With the cost of living crisis, soaring inflation and the UK expected to be in a recession for much of 2023, you may be worried about your job.
The Bank of England forecasts unemployment to rise every year until 2025, which could lead to many people being made redundant.
There have been several high profile companies announcing job cuts recently, including Amazon, Twitter, and Meta (which owns Facebook and Instagram).
Several companies also fell into administration last year including furniture retailer Made.com and clothing company Joules.
Here, Which?, with the help of Which? Legal, explains the key things you need to know if you’re at risk of being made redundant.
1. Being ‘at risk’ doesn’t necessarily mean you’ll be made redundant
Redundancy is one of the few legitimate reasons why an employer can terminate someone’s employment, but before this happens they should notify you that you’re ‘at risk’ of redundancy.
However, being told you’re at risk doesn’t necessarily mean that you will be made redundant. In some cases, your employer may decide to keep you in your existing role, or try to redeploy you somewhere else.
You do have the right to refuse an offer of alternative employment. However, if you unreasonably refuse an offer of suitable alternative employment, it could mean you miss out on your statutory redundancy pay.
2. Your employer must follow a set of procedures under UK law
If your employer doesn’t follow the procedures required by employment law and you have worked there for more than two years, your dismissal could be deemed unfair.
For example, if your employer is reducing staff numbers in a particular role within the business, they must:
Failure to comply with the law means a claim can be made, and may result in an employment tribunal finding the dismissal to be unfair. If the tribunal agrees that the dismissal is unfair, compensation may be awarded. If you are dismissed and have the requisite two years’ service, you will have three months less one day from the date your employment ends in which to issue a claim. Prior to issuing a claim you need to contact the conciliation service ACAS to commence Early Conciliation.
3. You can’t be made redundant in certain situations
The following is a list of some of the reasons why any selection for redundancy will automatically be deemed unfair:
Your employer must give you a full explanation of why you have been selected for redundancy – and it must not include any of the reasons above or any other reasons that are deemed unfair.
Seek advice to find out whether your selection for redundancy could fall under an automatically unfair reason (the above list is not exhaustive), and if so, what action you can take.
A new bill could give greater protection to pregnant women and new parents in the future if it becomes legislation. Under the current rules, employers have an obligation to offer a suitable alternative vacancy (where one exists) to employees on maternity leave, shared parental leave or adoption leave – before offering them redundancy.
The Pregnancy and Maternity Discrimination Bill would extend this redundancy protection so it applies to pregnant women, as well as new parents when they return to work after eligible forms of parental leave.
4. You’ll usually get a notice period
The length of the notice period can vary depending on what’s in your contract and how long you’ve been with the company.
Statutory minimum notice periods in England, Wales and Scotland are:
In some cases your employer may give you a longer notice period, regardless of how long you’ve worked for it.
If the company is unable to keep you on for your notice period (for example, if it’s going out of business), you’re still entitled to compensation for your notice period.
You may be offered payment in lieu of notice. This means your employer asks you to leave the firm earlier, but still pays your basic salary for your notice period. Unless your contract says otherwise, it’s unlikely you will be entitled to the monetary equivalent of any entitlements/benefits you would have received had you worked your notice period, for example pension contributions.
5. You’re entitled to a redundancy package
Redundancy pay can depend on several factors, including what your contract says and what you agree to in your consultation.
Everyone who has been with the business for two or more years is usually entitled to statutory redundancy, which is worked out based on how long you’ve worked at the organisation (up to a maximum of 20 years’ service), and your age.
In this situation, if you are made redundant (in England, Scotland and Wales) on or after 6 April 2022, you will have weekly pay capped at £571. The maximum amount of statutory redundancy pay is capped at £17,130. New rates for 2023-24 are expected to be announced in March, taking effect in April.
You can use the government calculator to work out your redundancy pay.
In some instances – for example, if you refuse suitable alternative work without a valid reason – you won’t be eligible for statutory redundancy pay.
It’s worth noting that statutory redundancy pay tends to be a minimum and some employers may offer more, so make sure you discuss redundancy pay during your consultation.
Whether you’re offered more money or not, you’re still entitled to any holiday pay, commission and bonuses you are owed. These types of payments will be subject to tax.
You can use our income tax calculator for 2022-23 to work out how much tax you’ll pay on your total income.
6. You’ll receive your redundancy pay in the same way you receive your salary
Your employer should pay your redundancy on the date that you leave the company, or your next normal pay date. It will usually be paid into your bank account.
Your employer should also provide you with a written document explaining how your redundancy payment was calculated.
If your employer doesn’t pay you, or doesn’t pay you in the way that it should, you can write to request payment.
If this doesn’t work, you have three months less one day from the date you should have received any outstanding salary, commission, bonuses or holiday pay, in which to issue a claim in the Employment Tribunal. Generally speaking, you have six months in which to issue a claim for an outstanding statutory redundancy payment, although it’s best to start proceedings as soon as possible.
Before issuing a claim, you first need to go through ACAS Early Conciliation. It will see if your employer will resolve the dispute without going to a tribunal. You need to start Early Conciliation within the three months less one day deadline to issue a claim.
If your employer is insolvent and hasn’t paid you what you’re owed, you can also claim from the National Insurance Fund by using the claim for redundancy and monies owed service.
7. You may be asked to sign a settlement agreement
A settlement agreement is a legally binding agreement between you and your employer. You might be asked to sign one if you are being made redundant, or if you are leaving your job for complicated reasons.
Settlement agreements are written by lawyers, and the language is often difficult to understand and could be confusing.
You need to make sure you know what rights you’re giving up when you sign one. This is because when you sign the agreement you are giving up the right to make a future claim against your employer.
You need to take legal advice for a settlement agreement to be binding. Your employer will normally pay for the cost of you getting legal advice.
8. Jobseekers will be offered coaching and advice
The government’s Job Entry Targeted Support (JETS) programme is for people who have been out of work and claiming either Universal Credit or New Style Jobseeker’s Allowance for at least 13 weeks.
Your Jobcentre Plus work coach can explain how support from the JETS programme can help you get back to work. This might include specialist advice on how you can move into growing sectors, advice on building your CV and interview coaching. If your work coach agrees that JETS is right for you, they will refer you to the JETS programme.
JETS will provide light-touch, personalised employment support for up to six months, which could give you the boost you need to return to employment.
For more information, you can contact Jobcentre Plus on 0800 169 0310.
9. You might be able to claim benefits while you’re not working
If you’re made redundant and your income falls as a result, you may be able to claim benefits while you look for another job – but the kind of help you’ll qualify for, and how much you’ll get, will depend on your circumstances.
Find out more: Universal Credit explained
Get help with the rising cost of living
We know households are struggling with rising costs right now.
Which? is dedicated to offering tips and advice on how to cut the cost of your household bills and other essentials, and make the most of your money.
See our wide range of free advice to help you through the cost of living crisis.
This story was originally published on 21 June 2020 and has since been updated. The last update was on 13 January 2023 to add information about settlement agreements.