The Truth About Redundancy

Updated on February 3, 2017
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Kate has over seven years experience as an Employment and Personal Injury legal executive. She runs LawCat, a legal explanations website.

What is Redundancy?

When you hear the word redundancy, you can quickly become anxious. It is upsetting to think that your job could be at risk and worrying to think what might happen should you suddenly find yourself without work.

It is common to spend time wondering what you have done to be selected for redundancy. However, redundancy is not a personal attack against you, it is not the same as being fired, and it is not a punishment.

Redundancy can occur in several situations, the most common being:

  1. The employer’s business, or a department in the company, has been terminated
  2. The employer’s business has moved to a different location;
  3. The company’s needs and/or direction has changed

If you receive news that there is a redundancy situation in your workplace you should try to find out what has caused the situation? Why does your employer say there is a redundancy situation?

It is the Role, Not the Person, That Is Made Redundant.

Redundancy means that a job no longer exists. It has nothing to do with the individual holding the job and everything to do with the job itself.

There are valid and invalid reasons for redundancy; the below table has some examples.

Some unscrupulous employers have been known to claim they are making someone redundant when in fact they are looking to remove a person, not a job.

Example: Bob is a team leader at a local store and does not get on with his manager. Bob is made redundant. A few weeks later Mike is employed as a new team leader.

This is not a genuine redundancy situation as Bob has been replaced by Mike. It was likely done as a way to remove Bob from his job in a faster, easier and cheaper way than dismissing him because he did not get on with his manager.

If this sounds like your situation, then you could be being unfairly dismissed and should consult with your union or a legal professional.

Valid or Invalid Reasons

Valid Redundancy Situations
Invalid Redundancy Situations
The job no longer exists because job roles have been reshuffled
There is evidence the job still exists (e.g. someone else is employed promptly to do your job)
The workplace has closed (either entirely or just that branch
You have a weak relationship with your superior
The business has merged with another leaving a surplus of staff
Poor performance on your part (you can be dismissed for poor performance but not made redundant).

Anyone Can be Selected for Redundancy

For a redundancy situation to be valid, your employer must be fair and objective when choosing people to form the ‘redundancy pool’.

A redundancy pool is the group of employees that those who will be made redundant are chosen from. Just because you are in the redundancy pool does not guarantee that you will be made redundant, it means you could potentially be made redundant.

Anyone can be selected for the redundancy pool and potentially be made redundant. The most common ways of building the redundancy pool include:

  • Last in, first out, meaning that the employees with the shortest length of service
  • Self-selection, where your employer asks asking for volunteers
  • Selecting those with disciplinary records
  • Selecting poorer performers, or those with lower qualifications

While anyone can be chosen for redundancy, there are certain reasons that you cannot be selected for.

You cannot be selected for redundancy based solely on your age, gender, sexual orientation, race, disability, religious belief, pregnancy, membership of a trade union or because you went on strike.

While it is legal to select members of minorities, the disabled, those who went on strike in the past, etc. for redundancy, they cannot be chosen for that reason alone. The employer must be able to prove that there was good cause for his/her selection.

What Would You Do?

Would you volunteer for redundancy if given the option?

See results

You Won’t Always get A Redundancy Payment

One of the benefits of being made redundant is that you can receive a redundancy payment. You could receive statutory redundancy pay, which is what the law says you are entitled to. Or you could receive contractual redundancy pay, which is what your contract says you are entitled to. In some situations, contractual redundancy pay is paid on top of statutory redundancy pay. However, redundancy pay is not guaranteed.

If you are any of the following, then you are not guaranteed a statutory redundancy payment.

  • If you are self-employed.
  • If you are a police officer or in the armed forces.
  • If you are a Crown servant, parliamentary staff or holder of public office.
  • If you are a share fisherperson.
  • If you are domestic staff working for your immediate family.
  • If you are an employee of a foreign government.

To be eligible for statutory redundancy pay you must also have to be working in the job for over two years as an employee.

Tip: It is always worth checking your contract. Just because you are not eligible for a statutory redundancy payment does not mean you are not granted a contractual redundancy payment under the terms of your contract.

If you meet the criteria for a statutory redundancy payment, there is still a chance you might lose that pay.

If your employer offers you a suitable position elsewhere in their company and you refuse it without good reason, then you can lose your redundancy payment. You can also lose your redundancy payment if you leave your job before it has ended. Lastly, you can also lose your pay if you are fired for gross misconduct before your job finishes.

You Should be Considered for Suitable Alternative Employment

As said previously, a redundancy situation is when a job has become redundant, not the person. As your job is no longer needed your employer must make all reasonable attempts to find you suitable employment in another area of the company.

They will have to take into account your skill set, experience and qualifications when considering a new position for you. If they can locate a new post, it will have to be assessed, meaning the hours worked, the rate of pay, status, and responsibility, will have to be carefully reviewed to see if it is suitable for you. Just because the new role matches your previous positions pay and status will not be enough to make the position suitable however if you have to work a great many more hours, or if you have a great deal more responsibility.

When considering if a new role is appropriate for you, you should ask about the responsibilities of the new position, is it at all similar to what you did in your previous role or any previous role? Do you have the necessary experience to perform all the tasks required? Do your personal circumstances allow you to work the new roles hours? Will you have to travel further for the new role?

Conclusion

You should now have an understanding of what redundancy is and what counts as a valid redundancy situation. You will know how employees can be selected for redundancy and what characteristics should not be taken into account.

You will also have an understanding of redundancy payments and when you may be eligible to receive one. As well as how your actions could prevent a payment from being made to you.

Lastly, you should now have an appreciation for alternative roles and what you should consider before accepting or rejecting one. This should also allow you to have a grasp of why you might not be offered an alternate position.

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