Helpful information for employees
HAVE YOU BEEN MADE REDUNDANT?
- Don’t worry – you may be entitled to claim redundancy pay, unpaid wages and more.
- If your employer is ‘insolvent’ this means it can’t pay its debts.
You have rights if this happens and can make a claim for money you’re owed.
Types of insolvency:
- Administration – where your employer asks an ‘administrator’ to come in to try to keep the company going
- Liquidation – when a company is closed and its assets are sold to pay the people it owes money to (creditors)
- Receivership – it’s like liquidation, but it’s usually arranged by a single creditor that’s lent money securely (eg a bank), and the assets are sold to pay just that creditor
- Voluntary Arrangement with creditors
If your employer is an individual, insolvency is called either:
- Bankruptcy (‘sequestration’ in Scotland)
- Voluntary Arrangement with creditors (‘deed of trust’ in Scotland)
The person who deals with the insolvency is called the Insolvency Practitioner.
If you’re owed money, you can claim for it through the Redundancy Payments Service.
If your claim is higher than the maximum allowances (see below), then a claim can be made to the Insolvency Practitioner for the additional amount.
Redundancy is a form of dismissal from your job – it happens when employers need to reduce their workforce for various reasons, including insolvency.
Please be aware that you may be eligible for certain rights, including:
- Redundancy pay
- Notice period
- Time off to find a new job
- Redundancy Pay
You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for 2 years or more.
- Half a week’s pay for each full year you were under 22
- One week’s pay for each full year you were 22 or older, but under 41
- One and a half week’s pay for each full year you were 41 or older
Length of service is limited to 20 years and the maximum weekly amount payable is £508 – this means that statutory redundancy pay is capped at £15,240.
You must be given a notice period before your employment ends.
Statutory redundancy notice periods are:
- at least one week’s notice if employed between one month and 2 years
- one week’s notice for each year if employed between 2 and 12 years
- 12 weeks’ notice if employed for 12 years or more
Check your contract of employment. Your employer may give you more than the statutory minimum but not a penny less.
As well as statutory redundancy pay, your employer should either:
- pay you through your notice period
- pay you in lieu of notice depending on your circumstances
Payment in lieu of notice
Your employment can be ended without notice if ‘payment in lieu of notice’ is included in your contract. Your employer will pay you instead of giving you a notice period.
You get all of the basic pay you would have received during the notice period. You may get extras such as pension contributions or private health care insurance if they’re in your contract.
Your employer may still offer you payment in lieu of notice, even if your contract doesn’t mention it. If you accept, you should receive full pay and any extras that are in your contract.
Finding a New Job
Contact your local Jobcentre and ask for their Rapid Response Service:
- If you suspect you’re going to be made redundant
- During your notice period
- Up to 13 weeks after you’ve been made redundant
They may also be able to pay for vocational training if no other funding is available – their job is to get you back into work quickly.
The process for claiming your entitlements, including redundancy pay, is via an online government service.
If you are made redundant, please visit www.gov.uk/claim-redundancy for more information.
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