay
22-40 One week’s pay
41 and older 1.5 weeks’ pay

In this situation, those made redundant (in England, Scotland and Wales) will have weekly pay capped at £538, with the maximum amount of statutory redundancy pay capped at £16,140.

In some instances, for example, if you refuse suitable alternative work without a valid reason, you won’t be eligible for statutory redundancy pay.

It’s worth noting that statutory redundancy pay tends to be a minimum and some employers may offer more, so make sure you discuss redundancy pay during your consultation.

Whether you’re offered more money or not, you’re still entitled to any holiday pay, commission and bonuses you are owed. These types of payments will be subject to tax. However, the rest of your redundancy package, whether statutory or extra, will not be taxed up to £30,000.

You can use our income tax calculator for 2020-21 to work out how much tax you’ll pay on your total income.

6. You’ll receive your redundancy pay in the same way you receive your salary

Your employer should pay your redundancy on the date that you leave the company or your next normal pay date. It will usually be paid into your bank account.

Your employer should also provide you with a written document explaining how your redundancy payment was calculated.

If your employer doesn’t pay you, or doesn’t pay you in the way that it should, you can write to them requesting payment.

If this doesn’t work, you have three months less one day from the date you should have received any outstanding salary, commission, bonuses or holiday pay, in which to issue a claim in the Employment Tribunal. Generally speaking, you have six months in which to issue a claim for an outstanding statutory redundancy payment, although it will be preferable to start proceedings as soon as possible.

Before issuing a claim, you first need to go through ACAS Early Conciliation. It will see if your employer will resolve the dispute without going to a tribunal. You need to start Early Conciliation within the three months less one-day deadline to issue a claim.

If your employer is insolvent and hasn’t paid you what you’re owed, you can claim from the National Insurance Fund by using the ‘claim for redundancy and monies owed’ service.

7. You could be entitled to claim Universal Credit

The government has announced changes to Universal Credit thresholds and allowances to help people that fall into financial hardship as a result of the coronavirus pandemic.

How much you get depends on your circumstances, including how much you earn, whether you have children and how many you have, and whether you’re unable to work.

The amount you have in savings could also affect how much you receive.

You can read our guides on how Universal Credit is calculated and what the government’s measures to protect wages mean for you for more information.

8. The government has launched a new job site

The government has launched a new Job Help site for people in England, Wales and Scotland, which currently lists over 65,000 roles. 

It’s also offering tips, including which sectors are recruiting, how best to use your transferable skills and how to secure a new role. 

There is a different service for jobs in Northern Ireland.

  • You can find out more of the latest coronavirus updates and advice with Which?

This story was originally published on 21 June 2020 and has since been updated. The latest update was on 30 July and included information about the new law for furloughed workers being made redundant.


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