Redundancy pay and rights

When an employer makes a worker redundant, there are certain processes and procedures they have to follow to ensure they stay on the right side of employment law.

11th January 2023

If you have been selected for redundancy, certain employment rights may apply. You should be given:

  • A notice period, which may vary depending on how long you have worked for your employer.
  • Statutory redundancy pay, if you have been an employee for at least two years or contractual redundancy pay.
  • A consultation to explain the reasons for your redundancy, how you were selected, and any alternatives to your redundancy.
  • Offers for suitable alternative employment within the organisation.
  • Paid time off to look for a new job, if you have worked for your employer for at least two years.

Settlement agreements

In certain situations, you may also be offered a settlement or compromise agreement by your employer. These are increasingly being used to reach resolutions which benefit both the employer and employee. DAS Law can help support you through the process to a suitable outcome.

More on settlement agreements

Notice periods for redundancy

Your notice period determines the minimum amount of time you have left between your employer telling you that you are being made redundant and the actual end date of your employment. Your employment contract may give you a longer notice period, but if not, the legal minimum requirements are:

  • A week’s notice if you have worked for your employer for between 1 month and 2 years;
  • A week’s notice for each year of employment if you have worked for your employer for between 2 and 12 years; or
  • 12 weeks’ notice if you have worked for your employer for over 12 years.

You should receive full pay throughout your notice period.

You should receive full pay throughout your notice period. Alternatively, your employer may have the contractual right to give you a payment in lieu of notice. This means that your employment will end immediately, but you will still receive the basic wage you would have been paid during the notice period.

If there is no clause allowing payment in lieu of notice in your employment contract, you should be given compensation for any benefits that you would have received over the duration of your notice period.

Redundancy pay

If you’ve been with your employer for two years or more before being made redundant, you will usually be entitled to redundancy pay.

The amount you will be paid is:

  • Half a week’s wage for every full year of employment in which you were aged under 22;
  • A week’s wage for each year of employment in which you were aged 22 or over, up to the age of 41;
  • A week and a half’s wage for every full year of employment in which you were aged 41 or over.

For the purposes of calculating redundancy pay, the figure for a week's wage is cap and the cap changes every April.  Please visit https://www.gov.uk/redundancy-your-rights/redundancy-pay for more details. Any amount over this cap will be disregarded. Redundancy pay also caps out at 20 years' service.

If your employer offers you the option to continue working for them, or suggests a suitable alternative role which you turn down for no good reason, they do not have to give you any redundancy pay.

Redundancy consultations

If you’re facing redundancy, your employer should organise a consultation to discuss it. This discussion should cover the reason redundancies are required, why you have been selected, and any alternatives they can offer, such as another suitable role that you could switch to.

If you’re facing redundancy, your employer should organise a consultation to discuss it.

If 20 or more employees are to be made redundant at once, your employer should instead arrange a consultation in which they will meet with an employee representative.

They will discuss the reasons why the redundancies are taking place, as well as potential ways to avoid or minimise the number of dismissals, and what help could be offered to those facing redundancy.

In these situations, full written details of the redundancy plans and procedures should be supplied to staff members or their representative. When a collective consultation takes place, the employee representative will either be a trade union representative (if the employees have a union) or simply an employee elected by the other employees to represent them.

Man on work meeting from homeIf you’re facing redundancy, your employer should organise a consultation to discuss it.

There are minimum periods which dictate when a collective consultation must take place before any dismissals can be enforced. If there are to be 20 to 99 redundancies, it must start at least 30 days before dismissals begin; with 100 or more redundancies, this increases to 45 days. There is no upper limit on how long a collective consultation can take.

Suitable alternative employment

If you have been selected for potential redundancy, your employer may instead offer you a similar role within the company, or a position at another organisation which has close ties to yours. This is known as ‘suitable alternative employment’.

If you have been selected for potential redundancy, your employer may instead offer you a similar role within the company.

It is important to note that if you turn down such an offer, you may no longer be entitled to receive redundancy pay, as you are effectively refusing to continue working for your employer.

However, this depends on whether the job truly is ‘suitable’. In order to count as suitable alternative employment, a number of points need to be considered, such as:

  • How the work involved compares to your current job;
  • Whether the hours, wage, location, and so on are acceptable;
  • Whether your skills, abilities and personal circumstances match the role.

Your employer needs to offer the alternative role to you before your current job comes to an end, and must supply enough information about the position for you to judge how similar it is. You are also entitled to a four-week trial period to try out the new job and see if you feel it is right for you. If not, you should let your employer know that you think it is unsuitable before the trial period is up.

If you and your employer disagree about whether a job they have offered is suitable, and there seems to be no other way to handle the issue, you may be able to make a claim to an employment tribunal.

On the other hand, if your employer has a suitable role available but fails to offer it to you as an alternative to redundancy, this may count as unfair dismissal, and you could take action against them.

If you are on maternity leave and you are faced with a redundancy situation, you are entitled to be offered any suitable available vacancy with your employer or associated employer without the need to apply for it.

Taking time off to find a job

If, by the time your employment ends, you have been working for your employer for at least two years, you have the right to take a reasonable amount of time off in your notice period, in order to look for a new job or to sign up for training which will help you find employment.

What is considered ‘reasonable’ will vary on a case-by-case basis; there are no rules covering this, and you will have to reach an agreement with your employer.

Unless your employment contract states otherwise, your employer only has to pay you 40% of one week’s wage for any time you take off to find a job during your notice period. So, if you usually work five days a week and you take six days off during your notice period for job-hunting, you will only be paid for two of those days – 40% of your five-day working week.

If you feel that your employer failed to follow any of the above procedures when making redundancies, you should take a look at our post on problems at work.

Problems at work

Dismissal and Redundancy: 7 things employees need to know

Molly-Ellen Turecek and Simon Roberts look at what an employee needs to know about redundancy.

January 2023 Learn more
What to do if you are made redundant or dismissed

Employment can end for a variety of reasons, good or bad. Be sure to know your rights.

January 2023 Learn more
My employer is advertising my job. Where do I stand?

DAS Law’s Lauren Woolf explains what to do if you find out your employer has been advertising your job without informing you that you are being dismissed.

January 2023 Learn more
How to deal with work disputes and problems

A variety of problems can arise in the workplace, and it's sometimes hard to know how to respond to these situations. Being aware of your rights under employment law can be a huge help.

January 2023 Learn more

Read more from the DAS Law blog

Employment disputes Workplace stress: your responsibilities as an employer

Commenting on Stress Awareness Week, Sarah Garner, Solicitor at DAS Law, takes a look at what the law says employers needs to do about stress.

April 2024
Employment disputes International Stress Awareness Month: your workplace rights

To mark International Stress Awareness Month, Sarah Garner takes a look at what the law says your employer needs to do about workplace stress.

April 2024
Employment disputes Don’t get in trouble with the law on April Fool’s Day

When does the line between hilarious and harsh get crossed and can a prank turn into legal proceedings?

March 2024
Employment disputes Top 10 Settlement Agreement tips for employers

The purpose of a Settlement Agreement is to bring an employment relationship to an end by mutual agreement. Here are our top 10 tips for moving people on with settlement agreements.

March 2024
Employment disputes Do employees get extra pay on a leap year day?

Every four years, many workers find themselves cramming an extra day of work into an already packed year. But are workers in the UK entitled to extra pay for this extra work?

February 2024
Employment disputes How Maternity, Adoption and Shared Parental Leave regulations are changing this year

In this Bitesized Edition, we look at the new Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations, set to come into force on 6 April 2024.

February 2024
Employment disputes 9 things employers need to know about apprenticeships

With National Apprenticeship Week here, we explain what employers need to consider regarding apprenticeship schemes and their legal obligations.

February 2024
Employment disputes How flexible working regulations are changing this year

Amendments to the current flexible working legislation will come into force this year. Any flexible working applications made on or after 6 April 2024 must be dealt with in accordance with the regulations.

January 2024
Employment disputes Holiday Pay Guidance from the Government – The Bitesized Edition

The Government has issued guidance on calculating holiday pay to simplify holiday entitlement for irregular hours and part-year workers.

January 2024
General advice , Employment disputes Be on your best behaviour at your work Christmas party

Charlotte Ellis. Legal Adviser at DAS Law, looks at the rules surrounding the office Christmas party.

December 2023
Employment disputes Don’t get a red card while watching the World Cup at work

If you are planning on watching World Cup matches at work there are a number of important things to consider.

August 2023
Employment disputes How employers can prevent harassment or bullying in the workplace

Employers can be liable for employees who have subjected other employees to harassment in the workplace if they have not taken reasonable steps to prevent harassment.

July 2023
Employment disputes How “purpose or reasonable effect” can affect workplace harassment cases

Harassment in the workplace has come under a spotlight in the last few years and employers have put their policies and practices under the spotlight to ensure they are doing all they can to eliminate it.

July 2023