Employment - The Basics

Redundancy

The Right to a Redundancy Payment

The conditions which must be fulfilled for a person to be entitled to a redundancy payment are:

• that he or she was an employee.
• that he or she had been continuously employed for two years.
• that he or she was dismissed.
• that the dismissal was as a result of redundancy.

The amount of the redundancy payment is based upon the employee's age, length of continuous employment and gross average wage (subject to an upper limit of £310 per week (from 1 February 2007).

Consultation and Notification Requirements

Where an employer is proposing to dismiss as redundant at least 20 employees within a period of 90 days or less, it must consult about the dismissals with "appropriate representatives" of the employees concerned. There is a sliding scale relating to the number of employees and the length of consultation, where the number of employees exceeds 20. The appropriate representatives are the recognised unions or, if there is no recognised union in relation to some or all of the affected employees, representatives elected by those employees for the purpose on consulting with the employer.

Notice must also be given to the Department of Trade & Industry on a similar timescale.

Information and Consultation

Described as 'potentially the most significant piece of employment legislation ever to be introduced in the UK' the Regulations have applied to those employers with 150+ employees since March 2005, those with at least 100 employees will be covered from April 2007 and at least 50 employees from April 2008.

Where the Regulations are invoked and there is a failure to negotiate an information and consultation agreement, employers will be obliged to provide workforce representatives with information on:

• The recent and probable development of the undertaking's activities and economic situation;
• The situation, structure and probable development of employment within the undertaking and any anticipatory measures envisaged, in particular, where there is a threat to employment within the undertaking; and
• Decisions likely to lead to substantial changes in work organisation or in contractual relations, including decisions covered by the legislation on collective redundancies and transfers of undertakings.

Consultation will also be expected to take place on the latter two.

Employers can avoid the operation of the Regulations by putting in place a 'pre-existing agreement' before any employee request under the legislation is received.

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