A beginner's guide to redundancy
Monday, 09 November 2009 15:32
The latest figures released at the end of October revealed that there are now 2.47m people out of work in the UK, with the figures rising by 88,000 between July and August. Many of these people will have been made redundant due to the economic downturn.
If you are in this situation, you should first of all make sure you know your rights. In some cases the employer may have a redundancy policy – in which case read your contract and find out what sort of redundancy package you may be entitled to.
If you've been with your employer for two or more years you will be entitled to statutory redundancy pay. This works out at just one week's pay for every year of work if you're aged between 22 and 40, if you’re aged under 22 then it is just half a week, and if you're 41 or over then you're entitled to 1.5 weeks. The rate per week of service is capped at £380 per week, even though this may be far less than you earn. Fortunately, many employers offer a more generous deal. The first £30k of redundancy pay is payable tax free, but anything over this amount, including unpaid wages and bonuses, may be taxed.
Your employer should be carrying out a fair process in making you redundant. Essentially, this means that they should ensure that you are selected fairly, they should carry out a consultation process with you, and try to find you another suitable position before making you redundant.
If you feel that your employer has not followed a fair process in making you redundant then you may need to consider making a claim for unfair dismissal. You should also consider if there are any other issues, like discrimination, that have played a part in your employment being terminated. ACAS (the Advisory Conciliation and Arbitration Service) may be able to help you, and if you have one, it’s also worth consulting your trade union. If you feel that you have been unfairly treated, seek specialist legal advice as soon as possible.
Your employer may also ask you to sign a compromise agreement. The purpose of a compromise agreement is for the Employee to agree to give up their legal rights against the employer in return for compensation. You will need to seek independent legal advice before signing such an agreement, and in many cases your employer will pay your legal costs towards this. We advise many clients on compromise agreements and will be happy to assist you if needed. Once the agreement is signed by all the parties, you cannot pursue claims arising out of your employment or the termination of your employment.
If you have been made redundant, we would also advise seeking independent advice from a financial advisor about any pension you may have built up during your employment.
If you need legal advice about redundancy, we are employment law specialists well versed in advising in these sorts of situations. We can usually see you within 24 hours and always aim to give clear, jargon free legal advice. We are centrally based iin London, near Bank and Monument tube stations and we would be happy to help you. Please call us on 0207 464 8433 and ask to speak to Michael Scutt or Danielle Harnett.