If you are facing being made redundant, then you should be thinking about negotiating a better redundancy pay, especially if you feel that you have been singled out unfairly for redundancy and that the standard severance package on offer does not seem like a fair outcome. You must consider the way that your employer selected you for redundancy, as if it does not feel right then it may have been underhand.
Your company’s redundancy process should be outlined in your contract or staff handbook. If not, then your employer has an obligation to ensure that you understand the process.
A redundancy process should outline the following:
- How employees will be chosen for redundancy
- How long the decision will take
- What meetings you can go to and when they will be
- How to appeal the redundancy process
Contents:
Your basic redundancy rights
Negotiate a higher redundancy payout
Was there a genuine redundancy situation?
Is the selection pool for the redundancy fair?
Was the selection criteria objective and fairly applied?
Were you consulted about the redundancy?
Was alternative work considered?
Redundancy payments
Statutory redundancy pay
Can you negotiate a better settlement than what is on offer?
Participate in the redundancy process
Evidence
Should you offer to resign before being made redundant?
How to appeal redundancy?
Your basic redundancy rights
Depending on the length of service, you have certain rights which include the following:
- Redundancy pay (where you have been employed for 2 years or longer)
- Notice periods
- The option to move into a suitable alternative role, if available
- A consultation with your employer
- Time off to look for a new job
Negotiate a higher redundancy payout
If the redundancy is fair your employers don’t need to pay any more than statutory redundancy pay, unless there is a contractually binding policy in place, which sets out the amount to be paid to you. Therefore, a redundancy situation does not always lead to a settlement agreement and if your employers are confident that they have conducted a fair and reasonable process they may decide to dismiss you without any kind of exit package.
If the redundancy is unfair then you are entitled to ask for an increased settlement package. Also, read our general guide on how to negotiate a settlement agreement as well as our page about how much money you should get.
Many employers offer an increased redundancy payment from the start to take into account the element of doubt about the objectivity of the process. The aim is to encourage acceptance of the package on offer in order to ensure your smooth exit from the business and to protect themselves from any potential claims you may make against them for failing to carry out the redundancy process correctly. Remember that the ex gratia payment is negotiable and if they say it is not then you can always focus on other areas such as bonus payments, date of termination and holiday pay, etc for points of negotiation to increase the overall exit package.
Was there a genuine redundancy situation?
Many redundancies are carried out incorrectly to the point where they amount to unfair dismissal. If the errors are identifiable then that will be key to negotiating a better redundancy package.
First of all in order for the redundancy to be fair, there has to be a genuine redundancy situation, as follows:
- The closure of the employers business – job redundancy
- The place of work is closing or being relocated- place of work redundancy
- There is a diminished need for work of a particular kind- employee redundancy
As an example, your employer may decide to merge two roles into one, or divide the work amongst other staff, but if you are made redundant and your employer then recruits someone to do the same job that you were doing, then that does not look like a genuine redundancy situation. The exception here would be if that person was brought in on significantly less money than you were on, which is a legally acceptable reason to make you redundant.
Even if you think that your redundancy will be bad for business, an employment tribunal will not get involved with whether a decision to make a redundancy was sensible. They will only consider whether it was genuine and whether the selection process was objectively fair.
Is the selection pool for the redundancy fair?
Your employer will need to choose the ‘selection pool’ for redundancy, i.e. who is at risk of redundancy.
If you have not been placed in a pool then you need to ask what the business reason was for selecting you for redundancy. Also, if there are other people doing the same job as you, then they should be in the selection pool with you.
Where people are not doing the same job, but their roles are interchangeable or where the skill sets for the jobs are similar, then you should argue that the selection pool should include those roles too.
Of course, the bigger the selection pool, the less likely it will be you selected for redundancy.
Was the selection criteria objective and fairly applied?
If there are a number of people in the selection pool, then your employer needs to set a selection criteria to determine who should be made redundant from that pool. The criteria could include things like attendance, punctuality, skill, experience and productivity.
Attendance and punctuality can be checked against HR records, but questions about productivity, skill and experience are more subjective and will be based on the opinion of the person that will be doing the scoring, usually a line manager or team leader. Your employer should be able to back the scores by checking past appraisals and reviews. If there is no basis for the scores, then your redundancy will be easier to prove to be unfair.
In addition, you should also consider whether your selection for redundancy was discriminatory, for example, if you were off due to maternity related sickness or disability and your attendance score has been marked down and this was the basis of the selection, then the redundancy may be unfair and in breach of discrimination legislation.
Were you consulted about the redundancy?
Employees that are at risk of being made redundant should be given notice of this. There should be at least one meeting with the employer and you should be given written notice of this in advance of the meeting. Employers should discuss the rationale behind the decision to put you at risk of redundancy and the method of selection that will be used to decide which employees are to be made redundant. Your employer should consult with you about what other roles may be available to you and you may suggest alternatives also.
Where the employer proposes to make 20 or more people redundant it must hold a consultation period for a minimum of 30 days.
Where the employer proposes to make 100 or more people redundant the consultation period must be a minimum of 45 days.
You should be given the chance to bring a colleague to accompany you and they too may ask questions. This will be a serious meeting where you will be able to raise any concerns that you may have. If you are a member of a Trade Union you can take your union rep to the meeting.
If you think that you have a potential claim against your employer, this is the time to mention it on a ‘without prejudice’ basis. Here you could consider entering into a settlement agreement.
Was alternative work considered?
Your employer does not have to create roles in the business where none exist, but they should make an effort to identify any suitable alternative roles for those employees at risk of redundancy. This could involve them sending you a list of all available vacancies. Equally, it is important to note that if you refuse a suitable alternative role, this may negate your entitlement to a redundancy payment.
You will be in a much better position to argue that your redundancy was unfair if you apply for lots of roles in the organisation but were not successful. Also, it is worth remembering that if you are offered an alternative role, you are entitled to a four week trial period and if it doesn’t work out, you can still claim your redundancy pay.
Redundancy payments
To qualify for redundancy pay, you must have been continuously employed by the same employer for at least two years.
You should check your contract of employment to see whether there is an agreed method for calculating redundancy pay. This is called a ‘contractual redundancy payment’.
If the contract is silent on redundancy payments, then you will be entitled to a ‘statutory redundancy payment’, which is set by the Government.
Statutory redundancy pay
Statutory redundancy pay is calculated based on your number of completed years’ service. You will get:
- 1.5 weeks gross pay for each complete year of continues employment in which the employee was aged 41 or over
- 1 weeks gross pay for each complete year of continues employment in which the employee was aged 22 or over
- 5 weeks gross pay for each complete year of continues employment where the employee was under the age of 22
A weeks pay is subject to a maximum figure of £525 (from April 2019).The maximum number of years which may be counted is 20.
Therefore, if you have worked somewhere for 20 years from the age of 41 to 61, you would be entitled to 20 x 1.5 x £525 = £15,750.
Redundancy payments up to £30,000 are not taxable. Anything above the statutory minimum is usually offered in exchange for your agreement not to sue your employer.
Can you negotiate a better settlement than what is on offer?
One way of considering negotiating a better deal in a redundancy situation is if he pool is small (only two or three of you) and your employer is looking for voluntary redundancies, or are targeting you unfairly.
If however, there was a large pool and you have evidence that you should not have been selected, or if there is alternative employment available that has not been offered, you may then go about making a case to your employer to negotiate a better payment.
An enhanced package under a settlement agreement may be offered in various circ*mstances. Some employers offer large amounts even when they don’t have to, usually to high earning employees such as senior HR or board level directors. This is known as a virtuous circle where a precedent is set for others who depart, as they will get a large package too. Some employers offer slightly more than statutory, but enough to tempt the employee to accept if their situation has little hope.
Participate in the redundancy process
Whilst negotiating on a without prejudice basis, you must participate by attending all the consultations and go through the appeals process. Often, it is better not to flag up your employers errors before being made redundant, as this then gives your employers a chance to correct them before making you redundant.
Evidence
During the redundancy process it is important that you ask for disclosure of documents that relate to the redundancy process, such as the scoring criteria and you should then demand to know who rated you and how. You may also ask to see evidence of the records that managers referred to, such as absence records, etc. You may even ask to see the scores of the other employees in the pool.
Asking for this information is a good way of encouraging your employer to offer an increased package, should they be feeling nervous that they may not have been entirely objective during the process so far. It is at this stage that you should consider submitting a written grievance, as it will force your employer to consider your arguments rather than fob you off.
Should you offer to resign before being made redundant?
If you are sure that you are going to be made redundant, you could offer to resign voluntarily instead. You could offer this in any redundancy situation really, whether you have a decent case or not, but it should be on the basis that your employer agrees to pay you a sum of money that recognises and takes into account the amount of time, effort and recourses that they will save by avoiding the whole redundancy process.
So, an example, by resigning you may save the business a whole month of management and HR time that would have been needed to follow the redundancy process. You could therefore ask for a month’s salary plus another month to take into account the time and effort saved on their part. This may be attractive to your employer, as it will be economical for them, as not only will it save time, they won’t have to carry out a fair process or give you a right of appeal.
How to appeal redundancy?
If you think you were unfairly selected or your employer did not follow a fair process, then you should submit a redundancy appeal. Appealing your redundancy does not affect your redundancy rights. If your employer does not have an appeals process, then you can write a redundancy appeal letter setting out your case. Once you have discussed with your employer why you think the redundancy was unfair, they can either accept or reject your appeal.
If you are not satisfied with your employer’s decision then you can take the matter to an employment tribunal.
What should I do next?
If you would like legal advice regarding redundancy, please complete the enquiry form or call us on 0161 249 5087and we can help you to determine if you have a case and discuss your options and/or settlement options.
We offera range of funding options to assist you.
