If you are made redundant or are threatened with redundancy, you must read this first

This article is part of a series known as Untold Social…

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Being offered redundancy by your employer can seem like a terrible thing (if you want to carry on working and there’s not much chance of another job) or a good thing (if you wanted to leave anyway, and you’re offered a good redundancy payout).

But either way you need to be cautious, because while some employers do everything according to the law and in a totally straight way, some can get matters wrong, either accidentally or deliberately, and it can be very much to your disadvantage if you don’t take simple steps to challenge them.

There are very strict rules about redundancy which effectively stop employers simply picking on a member of staff they don’t like and then saying “you’re made redundant”.  But there are two simple tests you can make to see if your employer is being fair and reasonable or not.

First, your employer should not be making a person redundant but instead making the job redundant.  That is a very clear distinction.  It is the non-existence of the job that causes the individual to be asked to leave the company.   What this means is that the employer should hold meetings with staff to advise staff that because of declining orders or for some other reason, one or more jobs are no longer needed, and so one or more staff have to go.

You and your colleagues should be engaged in this process.  If not the employer is not following procedures the redundancy could therefore be invalid.

Second, the state lays down how much redundancy pay you should get if you are made redundant.  It is very easy to work out how much redundancy pay you are entitled to – you can do it on line with a simple government calculator.  This is at…


If your employer says, “we can’t pay you that” on the grounds they don’t have the money, then the company has to stop trading, because it cannot meet its debts.

Now when this point is made, some employers will say, “well if you close us down you won’t get any money at all, but if you accept half what the calculator says, we can keep trading.”

This is untrue and unreasonable.   If an employer ceases to trade and does not have the money to pay the redundancy payments, the state will pay instead – at the full rate.   This applies to anyone who is entitled to redundancy pay.  Once again there is a government on line service to do this for you, which can also be used for holiday pay you are entitled to.


There is one final point however: supposing you are made redundant and the terms are agreed, but then suddenly your employer comes back to you and says, “We’ve got an upturn in orders so we are not making you redundant.  You’ve got to keep working.”  What then?

Now of course that might be great news for you – you want to keep working and you’ve got your job.  In that case you accept, and of course your rights to redundancy pay remain, should your employer get into difficulty again later. Meanwhile you take your old job back, and you carry on uninterrupted.

But supposing you have already got another job, or you have started to make arrangements to use the redundancy pay to set up your own company, or go on a big family holiday, what then?

The law is fairly clear on this – but there is some leeway.

Once notice of redundancy has been issued to an employee, it is legally binding and cannot be withdrawn by the employer, even if the employee is still working out his or her notice period – unless the employee agrees.

However section 141 of the Employment Rights Act 1996 also says that an employee who is dismissed by reason of redundancy loses the right to redundancy payments if he or she unreasonably refuses an offer of suitable alternative employment.

This offer to keep working must be made before the end of the employee’s employment under the previous contract and must take effect either straight away at the end of the current employment or within four weeks after that.  

The employment must either be on the same terms and conditions as the previous contract or be suitable alternative employment in relation to the employee.  So you can’t be moved from being a manager to being a cleaner, but you can be moved from being a manager in one department to another department, as long as that is within your sphere of knowledge.

If, after notice of redundancy has been issued, the employer makes an offer to the employee of his or her old job back on the same terms and conditions of employment, but the employee turns it down, the employer can argue that no redundancy payment is due because the employee has unreasonably refused an offer of suitable alternative employment.

Of course there can be an argument about the suitability of an offer of alternative employment  – that would be argued in front of an employment tribunal.

However if you have already got another job then the employment tribunal will almost certainly say that refusal to return is quite reasonable, and you must be paid your redundancy money.

But a refusal to accept a job back simply in order to get the redundancy payment is likely to be deemed to be unreasonable.   

It short if your employer changes his/her mind, you can only refuse the offer of the job because of something that is quite reasonable such as

a) You have accepted an offer of another job

b) You have set up your own business, or made arrangements to work with your partner in his/her business.

c) You have moved away, or have made the arrangements to move away.

One way to help yourself through all this is to join a Trades Union, but do remember, if you join the union after the redundancy process has started the union probably won’t help you.

Many employers are known to use a certain amount of bullying tactics to tell employees that they don’t have any rights in these circumstances, or even that the amount of redundancy money they are due is far less than it is.  A union should help you through each step of this process – but if you don’t want to join a union, do use the calculators shown above.

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