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What exactly is a redundancy?


What exactly is a redundancy?

The precise definition of redundancy is to be found in section 139 of the Employment Rights Act 1996, but basically if any of the following situations apply it is a redundancy:-

What exactly is a redundancy?

What exactly is a redundancy?

An actual or intended closure of the whole business;
An actual or intended closure of the business at a particular workplace;
A reduction (or anticipated reduction) in the need for employees to carry out work of a particular kind.
It is important to note that it is the job itself which is being made redundant.

Another point worth noting is that an employee is only entitled to a statutory redundancy payment if they have worked for their employer for a period of two years continuously. (However, whilst this is the law, an employer can make a payment as compensation for loss of employment if you have been employed for less than two years).

You can calculate your statutory redundancy payment by logging onto the government website.

Sometimes an employer will offer an enhanced payment in return for you entering into a settlement agreement, whereby you agree not to bring any proceedings against them in the Courts or Employment Tribunal.

Settlement Agreements and Redundancies

I am seeing more settlement agreements coming through at the present time as companies are finding that they are having to restructure their businesses due to the financial impact of the Coronavirus.

Whilst redundancy can be very stressful, compensation for loss of employment (which is tax free up to £30,000.00) can provide a much needed lifeline whilst looking for a new job. A settlement agreement which provides for a compensation payment will, if acceptable to both parties, enable them to move on. An agreed Reference can be included in the settlement agreement which can help when looking for work.

Contact me to discuss a redundancy or a settlement agreement

I am happy to discuss your situation if you need advice on redundancy/settlement agreements/restructuring.  I offer a free initial telephone consultation – just email me at with your telephone number and the best time to call you.