Redundancy Payments - When Is Redundancy Payment Not Payable?

What is redundancy?

This is defined by Section 139 Employment Rights Act 1996.   A redundancy occurs if the dismissal is wholly or mainly attributable to:

  • The employer ceasing or intending to cease to carry on its business (i) for the  purpose of which the employee was employed or (ii) in the place where the  employee was employed or
  • The requirements of the business (i) for the employees to carry out work of a  particular kind or (ii) to carry out that work in the place where the employees were  employed have ceased or diminished or are expected to do so.

If the redundancy is genuine, and provided that the Employer properly notifies and consults with the Employees the subsequent dismissal will be a fair one, and the Employer’s only liability will be payment of notice monies (unless notice is worked) plus a statutory redundancy payment (or a contractual payment is the employment contract provides for enhanced payments).    

What is the Statutory entitlement on redundancy?

The amount of the statutory redundancy payment depends on the employee’s age, length of service and weekly wage, which is subject to a statutory cap - currently £430 per week. The maximum payment is currently £12,900.

When is a Statutory Redundancy payment not payable?

  • Where an employee has been employed for less than 2 continuous years;
  • Where an employee is under 18;
  • Where there is a collective agreement with the workforce covered by an exemption order issued by the Secretary of State;
  • If a valid compromise agreement is entered into;
  • In certain circumstances if an employee resigns within the notice period (counter notice to work the employee’s minimum notice can be  served in this situation but can be disputed);
  • In certain circumstances if the employee commits an act of gross misconduct whilst “at risk” of redundancy - after notice of redundancy has been given refusal to make the payment is more problematic and an Employment Tribunal can order an Employer to make the Redundancy payment either in full or in part;
  • If the employee is re-employed (preserving continuity of employment);
  • If the employee unreasonably refuses an offer of reinstatement or suitable alternative employment (or unreasonably leaves during the statutory trial period allowed to enable the employee to consider any alternative employment offered)

If you wish to discuss any matter arising from this article or any other employment problem please contact Janet Long on 020 3254 1435 (direct line) or by email  to j.long@pj-h.co.uk

The contents of this article are intended for general information only.  It is not a substitute for legal advice, and shall not be deemed to be or constitute legal advice.  We therefore cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. We will, however, be pleased to advise you on the specific facts of your case