LRD Booklets October 2013

Redundancy law - a guide to using the law for union reps

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Introduction

Introduction (384 words)

Even though the figures for quarterly redundancies have flattened since the height of the economic downturn, they remain a regular and unwelcome ...
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Chapter 1

1. WHAT IS REDUNDANCY? (94 words)

Not every situation in which employees lose jobs through no fault of their own is covered by redundancy law, and confusingly, “redundancy” has ...
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The statutory test for redundancy (1,025 words)

The right not to be unfairly dismissed for redundancy and to receive a redundancy payment is found in section 139 of the Employment Rights Act 1996 ...
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Relocation redundancies and mobility clauses (488 words)

Under Section 139 of the ERA, there is a redundancy situation where an employer needs fewer (or no) employees to carry out work “in the place in ...
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Reorganisations (318 words)

Where an employer wants fewer employees overall, a redundancy situation is usually obvious. The position is less straightforward where the employer ...
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Changes in shift patterns (187 words)

Simply changing a shift pattern without reducing the number of workers or the kind of work being done is unlikely to create a redundancy situation, ...
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Same role but less pay? (275 words)

Replacing an employee with another employee who will do the same work for less money is not a redundancy, because the need for employees to do the ...
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Replacing direct employees with other workers (262 words)

Replacing direct employees with workers who are not employees will be a redundancy situation, even if they are doing exactly the same job. This is ...
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Bumping (221 words)

The law allows employers to carry out a practice known as bumping, when an employee whose role is redundant is offered someone else’s role, ...
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Has there been a dismissal? (96 words)

Only employees dismissed wholly or mainly because of redundancy are entitled to a redundancy payment. ...
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Voluntary redundancy (299 words)

Employers often call for volunteers first, to avoid compulsory redundancies. An employer asking for volunteers need not apply the selection ...
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Ending fixed-term contracts (264 words)

The ending and non-renewal of a fixed-term contract will be a redundancy situation, as long as the contract is ending because the employer’s need ...
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Notice (233 words)

As well as redundancy pay, employees dismissed because of redundancy are entitled to full statutory notice, or their contractual entitlement to ...
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Redundancy pay and notice (146 words)

An employee who has been given notice of dismissal for redundancy can leave the employment without working the whole of their notice and still ...
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Leaving too early means no redundancy payment (63 words)

An employee who leaves work after planned redundancies have been announced but before being given notice of their dismissal for redundancy has no ...
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Strikers (329 words)

Taking strike action before or during a redundancy period can affect employment rights in the following ...
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Agency workers (128 words)

Only employees can claim a redundancy payment. Agency workers are excluded from this right, regardless of how long they have worked. Agency workers ...
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Zero-hours contract workers (297 words)

Only employees are entitled to claim unfair dismissal or redundancy pay and two years’ continuous service is needed to qualify for a redundancy ...
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Chapter 2

2. COLLECTIVE REDUNDANCY CONSULTATION (387 words)

This Chapter sets out the legal obligations on collective redundancy consultation. The law on individual redundancy consultation is looked at in ...
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The extent of the statutory obligation to consult collectively (475 words)

The employer’s statutory obligation is to consult in good time, about ways ...
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Consultation must be “in good time” (696 words)

Consultation must take place “in good time”. There is no precise definition, but there are minimum ...
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Information that must be provided by the employer (194 words)

For the purposes of consultation, the employer must provide adequate information. Section 188(4) of TULRCA says the employer must provide the ...
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Lack of information does not justify a failure to consult (211 words)

The obligation to start consultation does not depend on the employer being able to supply reps with this statutory information. Instead, the ...
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What about confidentiality concerns? (79 words)

Employers sometimes argue that consultation would create commercial or confidentiality problems. But the rules (including Stock Exchange Rules) do ...
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Who owes the duty to consult? (62 words)

The duty to consult is always owed by the employer, even if it is a subsidiary and decisions are taken by Head Office. The duty to consult is ...
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Consultation must be with a view to agreement (110 words)

Section 188(2) of TULRCA states that consultation must be “with a view to reaching an agreement”. The ECJ has confirmed that genuine ...
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Which employees are covered by the consultation duty? (142 words)

The consultation duty covers any employees directly or indirectly affected by the proposed redundancies, not just those who may be dismissed as ...
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When does consultation end? (27 words)

Consultation ends when it is formally completed, either because the parties reach agreement on all the relevant issues or because agreement proves ...
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Acas guidance — areas for consultation (262 words)

Acas guidance on consultation: How to manage collective redundancies, published in April 2013, includes a sample redundancy procedure. It suggests ...
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Timing of dismissal notices (258 words)

An employer cannot give notice of redundancy before the consultation process has been completed. This important principle was decided by the ECJ in ...
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Each consultation needs a fresh section 188 notice (137 words)

As a general rule, there should be a fresh notice, launching fresh consultation, every time the employer proposes to make 20 or more redundancies ...
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The ending of fixed-term contracts (127 words)

From 6 April 2013, the government changed the law on collective consultation on the expiry and non-renewal of fixed-term contracts. The ending and ...
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The appointment of administrators (198 words)

Where an employer is in financial difficulty and administrators have been appointed, the administrators are under the same statutory duty to inform ...
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Dismissing employees and offering to re-engage them on new reduced terms and conditions (269 words)

It was confirmed in GMB v Man Truck and Bus UK Ltd EAT/971/99 [2000] IRLR 636, that proposals to dismiss 20 or more employees within a 90 day period ...
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Redundancy consultation and TUPE (223 words)

Where a business is sold as a going concern, the Transfer of Business (Protection of Employment) Regulations 2006 (TUPE) are triggered. TUPE has its ...
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Calculating the number of collective redundancies (59 words)

The duty to consult collectively is triggered when 20 or more redundancy dismissals are proposed over a 90-day period. When fewer than 20 ...
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No more “establishment” test? (342 words)

Although the text of section 188 refers to the need for the 20 or more employees to be “at one establishment”, in a landmark decision, USDAW v ...
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Voluntary redundancies (198 words)

All employees who volunteer to be dismissed as redundant must be included when working out whether 20 or more redundancy dismissals are proposed. ...
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Redeployment (166 words)

If an employer plans to redeploy some of the affected employees, so that fewer than 20 are likely to end up being dismissed, it must still ...
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Appropriate representatives (134 words)

Under section 188 of TULRCA, consultation over collective redundancies must take place with “appropriate representatives”. ...
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Electing representatives where there is no recognised union (440 words)

If there is no recognised union or suitable existing non-union representative body, the employer must organise elections for representatives. The ...
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Time off for representatives (202 words)

Reps are entitled to reasonable paid time off for consultation over collective redundancies. Union reps are entitled to reasonable paid time off for ...
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Facilities for reps (77 words)

In 2010, Acas updated its Code of Practice on time off for trade union duties and activities www.acas.org.uk/index.aspx?articleid=2391). The ...
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Statutory protection for representatives (106 words)

Both kinds of rep are protected against unfair dismissal or any detriment connected with their representative role. This protection extends to ...
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Remedies for failure to consult — protective award (126 words)

If an employer fails or refuses to consult, a claim can be made to a tribunal for a protective award. The claim must be made by whoever should have ...
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A protective award is supposed to punish the employer (180 words)

The purpose of a protective award is not to compensate employees for the loss they have suffered, but rather to punish the employer for failing to ...
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The “special circumstances” defence (327 words)

A tribunal should make a protective award unless the employer can point to special circumstances making it not reasonably practicable to consult. ...
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Calculating the protective award (228 words)

The maximum protective award a tribunal can make for failure to consult is 90 days’ pay per affected employee. Reps should note that the cut in ...
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Claiming a protective award (273 words)

If there are trade union or employee representatives, the claim must be brought by the relevant representative(s). ...
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Notification of collective redundancies to BIS (195 words)

As well as consulting employee representatives, the employer is legally obliged to notify the Secretary of State of the Department for Business, ...
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The relationship between collective and individual consultation (240 words)

Even if there is no duty to consult over collective redundancies because fewer than 20 employees are affected, the employer must consult any ...
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Chapter 3

3. REDUNDANCY SELECTION CRITERIA (135 words)

In many workplaces where unions organise, there is an agreed procedure in place for selecting for redundancy. A redundancy procedure will rarely be ...
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Redundancy selection procedures and the law (1,223 words)

An important EAT decision, Williams v Compair Maxim [1982] IRLR 83, laid down basic guidelines for a fair redundancy dismissal regardless of the ...
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Deciding on the selection pool (448 words)

Before selection criteria can be applied, the employer must first decide on the group or “pool” of employees from whom redundancies are to be ...
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Choosing selection criteria (157 words)

Where a union is recognised, selection criteria should be chosen in consultation with the union. Non-union reps or individuals should be consulted ...
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Selection criteria must not be discriminatory (468 words)

If the selection criteria and/or the selection process discriminate on the grounds of sex, race, disability, sexual orientation, transgender, ...
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Sex discrimination (357 words)

It is sex discrimination not to consult adequately with a woman absent on maternity leave (Blundell v Governing Body of St Andrews Catholic Primary ...
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Pregnancy and maternity leave (476 words)

As well as being automatically unfair, it is sex discrimination to select a woman for redundancy for a reason connected with pregnancy or maternity ...
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Temporary and part-time workers (195 words)

Selection of temporary employees for redundancy because of their temporary status is likely to be indirect sex discrimination, as well as being a ...
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Age discrimination (357 words)

Unlike other forms of direct discrimination, age discrimination in redundancy selection can be lawful as long as the employer can justify a ...
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Last in, first out (254 words)

Many agreed redundancy procedures use last-in-first-out (LIFO), which protects employees with longer service from being selected before those with ...
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Abolition of the default retirement age (345 words)

Until 6 April 2011, a statutory retirement procedure was in force, allowing an employer to force the retirement of employees aged 65 or over. The ...
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Apprentices and redundancy selection (110 words)

As a general rule, an apprentice should not be selected for redundancy unless the business is closing down. Apprentices who are wrongfully made ...
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Union membership or activity and redundancy selection (460 words)

It is automatically unfair to select individuals for redundancy because they are (or are not) trade union members. Section 153 of TULRCA says that ...
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Shopworkers (73 words)

A protected shop worker or betting worker (someone whose contract states that they are not required to work on a Sunday, or someone who has been ...
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Attendance, reliability and timekeeping as selection criteria (236 words)

Attendance, reliability and time-keeping are all valid selection criteria. It is legitimate for an employer to value reliability and punctuality. ...
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Automatically unfair selection criteria (305 words)

Some selection criteria are automatically unfair (section 105 ERA 96). If the reason, or if more than one, the main reason, for redundancy selection ...
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Chapter 4

4. PROTECTING DISABLED WORKERS IN A REDUNDANCY SITUATION (329 words)

Redundancy situations can result in discrimination against disabled employees in a variety of ways. Direct discrimination against a disabled person ...
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The duty to make reasonable adjustments (1,340 words)

Under section 20 of the EA 10, employers have a duty to make reasonable adjustments for disabled people at work. In the context of redundancy and ...
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Chapter 5

5. SELECTION METHODS, SCORING AND CONSULTATION (441 words)

An employer should consult on the method of selection, including scoring, and should apply chosen criteria fairly. ...
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Individual consultation and redundancy selection (84 words)

The High Court has given guidance on what fair individual consultation means. In R v British Coal ex parte Price [1994] IRLR 72, it said fair ...
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Is there a right to your scores? (128 words)

Yes. The EAT confirmed in Pinewood Repro Limited t/a County Print v Page [2010] UKEAT 0028 that fair consultation implicitly requires candidates to ...
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Is there a right to other workers’ scores? (144 words)

No. An employer is not obliged to hand over the scores of other employees during the consultation process (Alexander and Hatherley v Bridgen ...
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Can the Data Protection Act 1998 be used to ask for information? (250 words)

Yes, within limits. Employees have a right under the Data Protection Act 1998 (DPA 98) to a copy of redundancy selection material that contains ...
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Is there a right to appeal against redundancy selection? (298 words)

Yes. An employee should always be given the chance to appeal against a dismissal decision and all good redundancy procedures provide a right of ...
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Is there a right to be accompanied? (149 words)

All good redundancy procedures allow an at-risk employee to be accompanied to a redundancy consultation meeting by a union rep or co-worker and to ...
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Acas Code of Practice on Discipline and Grievance 2009 (68 words)

The Acas Code of Practice on Discipline and Grievance 2009 does not apply to ordinary redundancy consultation meetings. However, it will apply to ...
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Checklist: Challenging redundancy selection (157 words)

} keep a careful written record of formal and informal meetings and conversations about the ...
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Chapter 6

6. OFFERS OF ALTERNATIVE WORK (227 words)

In workplaces where unions are recognised, agreements about redeployment and re-training have often been negotiated that are significantly better ...
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Alternative employment — key legal duties (435 words)

} an employer should give employees at risk of redundancy the opportunity to apply for suitable alternative work if available, including, where ...
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The legal effect of an offer of suitable alternative employment (1,118 words)

Under section 138 of the Employment Rights Act 1996 (ERA 96), an employee who accepts suitable alternative employment is not regarded as having been ...
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The statutory trial period (651 words)

Employees have the right to a statutory trial period of four weeks in the new job, if it differs from the job they were doing previously. This can ...
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Is there a legal duty to offer internal vacancies first to suitable employees at risk of redundancy? (177 words)

Not always, although it is good industry practice to offer internal vacancies first to suitable internal candidates at risk of redundancy and only ...
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The special position of employees on maternity, adoption and additional paternity leave (43 words)

The obligation for employers to consider offering alternative employment is much stricter in cases where pregnant women or those on maternity, ...
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Job opportunities (169 words)

Whether or not at risk of redundancy, it is likely to be sex discrimination not to keep an employee on maternity leave informed about any job ...
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Statutory obligation to offer suitable available vacancies (641 words)

Regulation 10 of the Maternity and Parental Leave Regulations 1999 (MPL Regulations) gives important statutory rights to an employee whose role ...
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Time off to look for alternative work or arrange training (264 words)

If suitable alternative work is not available, employees under redundancy notice will need time to look for a new job or to arrange training. ...
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Other arrangements for training and job-search (147 words)

Collective agreements frequently improve on the statutory minimum rules on time off to look for work or arrange training, allowing more days, or ...
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Chapter 7

7. REDUNDANCY PAY, INSOLVENCY, TAXATION AND STATE BENEFITS (166 words)

This Chapter looks at statutory and contractual redundancy payments, including new case law about establishing an implied contractual right to ...
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Redundancy pay under the statutory scheme (345 words)

Under section 135 of the Employment Rights Act 1996 (ERA 96), an employee who has worked continuously for the same or an associated employer for at ...
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Calculating entitlement (96 words)

Statutory redundancy pay is calculated using a statutory formula based on the employee’s age and length of employment, multiplied by a “week’s ...
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A “week’s pay” (252 words)

Under the statutory scheme, the level of redundancy pay depends on an employee’s gross earnings at the date of dismissal, but the calculation of a ...
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The right to a written statement (39 words)

Under section 165 of the ERA 96, the employer must give the employee a written statement explaining how redundancy pay has been calculated. The ...
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Contractual redundancy schemes (29 words)

Many employers offer redundancy schemes that are much better than the statutory scheme. LRD has many examples on its online Payline database, ...
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LRD survey results: contractual redundancy pay (128 words)

In 2011, LRD surveyed reps, collecting updated information about recent changes to redundancy procedures and payments. The survey confirmed that, ...
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Establishing a contractual right (875 words)

Employees are only entitled to enhanced redundancy pay if they can point to a contractual right, either written expressly in the employment ...
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Establishing an obligation to pay enhanced redundancy based on custom and practice (890 words)

Sometimes, a contract is silent on the payment of enhanced redundancy, and other documentation, if any, such as staff handbooks or internal memos, ...
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Some more examples from the cases (322 words)

In Pellowe v Pendragon PLC [1999] UKEAT/804/98/0106, the EAT found no implied contractual promise to pay enhanced redundancy pay, although the same ...
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Age discrimination (445 words)

Any contractual redundancy scheme that uses age-based calculations has the potential to be discriminatory under the Equality Act 2010. However, ...
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Compromise agreements (now called settlement agreements) (129 words)

Employers typically make payment of the non-statutory part of any enhanced redundancy conditional on the employee signing a compromise agreement ...
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Redundancy and insolvency (482 words)

If an employer cannot pay redundancy compensation because of insolvency, it is paid (subject to a cap) by the Redundancy Payments Office (the RPO), ...
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Death of employer (52 words)

Where employment ends due to the death of the employer, this is deemed to be a redundancy (section 136(5) ERA 96). If the deceased employer’s ...
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Taxation (71 words)

Redundancy pay is tax free up to £30,000. HMRC has produced a Redundancy Fact Sheet on its website at: www.hmrc.gov.uk/guidance/redundancy-factsheet. ...
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State benefits (66 words)

Employees who lose work through redundancy are normally entitled to Jobseeker’s Allowance (JSA). For more information see LRD’s annual guide, ...
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Planned changes to TUPE and contractual redundancy rights (353 words)

In a move described by TUC general secretary Frances O’Grady as a “blatant attack on the ability of unions to represent working people”, the ...
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Chapter 8

8. UNFAIR DISMISSAL AND REDUNDANCY (128 words)

There are various ways in which a dismissal on grounds of redundancy can be unfair, entitling an employee to bring a claim for unfair dismissal. ...
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Length of service (27 words)

Unless an employer selects an employee for redundancy for an automatically unfair reason (see chapter 3), a claim requires at least two years’ ...
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Time limit for an unfair dismissal claim (111 words)

The time limit for a claim of unfair dismissal on grounds of redundancy is three months from the date of dismissal. There is discretion to extend ...
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New tribunal rules and fees (240 words)

New rules set out the methods that must be used to issue all tribunal claims from 29 July 2013. The government’s preferred method is online, using ...
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Unfair dismissal compensation and redundancy (371 words)

If a tribunal concludes that an employee would have been dismissed even if the employer had consulted properly, a tribunal is likely to reduce the ...
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Chapter 9

9. LAY-OFFS AND SHORT-TIME WORKING (70 words)

An employer facing financial difficulties or a reduction in work may attempt to lay-off employees or put them on short-time working for a specified ...
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The law (198 words)

A lay-off is defined in section 147 of the Employment Rights Act 1996 (ERA 96) as a situation where an employee is employed under a contract for ...
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Unpaid short-time working or lay-off (225 words)

An employee who agrees to short-time working or to be laid off is entitled to be paid. Their right is to receive either statutory guarantee pay — ...
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Guarantee pay (172 words)

Statutory guarantee pay (section 28 ERA 96) is capped at £24.20 per day as at 2013/14 and is payable for a maximum of five days in any three-month ...
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Redundancy pay for lay-off or short-time working (180 words)

An employee laid off work without pay or put on short-time working earning less than half of an employee’s weekly wage may be able to claim a ...
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Further information

Further information (334 words)

Copies of relevant statutes can be obtained online at: ...
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