Redundancy - the law

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;


• give redundancy pay to all employees with at least two years’ service calculated 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 (£475 from 6 April 2015); and


• offer any suitable available vacancies. 


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


Key developments 


• The duty to consult collectively over proposed redundancies under the Trade Union and Labour Relations Consolidation Act 1992 applies to public administrative bodies based in England, Wales and Scotland even if the employer is a foreign state (case 6).