Salman Haqqi, personal finance expert at Money, advises on redundancy rights.

 

The financial impacts of Covid-19 will continue to be felt for some time, with firms such as the John Lewis Partnership set to scale down the number of employees on their payroll to cut costs. Others may go out of business altogether, such as the Arcadia group earlier this year.

If your employer makes you redundant, it is important to know your rights. By law, you are entitled to receive notice pay and accrued but unused holiday. You may also qualify for statutory pay – though this will depend on how long you’ve been with your employer.

If you have worked continuously with your employer for more than two years, they are legally obliged to give you a redundancy payment. Even if your employer enters administration or is liquidated so it ceases to exist, your legal rights are still secure; you just need to apply to a different body, either the administrators or the Redundancy Payments Service, to get your money.

The amount you will receive from your employer will depend on several factors. These vary from your age; the amount of time you’ve been working for your employer (often called ‘length of service’); your current weekly wage, and whether they intend to offer redundancy pay above the legal minimum.

How much pay you are eligible for is calculated in the following way:

• 0.5 week’s pay for each full year of service when you were under 22
• 1 week’s pay for each full year of service when you were aged between 22 and 41
• 1.5 week’s pay for each full year of service where you were over the age of 41.

The government website has a calculator to help you to identify the amount of Statutory Redundancy Pay (SRP) you are entitled to. The weekly wage that is covered by SRP is £538 per week (£560 in Northern Ireland). The length of service is capped at 20 years. So, even if your salary was higher than this, your SRP entitlement will be calculated as if your weekly pay was £538.

For you to be made redundant, your job has to cease to exist completely. Your employer is not allowed to take on someone else to directly replace you. However, even when an employer has made redundancies, they are still able to recruit new members of staff to fill different roles in other areas of the business.

If you are made redundant, your employer should explain to you why and how you were selected. However, if you believe you were discriminated against, you have the right to pursue your claim to an employment tribunal. If this happens, you may be entitled to take legal action against your employer. It is worth noting that any legal action may be delayed as many courts remain closed due to lockdown rules.

For a comprehensive guide to redundancy rights, please click here.