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What is redundancy, who can be made redundant, and what are my rights?

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What are your rights in case of redundancy in the United Kingdom?

What is Redundancy?

Redundancy is an English term used to describe dismissal for economic or organizational reasons. This can happen when a company needs to reduce its workforce to cope with financial difficulties (redundancy due to personnel reduction), often caused by events like the coronavirus crisis. It’s not the same as being dismissed for misconduct or just cause.

If you’ve been affected by redundancy, UK law provides you with protection. Regardless of how challenging it may be, there are rules and regulations that employers must adhere to.

Who Can Be Selected for Redundancy in the UK?

When it comes to the challenging decision of reducing the workforce, the selection of employees is a crucial step. It’s important to know that dismissals shouldn’t happen lightly. UK law clearly defines the criteria that employers must follow, and there are some fundamental rules that must be adhered to.

Selection Criteria: What Doesn’t Count

Certain criteria cannot, under any circumstances, justify dismissal. These include:

  • Age or Gender: Your age and gender can’t be valid reasons for redundancy.
  • Pregnancy: If you’re pregnant, your condition should not influence the decision to dismiss you.
  • Union Membership: Being an active union member shouldn’t be a basis for selection.
  • Leave for Holidays or Maternity: Requesting leave for holidays or maternity should not jeopardize your job.

Permissible Selection Criteria

Employers can consider legitimate criteria for selecting employees for redundancy. These may include:

  • Length of Service: The “last in, first out” principle is a common practice.
  • Disciplinary Records: Previous disciplinary incidents may influence the decision.
  • Volunteers for Redundancy: In many cases, companies ask employees to volunteer for redundancy. However, the final decision on who gets made redundant lies with the employer.
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It’s crucial to remember that these rules are designed to ensure fair and lawful employee selection during redundancy. Employees should feel secure in the knowledge that their rights are protected throughout the redundancy process.

I’m on Furlough. Can I Be Fired in the UK?

It’s a common question, especially during times of economic crisis or financial difficulty. The answer is that, yes, you can be terminated even while on furlough in the UK. Furlough, is an action employers can take to reduce operational costs, but it doesn’t guarantee complete job protection.

While it’s possible to be terminated during furlough, employers must strictly adhere to regulations and employee rights, following the proper procedures. Everything must be done legally and in accordance with UK labor laws.

For employees on furlough who are concerned about losing their jobs, it’s important to be informed about your rights and have a clear understanding of labor laws. Consulting a legal professional specialized in employment matters may be helpful to ensure fair treatment during this uncertain period.

Can My Employer Terminate Me Without Notice?

No!

The amount of notice you’ll receive depends on how long you’ve been employed with the company:

  • At least one week of notice if you’ve worked for one month to two years
  • One week of notice for each year of employment if you’ve worked from two to twelve years
  • 12 weeks of notice if you’ve been employed for 12 years or more
  • In the case of termination, you have the right to a consultation with your employer.

If the company is cutting 20 or more jobs, they must organize a collective consultation involving a union or employee representative. This consultation process should begin at least 30 days before an employee’s job ends. If 100 or more workers are involved, the consultation must begin 45 days before. The consultation process is carried out even if the company is insolvent and permanently closing.

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What Redundancy Pay Am I Entitled to?

If you have worked continuously for your employer for two or more years, you have a legal right to receive redundancy pay. There is a legal minimum, but some employment contracts and employers are more generous.

The amount depends on your age, length of service with the company, and your salary. You can make a rough calculation using the government’s calculator. You will receive at least:

  • Half a week’s pay for each full year of work if you are under 22
  • One week’s pay for each full year of work if you are between 22 and 41
  • One and a half week’s pay for each full year of work if you are 41 or older
  • An employer is not obliged to pay you more than £16,140 or £16,800 if you are in Northern Ireland

If you still have unused vacation time when you leave, you are entitled to be paid for accrued holidays.

If a company has gone bankrupt, the government itself may provide redundancy pay.

What Happens to the Taxes I’ve Paid?

The first £30,000 of any redundancy pay is tax-free.

This amount includes all non-monetary company benefits that are part of your redundancy, such as a company car or computer. Their value will be quantified and added to your redundancy pay.

Any amount exceeding this threshold will be subject to taxation.

Remember to Check Your Taxes

One of the important things to keep in mind when you’re involved in a redundancy is managing your taxes. At the end of the fiscal year, which runs from April to March in the UK, it’s good practice to check your tax status to ensure you’re on the right track and have paid the correct amount of taxes. This is particularly relevant if you’ve found a new job in the meantime.

When you find a new job after a period of redundancy, your income and taxes may change. This can affect the taxes you should pay or the taxes you may have overpaid during the period of unemployment.

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If you’ve overpaid taxes during your period of unemployment, you may be eligible for a refund. On the other hand, if your new salary is significantly different from your previous job, you may need to make changes to your tax codes or deductions.

Keeping a close eye on your taxes will help you stay in control of your financial situation and avoid unpleasant surprises. If you have specific questions about your taxes or need assistance, read our article or send us an email.

Search for Your New Job

In the event of redundancy, you may be granted paid time off to look for another job.

If you have worked continuously for your employer for at least two years, you can take 40% of your workweek off, for instance, two days out of five, to attend job interviews.

Your employer must pay you for the hours you are absent when job hunting. If you take more time than is granted, the employer is not obligated to pay you for the additional hours you were away, although some employers may be more generous.

Anyone who is made redundant may be eligible for scholarships, loans, and free courses.

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