Redundancy

Revision Notes:                                  

  • An eligible employee, dismissed by reason of redundancy, is at a minimum, entitled to a statutory redundancy payment. 
  • A redundancy payment is a reward for “past service”. An eligible employee is entitled to receive the full statutory redundancy payment even if he or she finds another job immediately.

 

Who is eligible for a redundancy payment?

 

  • Where an employee is dismissed by reason of redundancy, there may also be a claim for unfair dismissal.

 

The 3 main categories for Redundancy

 

  • Job Redundancy (cessation of business)
  • Place of Work Redundancy
  • Employee Redundancy

 

Bumping

 

  • Bumping occurs when one employee’s job (A) disappears and that employee is given another individuals’ job (B) by the employer, which means (B) is then made redundant.

 

  • s.141 Employment Rights Act 1996 provides that if an employee is offered a job, they will lose their entitlement to a redundancy payment.
  • s.162 Employment Rights Act 1996 states that a redundancy payment is calculated by applying a formula based on age, length of service and a ‘week’s pay’. It is not based on the loss suffered. 

 

Relevant case law:

 

Bass Leisure Ltd v Thomas (1993) UKEAT 47

 

Safeway Stores plc v Burrell [1997] IRLR 200

 

W Gimber and Sons Ltd v Spurrett (1967) 2 ITR 308

 

Readman v Devon Primary Care Trust (2013) ECWA Civ 1110

 

Optical Express Ltd v Williams (2007) IRLR 936