Redundancy & Your Rights

Redundancy & Your Rights

Over the last 18 months, the number of people I have interviewed who have left their company due to redundancy has spiraled to unprecedented levels.  Even more worrying has been the lack of knowledge some of them had about their rights in a redundancy situation.

Whilst I haven’t kept exact figures, some people felt their employer handled their redundancy in the right way, yet many others realised they should have questioned their employer more as to why they were made redundant – some stories I had been told just didn’t add up.

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Before Christmas I met a Financial Controller I had known for over 8 years, and it was their story that prompted me to write this post.  Assuming they were not over-exaggerating, I don’t know how their employer got away with making them redundant and suffered no repercussions.  Looking at it from an outsider’s viewpoint, it seemed to be a cover-up to me for something else going on in the business.  The candidate fortunately secured a new job thanks to McGinnis Loy so they managed to move on quite quickly, but I suspect this was not an isolated case.

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In response to the question often asked by recruiters “what is your reason for leaving?” Redundancy is now one of the top answers I am given, and is now as frequent as “career progression” or “looking for a shorter commute” used to be 5+ years ago.  Since the 2008/2009 recession, redundancy has certainly become more prominent on CVs than ever before, and in today’s uncertain economic times it is no surprise.  .

One of the best websites I would recommend is www.gov.uk.  They have comprehensive guides on redundancy, and a whole section dedicated to “Redundancy & Leaving Your Job”.   One of first things they talk about is the employer’s responsibility to treat you fairly and how they should follow the correct legal process, including consulting you in person before making you redundant.  A face-to-face consultation with your employer should, amongst other things, include a discussion about why you have been selected for redundancy, and what alternatives to redundancy they have considered.

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If you are entitled to statutory redundancy pay, the amount you will receive is based on how long you have been continuously employed (must be at least 2 years), your age and weekly pay (up to a specific limit).  Some employers (most notably larger corporate) do offer more generous redundancy packages than the current statutory amounts, so it is always worth checking your employment contract when you joined the business.  The DirectGov website also allows you to check that your employer has worked out your redundancy payment correctly.  It provides a quick calculator to help you, which you can access by following this link.

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There are some circumstances where you are entitled to redundancy pay though, and the two most common are:

  • Where your employer offers you alternative work which you refuse without good reason.
  • Where you decide to leave of your own free will, before the end of your notice period.

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If your employer is declared insolvent or they cannot afford to pay your statutory redundancy pay, this can bring further financial complications.  However, you can apply for a direct payment from the National Insurance Fund (you can download a RP1 form here). In order to claim, you must first write to your employer asking for your statutory redundancy pay, and only if they are still unable to pay, should you fill out form RP1 from the Insolvency Service.

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Another website I found useful when researching is www.worksmart.org.uk, run by the TUC.  Like the DirectGov website, they offer a wide range of articles and a comprehensive FAQ (frequently asked questions) section.  Some of the more relevant questions I have highlighted below, with links at the end giving you the answers, but do look through the whole site for further informative advice:

  • How do I know if I have been fairly selected for redundancy?  more…
  • I have been offered an alternative to redundancy – doing a different job. What is my position?  more…
  • What consultation must an employer undertake before making redundancies?  more…
  • I have been told of potential redundancies but the employer has not discussed this with staff. Is this allowed?  more…
  • My employer has announced redundancies and a selection process that is obviously unfair. What should I do?  more…
  • I’ve been made redundant because my employer is bankrupt. Will I still get paid?  more…
  • What notice does my employer have to give when making me redundant?  more…

 

There are many more websites available for people who are about to be, or who have already been made redundant.  Just typing “redundancy” into Google gives over 26million results, so there is certainly a wealth of free information out there if you care to search through it all.  Hopefully this short summary will have provided you with a good starting point though.

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Good Luck!

Leslie Fearn

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Leslie has over 15 years Recruitment experience helping blue-chip corporates to SME businesses recruit for their Finance teams.  As one of the founding Directors of McGinnis Loy, a Specialist HR and Finance Recruiter across the Thames Valley and London, he is still actively recruiting in the marketplace today.  Follow his helpful tweets on Twitter: @mcginnisloy

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