As we see the 12th rise of interest rate in a row by the Bank of England (its highest rate since 2008) along with increasing bills and rising costs of living, resilience and budgeting have become vital issues for businesses. We are now seeing waves of redundancies, the most recent of which is Vodafone cutting 11,000 jobs globally over three years due to underperformance. Redundancies present challenges to both employers and employees. Whilst this is not a happy topic, it is a reality for some businesses so through this article, we hope to provide guidance on effectively dealing with redundancies, focusing on strategies for employees to navigate this difficult and unpleasant process and how to pick back up after being made redundant.
Redundancy generally means that an employee is dismissed because their role is no longer needed, but there must be a genuine business justification for the proposed redundancies. Common reasons include business reorganisation, economic challenges, technological advancements, or a decrease in demand for products or services.
Employees should be aware of the various statutory rights to which they are entitled too including fair selection and a fair process (see below). The employee should always be given proper notice, be offered a forum to talk through the process, be given clear timelines, and where possible offered alternative employment or voluntary redundancy options.
Can employees avoid redundancies?
Although the redundancy process is regulated by law, different businesses may have different requirements and criteria, and different employees will have different skillset and backgrounds. We suggest below several options for employees to consider in order to minimise the risk of being made redundant in our experience advising on redundancies:
- Proactive Communication: Stay informed about the state of your company and any potential challenges or changes it may be facing; maintain open lines of communication with your managers and regularly check in with them to discuss performance, projects, and any concerns you may have and anticipate problems before they develop.
- Continuous Learning and Skill Development: Keep your skills up to date and relevant to your role and industry; stay informed about emerging trends, technologies, and best practices in your field; adapt to changing circumstances and be flexible.
Demonstrating Value: Consistently deliver high-quality work and meet or exceed performance expectations; take initiative in identifying and solving problems or inefficiencies in your processes; seek opportunities to contribute to the company’s success, such as considering improvements, cost-saving measures, or innovative ideas.
What should the employees do?
Employees facing redundancy should proactively seek information from their employer regarding the redundancy process, consultation periods, and available support services. They should also familiarise themselves with the concept of redundancy and the information provided by the employer. If they do not understand why their role is being made redundant, or have concerns about the selection process, they should engage in open and constructive communication with the employer and ask for clarification to ensure that there is no discrimination or bias involved. Employees should also inquire about any alternative options your employer may offer to avoid redundancy or discuss this possibility with the employer and express their interest.
In addition, employees can join an employee representative group or trade union that can support them during the consultation process. They should also take advantage of any support or assistance the employer offers during the redundancy process and seek advice from external sources such as job search agencies, career coaches, or legal professionals to ensure they are well-informed about their rights and options. Employees can also seek other employment opportunities through updating CVs for job applications, networking, attending job fairs, and utilising online job portals etc. They should also enhance their skills through training or professional development programs to increase marketability.
Employees are normally entitled to statutory redundancy pay if they have worked for their employer for 2 years or more. The pay is calculated based on the employee’s age and length of service (from 0.5 week’s pay for each full year you were under 22 years old to 1.5 weeks’ pay for each full year you were 41 years old or more). There are also maximum limits on the length of service (20 years) and amount of statutory redundancy pay (£19,290 if the employee was made redundant on or after 6 April 2023).
If a dismissal is unfair (e.g., employees are selected for redundancy based on their sex, marital status, age, trade union membership, or whistleblowing, etc), they may bring unfair dismissal claims against their employer.
Employees should make sure they fully understand their rights and entitlements under employment law. They should also consider seeking professional advice and support from experienced employment solicitors to ensure their rights are protected throughout the process. The employer is obliged to pay for this advice if they are seeking a settlement agreement with the employee.
When signing a settlement agreement, the employee should consider the following factors:
- any ongoing post-termination clauses under the employment contract, such as restrictions from working for a competitor of the employer: you may need to re-negotiate these.
- any ongoing duties of confidentiality and not to say anything derogatory about your employer under the employment contract: you may want to make these mutual under the settlement agreement. You should also consider what and to whom you can and cannot disclose. If you need an employer’s reference, this should also be agreed upon under the settlement agreement.
- tax indemnities: the settlement agreement will likely include a provision on tax indemnities, so make sure you understand the current position, i.e., what tax has been deducted and paid and which must avoid risks that you will have to indemnify your employer in relation to tax.
- what happens if the employers want to re-hire you later: if yes there should be repayment terms included in the settlement agreement.
- have you received everything you are entitled to, such as holiday pay, bonus, expenses, vested shares, and salary and whether the amounts paid are correct.
- what employer’s property you need to return or delete or things you can keep.
- whether you are required to take garden leave, if so, how this will work.
- whether you are required to help with any transitional handovers etc.
Redundancy poses challenges for both employers and employees. As it can be an extremely difficult, unpleasant, and complex process, employers and employees should both consider engaging experienced employment solicitors to help them understand their rights and obligations and navigate the process to protect business and individual interests.
Here at A City Law Firm, we specialise in all types of discrimination claims and we are dedicated to achieving the best result and outcome for your case. Whether that be a settlement agreement or going to a tribunal. We know raising a grievance isn’t the first option you may wish to consider, we know leaving your career could be damaging and we know tribunal claims are costly. We would work with you to support whatever decision and approach you wish to take, but often having someone on your side gives you the confidence to stand up and shout out.