Recession and redundancy: your rights

A useful article in the current climate I recived in an email.

Recession and redundancy: what are your rights if your company lets you go?

Jane Bell

With the credit crunch biting businesses and rumours spreading of a recession that could be as bad as the 70s, all of us are starting to get concerned about the future. Should an economic depression hit hard, then many of us could be in a situation where our jobs hang in the balance.

But what are your rights if your company wants to let you go? Do they need good reason and how much compensation do you deserve? Here are Lawpack's redundancy FAQs.

In what situations can my employer make me redundant?

• The business is closing down or relocating.
• Your job is unnecessary because of new technology or a new system.
• The business no longer has a need for the kind of work which you were employed for.
• Your employer needs to cut costs and so they need to reduce the number of employees.

What is the procedure?

You should be selected fairly and your employer should consult you about the redundancy. They should give you redundancy pay and the right amount of notice (which is stated in your contract). They should also consider any alternatives to making you redundant. If a method for deciding redundancies has been agreed with a trade union, your employer should follow it.

'Fair' reasons may be last one in, first one out, or they may initially ask for volunteers. They could also base it on disciplinary records or by evaluating their employees' skills, qualifications and experience.

They may select people by asking their staff to reapply for their own jobs. You should remember that this is still just a way for the employer to decide who to select for redundancy. If you decide not to apply (or are 'unsuccessful'), you're still in employment until your employer makes you redundant.

What happens if my employer offers me an alternative job?

If you decide to take an alternative job, then you have the right to a four-week trial period in a new job and if you need training for this new job, the period can be extended by written agreement. If you decide it isn't suitable, you can give notice during the trial period and this won't affect your right to statutory redundancy payment. If you haven't given notice by the end of the trial period, then your right to statutory redundancy pay ends.

Am I allowed time off for job hunting?

Yes, you're allowed a reasonable time off for interviews and training, as long as you've been working continuously for the business for two years. Your employer only has to pay you up to two fifths of a week's pay for it (e.g. if you work five days a week and take four days off in total during the whole notice period, your employer only has to pay you for the first two days).

What can I do if I've been offered a new job before my notice expires?

Try and negotiate with your employer for early release without losing your redundancy pay, as employers will often try to make such arrangements. If they say they cannot let you leave early (e.g. they need you to finish a project), you can give them 'a written counter notice', which states when you would like to finish. They should then write back to you to let you know whether they accept your offer. If you do decide to leave early without their permission, then you may risk losing some, or all, of your redundancy pay.

What should I do if I feel that I have been unfairly selected?

Write to your employer outlining why you believe the decision to be unfair and explain how you would like the situation to be rectified. If they do not heed your complaint, you can then appeal against the decision to an employment tribunal. The redundancy procedure will be definitely unfair it it's discriminatory; for example, because you're on maternity leave.

Am I entitled to compensation?

You're entitled to a statutory redundancy payment if you're over 18 and have had at least two years' service at the company. It's also due if your fixed-term contract of two years or more expires and the company doesn't renew it because of redundancy.

How is the payment calculated?

It's calculated by the company considering your age, your length of service at the company and your gross average weekly wage. Each completed year of service, up to a maximum of 20 after the age of 18, counts for payment on the following scale (with the maximum of £330 for a week's pay):

• If you're over 18 and below 22, half a week's pay.
• If you're between 22 and 41, one week's pay.
• If you're over 41, one and a half week's pay.

Statutory redundancy pay isn't taxable.

What can I do if I haven't received the right amount of compensation?

Your employer will normally pay you either on the last day of your notice period or shortly afterwards, or on your next pay day. If you haven't been paid, or you don't think it's enough, you should write to your employer explaining the problem. They should then give you a written statement outlining how the payment has been calculated.

If this doesn't work, you can raise a complaint with an employment tribunal, but a claim must be made within six months of you receiving the payment. This time limit can be extended for a further six months, if it has been approved by the employment tribunal.

If the company has gone insolvent and can't pay you, then you may be able to get the money from the government.

Are there any situations where I wouldn't be offered compensation?

You're not entitled to Statutory Redundancy Payment if, before the existing job ends, your employer offers you (verbally or in writing) employment on the same terms or suitable alternative work, beginning within four weeks of the ending of the original employment. If you unreasonably refuse such an offer, or during a trial period for the new job (which you can opt for) you unreasonably terminate such employment, you lose the right to receive the payment.

Where can I get further advice?

If you need more information, the Advisory, Conciliation and Arbitration Service (Acas) can help. You can get free and confidential advice on employment issues by calling their helpline on 0845 747 4747.