Redundancy law

The key developments

• If an employee has received an enhanced redundancy payment but his/her dismissal is found to be unfair, the additional amount has to be deducted from the compensation that s/he receives (case 1).

• In a collective redundancy situation, an employer must consult about the reason for redundancies (case 2).

• An employee who has accepted a four-week trial in an alternative job cannot claim that the variation of terms amounts to a constructive dismissal (case 3).

The basic legal rules

A redundancy situation exists where the need for work ceases or diminishes for any reason. The employer must:

• adopt redundancy selection criteria that are not discriminatory;

• allow employees selected for redundancy the right to 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 – the statutory minimum is a week’s pay (up to £310 a week) for each year of service, with more for older workers and less for very young ones; and

• offer alternative (and suitable) employment where this is available.

If at least 20 redundancies are proposed, the employer must notify the Department for Business, Enterprise and Regulatory Reform. It must also consult employee reps, with a view to reducing the number of redundancies. Where an employer fails to consult, a union can apply for a protective award, up to a maximum of 90 days’ pay.