REDUNDANCY PAYMENTS LAW - QUALIFICATION CRITERIA
In most cases, dismissals that are based on redundancy will be considered fair. However, not all redundancy dismissals are lawful. A redundancy dismissal can be deemed unlawful for a number of different reasons, and ultimately, the fairness, or lack thereof, depends on the facts of the case. The main piece of legislation governing redundancy dismissal is the Employment Rights Act 1996. The Employment Tribunal uses a variety of factors, such as the size of the business and the employer’s resources, to determine if the dismissal was reasonable and fair.
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Two main criteria must be met in order for an employee to qualify for a redundancy payment. First, the applicant must be an employee of the business. Self-employed individuals do not qualify. Second, the applicant must have been continuously employed by the business for a minimum of two years.
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The amount of the redundancy payment is arrived at by performing a detailed calculation based on statutory guidelines. The employee has the right to dispute the amount offered by appealing to the Employment Tribunal. Note that there is a time limit with which the employee must comply. The application must be made within six months of the date of the dismissal. In general, the amount of payment to be made depends on the applicant’s age and the amount of time during which they were employed by the organisation.
Statutory caps limit the amount of money an applicant can receive as a redundancy payment. The law places a cap on the maximum amount of weekly pay that can be used in the calculations, regardless of whether the applicant’s actual weekly pay is higher. In the case of an applicant whose weekly pay is below the cap, the actual amount of pay is used.
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In order to be eligible to receive a redundancy payment, the employee’s dismissal must have been based on one of two reasons. One reason is a reduced need for workers in the employee’s field of work. The second reason is that the entire business is closing.
Unfortunately, some employers try to take advantage of the concept of redundancy in order to provide a cover for an unfair dismissal. An employee may try to use redundancy as an excuse for dismissing an employee they simply want rid of. If a terminated employee believes that the claim of redundancy is false, they are well-advised to speak with an attorney. That employee may be able to make a claim to the Employment Tribunal, which is beneficial because compensation awarded for unfair dismissal is much higher than redundancy payments.
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The Employment Tribunal considers the following criteria in determining whether the employee’s dismissal was fair :-
- Did the employer give the employee and/or the appropriate Trade Union reasonable and adequate notice of the forthcoming dismissal?
- Did the employer use fair selection criteria when deciding which employee to terminate?
- Was the employee’s work record given consideration before they were chosen for dismissal?
- Did the employer adequately consider potential alternative employment available within the organisation?
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In some cases where redundancy might otherwise have occurred, the employer offers the employee an alternative job within the organisation. Employees should be aware that refusing to accept suitable alternative employment makes them ineligible for receiving a redundancy payment.
An exception is made for situations where the employee refuses the alternative employment because of family commitments or personal circumstances. The employee does have the option of taking the employment on the basis of a four-week trial period. If the employee finds the job unsuitable after going through the trial period, then the employee may refuse the job and still maintain their right to make a claim for a redundancy payment.
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