Making an employee redundant

Rights of redundant employees

Employees qualify for redundancy payments if they have worked for you continuously for at least two years up to the date of dismissal. Any time they worked for you before they reached the age of 18 does not count.

These qualifying conditions also apply where they are laid off or put on short-time working and wish to apply for redundancy payments.

Exceptions

The following people do not qualify for redundancy payments, unless special provisions are included in their contract:

• people who are not employees, eg partners, self-employed workers, some directors - see our guide on employment status
• employees aged 65 or over, or who have reached the normal retirement age for the position - this exemption may change

Rights under redundancy

People who are made redundant have certain rights. These include the right to:

• suitable alternative employment wherever possible
• a trial period in another job you offer them without losing their right to redundancy payment
• reasonable time off on full pay for job-hunting or to arrange training
• not be unfairly dismissed, except employees with less than one year's service, unless they are selected for redundancy on grounds which are regarded as automatically unfair - see our guide on dismissal
• legal minimum levels of redundancy pay
• a written statement of the amount of any redundancy payment and how you worked it out

How is redundancy pay calculated?

Redundancy pay is based on:

• the employee's age
• how long the employee has worked for you continuously after reaching the age of 18 - up to a maximum of 20 years
• the employee's weekly pay - up to a limit which is adjusted each year in line with the retail prices index 

The maximum amount of a week's pay that may be taken into account for statutory redundancy payments purposes is £270 for redundancies that occur before 31 January 2005, with an overall maximum statutory payment of £8,100. From 1 February 2005 the weekly maximum increases to £280, and the overall maximum payment to £8,400.

Calculate how much redundancy pay is due on the Department of Trade and Industry (DTI) website.

Different laws govern Northern Ireland. For information call the Northern Ireland Redundancy Payments Helpline on Tel 0800 585 811.

Subjects covered in this guide

• Introduction
• What is redundancy?
• Avoiding redundancies
• Staff selection - non-compulsory
• Staff selection - compulsory
• The redundancy consultation process
• Rights of redundant employees
• How to help redundant employees
• Potential problems following redundancy

 

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