Opinion: What are your rights if your employer wants to make you redundant?

As a consequence of the oil and gas downturn, a number of employers are having to make difficult decisions around redundancies.

As an employment lawyer, I am often asked about the redundancy process – in particular, questions around the process involved and what compensation people are entitled to.

Here are the key things your employer must do to ensure that you are dealt with (and paid!) in a fair manner.

Fair redundancy dismissals

In order to dismiss you fairly by reason of redundancy, your employer must show that there was a genuine redundancy situation and that a fair redundancy process was followed.

If those requirements are not met then the dismissal may be unfair and you, as long as you have two years’ qualifying service, will be able to claim unfair dismissal at an employment tribunal.

There are also certain circumstances in which a redundancy dismissal may be ‘automatically unfair’ in which case a claim can be made without the need for two years’ service.

This would generally occur if an employee was selected for redundancy because they tried to exercise a legal right such as taking part in trade union activities or taking rest breaks in accordance with the working time regulations.

Pools

You’re entitled to a consultation with your employer if you’re being made redundant. This involves them speaking to you about:

• -Why you’re being made redundant
• -Any alternatives to redundancy

Meaningful consultation forms part of the fair process required for a fair redundancy dismissal. Employers should identify suitable pools of people who are at risk of redundancy.

Employees in the pool should undertake the same or similar roles, but they do not have to be identical. Those employees carrying out similar roles should only be excluded if there is good reason to do so.

Where an employer is making 20 or more employees at a workplace redundant within 90 days or less, this is called a ‘collective redundancy’.

An employer making a collective redundancy must consult with a recognised trade union where there is one. If there is no recognised trade union, an employer must consult with employee representatives before issuing redundancy notices.

There’s no time limit for how long the period of consultation should be, but the minimum is:

• -20 to 99 redundancies – the consultation must start at least 30 days before any dismissals take effect.
• -100 or more redundancies – the consultation must start at least 45 days before any dismissals take effect.

Criteria

Once a pool has been identified, your employer must consult with individuals in the pool and apply objective selection criteria to those people.

In order to be reasonable, the redundancy selection criteria should, as far as possible, be both objective and capable of independent verification.

This means that the criteria should be measurable, rather than just being based on personal opinion.

Potentially fair selection criteria include:

• -Performance and ability.
• -Length of service.
• -Attendance records.
• -Disciplinary records.

It is unlawful to have redundancy selection criteria and/or a redundancy procedure which involves discrimination on the basis of disability, sex, race, religion or sexuality or any other protected characteristic under the Equality Act 2010.

Suitable alternative employment

Your employer must consider whether there is suitable alternative employment available for you.  They might offer you an alternative role within your organisation or an associated company.

Whether a job is suitable depends on:

• -how similar the work is to your current job
• -the terms of the job being offered
• -your skills, abilities and circumstances in relation to the job
• -the pay (including benefits), status, hours and location

Your redundancy could be unfair if your employer has suitable alternative employment and they don’t offer it to you.

Conversely, should you turn down such an offer, if it is unreasonable, you may lose your right to statutory redundancy pay.

Redundancy Pay

You will be allocated a multiplier of weeks’ pay depending on your age and length of service.

The multipliers are calculated as follows:

• -For each year of service up to age 21: a half week’s pay.
• -For each year of service between ages 22 and 40 inclusive: one week’s pay.
• -For each year of service from age 41 and above: one and a half week’s pay.

Length of service is capped at 20 years and weekly pay is capped at £479 – therefore the maximum amount of statutory redundancy pay you can collect is £14,370.

It is also worth noting that redundancy pay (including any severance pay) under £30,000 isn’t taxable.

To protect your rights, you may wish to consult an employment lawyer. They will be best placed to advise you on the process and the actions you should take.

Sally-Anne Anderson is an Employment Law Partner at Scottish legal firm Aberdein Considine, which has 20 offices throughout Scotland.