Redundancy — the basic legal rules

A redundancy situation exists where an employer closes or intends to close the workplace or reduce the number of employees doing a particular kind of work. In particular, the employer must:

• adopt redundancy selection criteria which are not discriminatory;

• allow employees selected for redundancy time off to look for other work, provided they have at least two years’ service;

• pay redundancy pay to all employees with at least two years’ service calculated by using a statutory formula linked to age and length of service. A week’s gross pay is subject to a statutory maximum cap which is reviewed annually (£380 for 2010, £400 from 1 February 2011);

• offer any suitable available vacancies.

If at least 20 redundancies are proposed, the employer must notify the Department for Business, Innovation and Skills (BIS). It must also consult employee reps with a view to reducing the number of redundancies. There are detailed rules which must be followed. Where an employer fails to consult, a union can apply for a protective award, up to a maximum of 90 days’ pay.