Your Rights - Redundancy

Redundancy Legal Rights & Advice

The worst has happened and you have been made redundant. So where do you go from here? What rights do you have and where can you get more help and advice? You probably have lots of questions and this section will start to answer some of them.

  • Redundancy is where an employee is dismissed because the employer closes down the business, or the employer closes down the employee's workplace, or there is a diminishing need for employees to do work of a particular kind.
  • Under the Employment Rights Act 1996, if you are made redundant you have a right to a payment from your employer if you have had 2 or more years of continuous service. You are only entitled to a payment under the Act if the reason for your dismissal was redundancy.
  • The number of hours you work each week does not affect your entitlement. This only applies for employment after the age of 18. Self-employed people and members of a partnership do not qualify.
  • The amount of lump sum you are entitled to depends on how long you have been continuously employed by your employer, how your years of continuous service relate to a particular age band and your weekly pay (up to a legal limit). The maximum number of years continuous service that can be counted for statutory redundancy payments purposes is 20 and the current weekly pay limit is £400. Here is a ready reckoner to help you work out your payment.
  • Time limits. Your employer has to make the payment when you are dismissed or very soon after. If the company is insolvent, or your employer cannot or refuses to pay, you can apply to the Government for a direct payment from the National Insurance Fund. Click here for information from the Insolvency Service.
  • Disputes over payments. If you and your employer disagree about lump sum payments you can go to an Employment Tribunal to determine the outcome. If you want to apply to a tribunal ask at a Jobcentre Plus office for a form IT1 and leaflet, or phone the DTI Helpline 0845 145 0004. To help and advise you we recommend you consult a solicitor with expertise in Employment Law. Follow this link to find a solicitor in your area.
  • Most people are nervous about contacting solicitors because they fear the costs involved. Many solicitors provide a free initial consultation, face-to-face or more usually on the telephone, to establish whether you have a case worth pursuing. If you have a case, an Employment Law expert will help you and give you indicative costs before proceeding.
  • Pensions, Tax and Job Seekers Allowance. If you are due to receive a payment under an occupational pension scheme within 90 weeks of your redundancy, your lump sum could be affected. There is no income tax paid on a statutory redundancy payment. However, any additional redundancy payments you receive from your employer may be taxable. Statutory redundancy payments have no effect on your entitlement to contribution-based Jobseeker's Allowance.
  • Looking for a new job. Once you have been notified about redundancy your employer should allow you a reasonable amount of time off work to seek other employment.
  • Taking a new job with the same employer can affect your entitlement to a payment. If the new job is with the same or an associated employer you will lose the payment if the new job is offered before your old employment contract expires, and starts within four weeks of your termination.

This section gives a general overview of the most common situations. For comprehensive information look here on the Direct Gov website or call their helpline on 0845 145 0004. You can find redundancy legal advice here.