Redundancy Notice

What is a redundancy notice?

A redundancy notice is used by an employer to notify an employee of their final selection for dismissal by reason of compulsory redundancy. The redundancy notice can be used by an employer that is based in Great Britain (England, Wales and Scotland).

What is the difference between a redundancy notice and an employee dismissal letter?

An employee dismissal letter is used by an employer to dismiss an employee on the grounds of poor conduct, poor performance or gross misconduct. Usually, an employee dismissal letter will be sent following the conclusion of a formal disciplinary process.

A redundancy notice will be used when an employee is being dismissed by reason of redundancy. Redundancy occurs when an employer needs to reduce the size of its workforce.

Is it mandatory to give an employee written notice of redundancy?

No. It is not strictly mandatory to provide notice of redundancy in writing. Notice of redundancy can be provided verbally. However, it is best practice to provide notice of redundancy in writing. This way, both parties have a written record of this, and all the important information about the terms of the dismissal can be set out in writing.

What does redundancy mean?

In an employment setting, redundancy means the need for the employer to reduce the size of its workforce. The need for redundancy will arise where:

• there is an actual or intended closure of the whole business or the business at a particular workplace; or
• there is a reduction (or anticipated reduction) in the need for employees to carry out work of a particular kind within the whole business or at a particular workplace

What is a collective redundancy situation?

A collective redundancy situation means that 20 or more employees are going to be made redundant within any 90-day period. In a collective redundancy situation, an employer must follow a specific process which will include:

• carrying out a collective consultation
• notifying the government Redundancy Payments Service

When should this notice not be used?

There are certain situations where a redundancy will automatically unfair, meaning that an employee may have grounds to bring a claim in the Employment Tribunal. A redundancy notice will be automatically unfair if an employee has been selected for redundancy because:

• they have been on jury service
• they are in a trade union or have been on an official strike
• they have reported wrongdoing that is protected by law (this is known as whistleblowing)
• they took action in connection with a health and safety matter
• they used their employment rights (e.g they took maternity leave)
• of their working status (e.g. being a part-time worker or a permanent employee)

An employer should also ensure:

• that it does not discriminate against any person during a redundancy process
• that any suitable alternative employment is offered to the employee

What are the prerequisites of the notice?

An employer must ensure that it follows the correct redundancy process. Usually, an employer will hold a policy document which sets out the process.

In the case of a collective redundancy situation (where 20 or more redundancies are being made within a 90-day period), the employer must follow the correct process before making any final dismissals. This will involve a collective consultation with employees and their representatives. An employer must also notify the government Redundancy Payments Service in the case of a collective redundancy situation.

All employees should be individually consulted during a meeting, at least once, in any redundancy situation.

Who can send this kind of notice?

A redundancy notice will be sent by an employer who has employed staff members under a contract of employment.

What must be done once the notice is ready?

Once finalised, the redundancy notice should be signed by the employer. Usually, a letter of this nature will be handed to an employee in person during a meeting.

The employee will then be required to work until their notice period* unless:

• they are instructed to stay away from their place of work (this is known as being placed on garden leave)
• they receive a payment instead of their notice period

An employee's notice period is the amount of time an employee has to work for their employer after they resign or after the employer terminates the contract of employment.

In which circumstances will an employee be entitled to redundancy pay?

There are different types of redundancy pay:

• Employees with at least two years of continuous service will usually be eligible for statutory redundancy pay (an automatic right to pay which is set out in law). Statutory redundancy pay is calculated with reference to an employee's gross weekly salary, length of service and age. An employer can calculate statutory redundancy pay by using the government website calculator.
• An employee's contract of employment may also include a provision for additional contractual redundancy pay.
• Employers may also offer a voluntary payment to an employee in a redundancy situation. This is sometimes referred to as an 'ex-gratia' payment.

What should the notice contain?

A redundancy notice should provide the following information to an employee:

• information about their score in reference to the redundancy selection process and criteria
• the relevant notice period and confirmation of their final date of employment (formal notice)
• if applicable, the details of the payment they will receive in place of their notice period (known as a 'PILON' payment)
• details regarding any accrued annual leave which they may be owed and how this will be paid to them
• any deductions which will be made in respect of annual leave taken by the employee
• the employee's right to any statutory redundancy pay and the relevant calculation for such pay
• the employee's right to any contractual redundancy pay and the relevant calculation for such pay
• details of any ex-gratia (voluntary) payment which the employer may be paying to the employee
• information regarding the appeal process with respect to the redundancy decision

What laws apply to a redundancy notice?

The key pieces of applicable legislation concerning redundancy are:

• The Employment Rights Act 1996
• The Trade Union and Labour Relations (Consolidation) Act 1992
• The Equality Act 2010
• The Income Tax (Earnings and Pensions) Act 2003

The Advisory, Conciliation and Arbitration Service (ACAS) also provides guidelines and advice to employers in respect of redundancy.

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