Last week saw Toys R Us announce its plans to close all of its stores after it was unable to find a buyer, which could lead to 3,000 people being made redundant.
Toys R Us are one of a number of high street retailers to recently announce closures and redundancies.
Being employed provides the security of having a guaranteed regular income and losing this security can be devastating.
It is important for employees to know their legal rights if they find themselves at risk of redundancy.
An employer must follow a fair procedure that includes notifying the employee they are at risk, undertaking a reasonable consultation process, holding a dismissal/redundancy meeting and providing the right to appeal. Failure to do this can make the dismissal unfair and this can be challenged at an Employment Tribunal.
Where there are 20 or more employees at risk an employer must go through a collective consultation process that lasts for a minimum of 30 days; where more than 100 employees are at risk, this increases 45 days. Trade Union or employee representatives should also be appointed and no decisions should be taken, and no notices to terminate employment give before the conclusion of the collective consultation process. Consultation should begin in good time.
If there is a failure to undertake collective consultation in good time, with the correct representatives, and for the minimum required period, employees can pursue claims at an Employment Tribunal for what is called a Protective Award. An employment tribunal can award up to 13 weeks actual gross pay to each employee who was affected by the failure to consult properly.
Any employee with over 2 years’ service is entitled to a statutory redundancy payment. This is calculated as 1 weeks’ gross pay (currently capped at £489 per week, but increasing to £508 in April 2018) for every complete year of service up to 20 years.
Employees under 22 receive ½ weeks’ pay for each complete year of service, those aged 22 to 41 receive 1 weeks’ pay for each complete year of service and employees over 41 receive 1½ weeks’ pay for each complete year of service.
Employees are also entitled to their full notice period and contractual benefits up to the date on which their employment ends, or payment in lieu where they are not required to work this.
Any accrued, untaken holiday should be paid in lieu.
If an employer fails to make a redundancy payment an employee has 6 months (less 1 day) to issue a claim to an Employment Tribunal for a statutory redundancy payment. If the employee wants to bring a claim for unfair dismissal or for a Protective Award, the time limit is 3 months (less 1 day).
The main fear for employees at risk of redundancy is that they will not receive the payments due to them if their employer becomes bankrupt. Should this happen employees can submit their claims to the National Insurance Fund via the Redundancy Payments Office at www.gov.uk/insolvency-service and must do this within 6 months of being made redundant.
The law in this area can be complex, and because the time limits for making claims are so short, it is important to ensure that you take advice as soon as you can.