6. Redundancy

A redundancy situation exists where an employer closes or intends to close the workplace or reduce the number of employees doing a particular kind of work. In particular, the employer must:

• adopt redundancy selection criteria which are not discriminatory;

• allow employees selected for redundancy time off to look for other work, provided they have at least two years’ service;

• give redundancy pay to all employees with at least two years’ service, calculated using a statutory formula linked to age and length of service. A week’s gross pay is subject to a statutory maximum cap which is reviewed annually (£538 from 6 April 2020); and

• offer any suitable available vacancies.

Contractual redundancy terms may be more generous than the statutory minimum.

An employer has a legal duty to consult over collective redundancies if it proposes to dismiss as redundant 20 or more employees at one establishment within a 90-day period — section 188, Trade Union and Labour Relations (Consolidation) Act 1992.

If it fails to do so, an employment tribunal can order the employer to pay a “protective award” in relation to each affected employee of up to 90 days’ pay. An employer has a defence if it can establish that there were “special circumstances” making full consultation “not reasonably practicable”, and that it consulted as much as it reasonably could.