What to do if you are made redundant or dismissed

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Dismissal from your job

Dismissal is when your employer brings your employment contract to an end, thereby terminating your job with them.

Many different actions by your employer count as dismissal, some of which are more straightforward than others. Things your employer may do that count as dismissal include:

  • ending your employment
  • not renewing a fixed-term contract after it has ended
  • making you redundant (including voluntary redundancy)
  • making it impossible for you to continue working in some way, leading you to resign (this is known as constructive dismissal)
  • making you feel as though you have to resign
  • laying you off or putting you on short-time working despite this not being permitted by your contract
  • not letting you come back to work after maternity leave
  • prohibiting you from coming back to work after industrial action (a strike) or a lockout

In most cases, your employer should give you a notice period for being dismissed. If this is not stated in your contract of employment, then the law sets out the statutory minimum notice periods your employer must obey, depending on how long you have worked for them.

The minimum legal notice periods are as follows:

Length of time worked for employer Amount of notice they must give
Less than a month No notice period, though you are entitled to “reasonable” notice, which will usually be based on how often you are paid
One month or more One week’s notice
Two years or more Two weeks' notice
Every additional year beyond two years One additional week’s notice, to a maximum of 12 weeks

Although it is rare, your employer could dismiss you without giving notice on grounds of gross misconduct. Gross misconduct is when you commit a serious offence such as physical violence against a co-worker or theft of company property. In these situations your employer may dismiss you from work immediately and does not have to keep you on to work through any notice period. However, they must still follow a fair process in reaching this decision.

Reasons for dismissal

In order to dismiss you in any circumstances, your employer must have a good reason for doing so and follow the appropriate procedures accordingly.

There are a number of reasons which your employer may give to justify a dismissal. Potentially fair reasons include:

  • You are not able to perform your role properly – for example, if you are performing poorly and you have shown no signs of improving following training and assistance.
  • You are suffering from an illness which means you cannot do your job – though your employer must first consider any reasonable changes they could make to accommodate your needs, and give you a chance to recover. If you become disabled due to an illness or accident, your employer can only dismiss you if it is genuinely no longer possible for you to do your job as a result – otherwise it will likely count as discrimination.
  • Your job role is no longer required or your employer has to reduce their workforce – this is known as redundancy (see below for more details). If you are selected for redundancy, your employer must have fair reasons for selecting you.
  • You have committed an act of gross misconduct, such as physical violence, theft or being drunk at work. In cases like this, you will face summary dismissal – that is, dismissal without a notice period.
  • Your employer is no longer able to employ you without breaching the law – for example, if you are working in a sensitive position and receive a criminal record.
  • It is impossible to carry on employing you – for example, if the factory in which you work burns down.
  • Any other substantial reason meaning they can no longer employ you.

Unfair dismissal

As mentioned above, your employer must have a good reason for dismissing you and must follow appropriate procedures when doing so. If they fail on either of these counts, you may be able to make a claim for unfair dismissal.

Another situation in which you could make a claim for unfair dismissal is if the reason for your dismissal is inconsistent with the treatment of other employees - for example, if you are dismissed for doing something that other employees are allowed to do. Another example is if your employer did not fully investigate the circumstances surrounding the reason they dismissed you - for example, if a colleague made accusations about your conduct in the workplace and your employer failed to verify these claims.

In most cases, you must have worked for your employer for a certain amount of time before it is possible for you to make a claim for unfair dismissal. Since 6th April 2012, you are ordinarily required to have been with your employer for at least two years before you can make a claim for unfair dismissal.

However, there are exceptions to this time limit, because some reasons for dismissal are automatically unfair regardless of how long you have been in a job role. You have probably suffered automatically unfair dismissal if you were dismissed because:

  • You were pregnant or on maternity leave, or for any reason related to these.
  • You were trying to enforce any right you have under employment law.
  • You were involved in ‘whistleblowing’ on a matter of public importance.
  • You took action on a health and safety issue.
  • You joined a trade union or took part in trade union activities.
  • You acted as a representative for another employee during grievance or disciplinary proceedings.
  • You worked in a shop or a betting shop and refused to work on Sundays, unless you were specifically hired to only work on Sundays.

Additionally, if you believe that you were dismissed for a discriminatory reason, even if you have not worked for your employer for the necessary time in order to claim for unfair dismissal, you can still make a claim against them for discrimination. See our discrimination section for more details.

For more information on how to identify whether you have been unfairly dismissed, watch this video from experience employment solicitor Jayne Nevins, who will talk you through what constitutes an unfair dismissal.

Constructive dismissal

Constructive dismissal is the term used for when you resign from your job due to your employer’s conduct or due to actions that make you feel as though you are being ‘forced out’. Even though it seems as though this is not dismissal because you chose to resign, if your employer treats you so badly at work that they make you feel as though you need to leave, this counts as them breaching their contract with you and therefore amounts to a dismissal.

The conduct of your employer must, however, be seriously unacceptable before you can consider yourself to have been constructively dismissed. It may be that their actions build up over time to make your job intolerable, or it could be that one extremely severe incident leads you to resign.

Some ways in which an employer could force you into a constructive dismissal may include:

  • a failure to pay your wages or to pay them on time
  • changing your working conditions without asking you; for example, telling you to work in another location which is difficult for you to get to
  • harassing or insulting you at work

You will usually be expected to initially try and sort out the problem with your employer, rather than immediately resigning. As a result, your employer is required to provide information on their procedures for raising a grievance.

However, if the grievance procedure fails to help, you may then reach a point where you feel you have no choice but to resign. If this is the case, you should do so as soon as possible, as it may be hard to prove that your working conditions were unacceptable if you tolerated them for a long time. If you try to bring a claim afterwards, your employer may argue that you had effectively accepted what was happening.

It is important to note that having been constructively dismissed does not necessarily mean that you were unfairly dismissed; it only shows that your resignation counts as a dismissal. You will have to prove separately that the reason for your dismissal was unfair – see the unfair dismissal section above.

If you feel that you have been unfairly or constructively dismissed, there are a number of steps you can take to resolve the issue. Take a look at our problems at work section to find out what you will need to do.

Strikes and industrial action

If you are striking or taking part in industrial action, this can affect whether you are considered to have been unfairly dismissed or not.

A strike is when an employee or group of employees enforce a break in their work as an official demonstration. "Industrial action short of a strike", as described in the section 229(2) of the Trade Union and Labour Relations (Consolidation) Act 1992, may include an overtime ban, or conducting a rest-day working for the purpose of authorizing industrial action.

If an employee is taking part in unofficial strike action at the time of their dismissal then their employer is immune from any unfair dismissal claim, unless the dismissal was for a reason deemed automatically unfair.

If employees take part in official strike action then it may be possible for the employer to fairly dismiss all of said employees. However, the dismissal(s) will be automatically unfair if the employer selectively dismisses certain members of staff or bases the dismissal on an automatically unfair reason.

This will include the circumstance where the strike action was official and the relevant union satisfied all the steps required to make the strike action protected, but the employees are dismissed within the first 12 weeks of the strike action. 

Redundancy

Redundancy is a type of dismissal which can occur when an employer wants to reduce the number of staff working for them. They may select workers for redundancy, ask for volunteers, or both. Whichever method they use, it must be fair to employees.

Some common methods used for selecting who to make redundant include:

  • looking at the skills, qualifications and appraisal scores of staff
  • checking employees’ disciplinary records
  • the ‘last in, first out’ method, where the more recent employees are the first to go

One thing all these methods have in common is that they are backed by evidence. While an employer may select staff for redundancy on the basis of work performance, for example, this must be demonstrated through appraisal records or a similar method, rather than the employer simply selecting the employees they think are the worst performers on a whim.

A specific method for selecting employees for redundancy may be described in the staff’s employment contracts, or your employer may have used a particular method without objection in a previous redundancy situation. In these cases, the method stated or the process which has been used before should be applied.

A selection process will not be necessary if a particular department is being shut down entirely, meaning all of the employees there will be made redundant.

Unfair redundancy

If your employer selects people for redundancy for unfair reasons, this will be seen as unfair dismissal. It is unfair to make people redundant on the basis of:

  • age
  • gender
  • race
  • sexuality
  • marital status
  • disability
  • religion or other strongly-held belief
  • their working pattern (for example, part-time employees)
  • taking maternity, paternity, parental or dependents leave
  • being pregnant or giving birth
  • membership of or involvement in trade union activities, or lack thereof
  • involvement in health and safety activities, or having taken action over health and safety concerns
  • asserting their statutory employment rights
  • taking part in a strike or other industrial action for 12 weeks or less
  • whistleblowing
  • being a trustee of a company pension scheme
  • jury service

Some of these reasons also count as discrimination. If you feel that you have been unfairly selected for redundancy or discriminated against, you may be able to make a claim at an employment tribunal.

Redundancy rights

If you have been selected for redundancy, certain employment rights may apply. You should be given:

  • a notice period, which may vary depending on how long you have worked for your employer
  • statutory redundancy pay, if you have been an employee for at least two years
  • a consultation to explain the reasons for, and any alternatives to, your redundancy
  • offers for suitable alternative employment within the organisation
  • paid time off to look for a new job, if you have worked for your employer for at least two years

Notice periods for redundancy

Your notice period determines the minimum amount of time you have left between your employer telling you that you are being made redundant and the actual end date of your employment. Your employment contract may give you a longer notice period, but if not, the legal minimum requirements are:

  • a week’s notice if you have worked for your employer for between 1 month and 2 years
  • a week’s notice for each year of employment if you have worked for your employer for between 2 and 12 years
  • 12 weeks’ notice if you have worked for your employer for over 12 years

You should receive full pay throughout your notice period. Alternatively, your employer may choose to give you payment in lieu of notice. This means that your employment will end immediately, but you will still receive the basic wage you would have been paid during the notice period. Other contractual bonuses such as pension contributions should be paid too.

If there is no clause allowing payment in lieu of notice in your employment contract, you should be given compensation for any benefits that you would have received over the duration of your notice period.

Redundancy pay

If you’ve been with your employer for two years or more before being made redundant, you will usually be entitled to redundancy pay.

The amount you will be paid is:

  • half a week’s wage for every full year of employment in which you were aged under 22
  • a week’s wage for every full year of employment in which you were aged 22 or over, up to the age of 41
  • a week and a half’s wage for every full year of employment in which you were aged 41 or over

For the purposes of calculating redundancy pay, however, the figure for a week's wage caps out at £475 - any amount over this will be disregarded. Redundancy pay also caps out at 20 years' service.

Our redundancy pay calculator can help you find out how much you’ll be entitled to.

If your employer offers you the option to continue working for them, or suggests a suitable alternative role which you turn down for no good reason, they do not have to give you any redundancy pay.

Redundancy consultations

If you’re facing redundancy, your employer should organise a consultation to discuss it. This discussion should cover the reason redundancies are required, why you have been selected, and any alternatives they can offer, such as another suitable role that you could switch to.

If 20 or more employees are to be made redundant at once, your employer should instead arrange a consultation in which they will meet with an employee representative. They will discuss the reasons why the redundancies are taking place, as well as potential ways to avoid or minimise the number of dismissals, and what help could be offered to those facing redundancy.

In these situations, full written details of the redundancy plans and procedures should be supplied to staff members or their representative. When a collective consultation takes place, the employee representative will either be a trade union representative (if the employees have a union) or simply an employee elected by the other employees to represent them.

There are minimum periods which dictate when a collective consultation must take place before any dismissals can be enforced. If there are to be 20 to 99 redundancies, it must start at least 30 days before dismissals begin; with 100 or more redundancies, this increases to 45 days. There is no upper limit on how long a collective consultation can take.

Suitable alternative employment

If you have been selected for potential redundancy, your employer may instead offer you a similar role within the company, or a position at another organisation which has close ties to yours. This is known as ‘suitable alternative employment’.

It is important to note that if you turn down such an offer, you may no longer be entitled to receive redundancy pay, as you are effectively refusing to continue working for your employer. However, this depends on whether the job truly is ‘suitable’.

In order to count as suitable alternative employment, a number of points need to be considered, such as:

  • how the work involved compares to your current job
  • whether the hours, wage, location, and so on are acceptable
  • whether your skills, abilities and personal circumstances match the role

Your employer needs to offer the alternative role to you before your current job comes to an end, and must supply enough information about the position for you to judge how similar it is. You are also entitled to a four-week trial period to try out the new job and see if you feel it is right for you. If not, you should let your employer know that you think it is unsuitable before the trial period is up.

If you and your employer disagree about whether a job they have offered is suitable, and there seems to be no other way to handle the issue, you may be able to make a claim to an employment tribunal.

On the other hand, if your employer has a suitable role available but fails to offer it to you as an alternative to redundancy, this may count as unfair dismissal, and you could take action against them.

Taking time off to find a job

If, by the time your employment ends, you have been working for your employer for at least two years, you have the right to take a reasonable amount of time off in order to look for a new job or to sign up for training which will help you find employment. What is considered ‘reasonable’ will vary on a case-by-case basis; there are no rules covering this, and you will have to reach an agreement with your employer.

Unless your employment contract states otherwise, your employer only has to pay you 40% of one week’s wage for any time you take off to find a job during your notice period. So, if you usually work five days a week and you take six days off during your notice period for job-hunting, you will only be paid for two of those days – 40% of your five-day working week.

If you feel that your employer failed to follow any of the above procedures when making redundancies, you should take a look at our section on problems at work which provides information on how to take a claim to an employment tribunal.

Further topics

Settlement agreements

Settlement agreements, sometimes known as severance agreements or termination agreements, can be entered into when an employee leaves employment - for example, through dismissal or redundancy. The purpose is to settle any claims the employee may have upon their leaving.

They can also serve as a means of settling other types of employment claims (e.g. claims of discrimination or harassment) against an employer, irrespective of whether the employment relationship has ended.

Entering into a settlement agreement involves the employee signing an agreement promising that they will not make any claims (e.g. for unfair dismissal) against the employer.

In doing this the employee agrees to waive their rights to bring a claim against their employer. However, not all claims can be settled by way of settlement agreements.

Generally, a settlement agreement is the only way an employee can waive their rights to pursue their statutory employment rights. An exception to this is when a settlement is reached following an ACAS conciliation.

Advantages of settlement agreements

Settlement agreements are attractive to employers as they mean they do not have to worry about any repercussions such as employment tribunals, and can also be desirable for employees as they may receive a handsome sum in compensation. Settlement agreements can be considered tantamount to the employer ‘paying off’ the employee to ensure no dispute will arise over dismissal, or to settle an issue which has already become apparent.

Another point in favour of settlement agreements is the ease and quickness with which they can be arranged, reducing the tumult for both sides and negating the need for court action.

The role of solicitors and other advisers

When a settlement agreement is drawn up, one condition is that the employee or worker must have received advice from an independent adviser. This adviser should be a qualified lawyer (such as a solicitor or barrister), a certified trade union or advice centre representative, or a person of such description as specified by order.

It is normal practice for the adviser to sign a certificate or letter to confirm that they have provided the employee with advice on the terms and effect of the agreement upon them, and upon the effect of the agreement on the employee's ability to pursue claims before the employment tribunal.  This certificate will also confirm that the adviser has the necessary insurance in place in respect of the advice given.

Ordinarily the adviser will provide advice on the amount of compensation that should be expected. The settlement agreement cannot be enforced unless the employee has received the required advice from an independent adviser.

Content of a settlement agreement

Examples of terms that a settlement agreement may contain include:

  • An amount of compensation offered to the employee
  • Assurances given by both the employer and employee
  • Indication that all terms have been accepted by the employee and that they will not take legal action in future
  • A letter of reference which can be used by the employee in future job applications.
  • A ‘non-compete’ clause which places some restriction on the type of jobs the employee is able to apply for in the future
  • Payment of tax
  • Confidentiality clause – i.e. that you cannot disclose some or all of the claims to anybody

The amount of compensation is purely down to the two parties and what they can agree to.

Rejecting the settlement agreement

The employee absolutely has the right to reject any offer of settlement, either on principle or because they feel the compensation offered is insufficient. In the case of inadequate financial renumeration, the employee can negotiate another settlement or pursue their claim to an Employment Tribunal.

Resignation and dismissal from work

If you resign from work, ordinarily, you would be entitled to be paid everything that you have earned up to the point when you finished employment. However, it is possible your employer may have the contractual right to withhold your pay, depending on your contract of employment.

Where an employee is forced to resign their employment as a result of not receiving payment from their employer, the employee may be able to pursue claims for wrongful dismissal and (provided they have the requisite period of continuous service) constructive dismissal.

To succeed in such a wrongful or constructive dismissal claim, you must be able to present proof that your employer, by failing to pay wages when due, fundamentally breached the contract of employment and conducted itself in such a manner as you would be allowed to treat the employment contract as being discharged. If you cannot prove this you will not be entitled to payment for any period of notice during which you did not work.

Any commission payment will often depend on your written document of employment. Commission is capable of forming “wages” for the purpose of a claim for unauthorised deduction of wages.

Pay in lieu of notice

In the event that an employee is dismissed, it is common practice for an employer to pay out a lump sum 'in lieu of notice' as an alternative to keeping the employee working their statutory or contractual period of notice. Pay 'in lieu of notice', however, can only be lawfully imposed by the employer where provision is made for it within the contract of employment.

In most cases, a lump sum will be determined by the ordinary earnings of the employee had they worked their agreed notice period.

Wrongful dismissal

If your employer dismisses you in a way which breaches the terms of your contract, this is what is known as ‘wrongful dismissal’.

Wrongful dismissal cases usually arise when an employer either fails to give you sufficient notice as set out in your contract, or does not follow the appropriate procedures that they have laid down for dismissal situations.

Statutory notice periods

If your notice period is not stated in your contract, then you have a fallback in the form of your statutory employment rights. You should be given one week’s notice after being employed for one month. After this, every year you have worked will add another month to this minimum notice period, up to a maximum of twelve weeks’ notice.

If your contract promises you a longer notice period than this, you are of course entitled to that amount of notice, but you should always receive the statutory minimum notice period if nothing else has been specified.

If you are not legally entitled to a specific minimal notice period – if you have been employed for less than a month, for example - your employment rights still state that you should get a “reasonable” notice period. This is of course open to interpretation, but your employer will need to demonstrate that they acted reasonably if challenged on it. This may be based on how often you get paid – for example, you may be able to argue that a month’s notice period is reasonable if you are paid once a month.

Compensation amounts and other grounds for claiming

The award you can expect for a wrongful dismissal claim is likely to amount to what you would have earned had you been allowed to work through your notice period, as you should have been permitted to under the terms of your contract.

It is not just the notice period that can lead to a claim of wrongful dismissal. Your employer will also be required to follow certain procedures if they want to dismiss you, so a failure to do so means that they could find themselves in hot water. Essentially, any breach of contract performed when dismissing an employee can give rise to a wrongful dismissal claim.

Who can claim for wrongful dismissal?

Because a wrongful dismissal claim involves breach of contract, there is no minimum time period for which you must have worked in order to make one. In breaching the contract, your employer has broken the law. For this reason, while an employment tribunal can hear a wrongful dismissal claim which does not exceed £25,000 in value, they could also go before a county court or high court.

Counterintuitively, wrongful dismissal does not actually necessarily mean that they had no good reason to dismiss you or would not have been permitted to, but merely that the way in which they carried out your dismissal was incorrect.

Get legal help today

If you’re leaving work in contentious circumstances, one option for resolving any issues with your employer may be the signing of a settlement agreement. If you need further advice on this, DAS Law’s Settlement Agreement service can get you the legal help you need, ensuring that you reach a deal with your employer which is fair to you.


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