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Furlough’s imminent end: Your redundancy rights

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Written by: Stephen Moore
02/07/2020
The Coronavirus Job Retention Scheme is set to close at the end of October, and many employers will be forced to consider making redundancies.

The following list highlights some important points for employees to be aware of regarding their rights in respect of redundancy.

Redundancy pay

Employees on furlough leave retain the same rights to redundancy payments.

Employees with two years’ service are entitled to a statutory redundancy payment. This amounts to 0.5, 1 or 1.5 week’s pay for each full year the employee has worked for the employer capped at 20 years, the amount dependent on the employee’s age.

Employees will receive 0.5 week’s pay for each full year they were under 22, one week’s pay for each full year they were 22 or older, and 1.5 week’s pay for each full year they were 41 or older.

Notice

Employees made redundant are entitled to between one and 12 weeks’ statutory notice, dependent on the employee’s length of service. Employees may have to work out this notice period or spend it on furlough leave, or employers may pay employees in lieu of notice.

Employees may be entitled to more than the statutory notice period depending on the rights afforded to them in their contract. It is important to review any written agreements that have been made with the employer to check the contractual entitlement to notice and redundancy rights in general.

If the contractual and statutory notice periods differ, the longer notice period will apply.

Outstanding payments

Employees are entitled to outstanding payments owed including any unpaid wages, expenses, and accrued but untaken holiday. Employers can require employees to take their holiday entitlement during their notice period providing that the employer gives the requisite amount of notice – twice the amount of days as the number of days required to be taken as holiday.

Insolvency

If the employer is insolvent and has not made the payments owed, employees can apply to the Insolvency Service to claim back any outstanding payments.

Volunteering for redundancy

Employers may ask employees if they wish to volunteer for redundancy. This still classifies as a dismissal, entitling the employee to the same statutory redundancy rights as someone who didn’t volunteer.

If only a limited number of redundancies are being made and an employee was thinking about moving jobs or retiring in the near future anyway, taking voluntary redundancy may be financially beneficial if their length of service means their redundancy pay would be generous.

Suitable alternative employment

If an employer offers suitable alternative employment within the company and this is unreasonably turned down by the employee, the employee may lose their right to statutory redundancy pay.

The question of whether the job offer is suitable can be contentious, so employees should try to have open conversations with their employers to discuss any alternative job offers.

Consultation

Employees who are being made redundant have the right to be consulted either individually, or if at least 20 employees within the company are being made redundant in a 90 day period, collective consultation rules apply which affects how the consultation takes place and the minimum length of the consultation.

Employees are able to put forward comments and suggestions including alternatives to redundancy, which the employer should listen to and consider.

A failure by an employer to properly inform and consult where at least 20 employees are being made redundant may entitle an employee to a Protective Award payment from the employment tribunal.

The amount of compensation awarded is at the tribunal’s discretion and can be up to 90 days’ gross pay to each employee affected. Claims for a Protective Award must be brought within three months of the date of the last dismissal.

Time off

Employees made redundant with two years’ continuous service by the date their notice period ends are entitled to seek a reasonable amount of time off work, to look for new employment or to make arrangements for training to help find another role. Pay is limited to 40% of one week’s pay for the entire time taken off.

Right to appeal

Employees may have the right to appeal the redundancy decision by writing to their employer and setting out the reasons for appeal.

Unfair dismissal and discrimination rights

In order for a redundancy to be fair, a selection criteria must be drawn up along with a pool of employees to select from for redundancy. The employer must then engage with this process fairly and select employees based on transparent and objective criteria. Once a provisional decision has been reached, the employer must follow a fair procedure for consulting with employees over this process.

An employer also needs to show that alternatives to redundancy were properly considered and that reasonable efforts were made to find alternative employment.

Employees with two years’ service are entitled to bring a claim for unfair dismissal. A claim for unfair dismissal could be made if an employee believes they were unfairly selected for redundancy, the employer didn’t follow a fair redundancy process or if the dismissal was not genuinely for the reason of redundancy.

Discrimination claims could also arise if an employee is selected for redundancy on the basis of a protected characteristic under the Equality Act, for example, or the employee’s working pattern.

Typically, unfair dismissal claims must be brought three months less one day from the last day of employment, and discrimination claims must be brought three months less one day from the last act of discrimination complained of.

Stephen Moore is partner and head of employment at Ashfords

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