Redundancy

What is redundancy?

Redundancy is generally where an employer needs to reduce his or her workforce. It may happen because a work place is closing down, or because fewer employees are needed for work of a particular kind. Normally your job must have disappeared. It is not redundancy if your employer immediately takes on a direct replacement for you. But it will not matter if your employer is recruiting more workers for work of a different kind, or in another location.

What is a redundancy payment?

The statutory redundancy payments scheme aims to ensure that those who are dismissed through no fault of their own receive compensation. Employees with more than 2 years service are statutorily entitled to a lump sum from their employer, based on their age, length of service and contractual earnings up to a maximum limit which is currently £380 per week and is reviewed annually.

When is a redundancy payment due?

Your employer must give you a lump-sum payment if:

You are made redundant; and
You have at least two years continuous service; and
You meet certain other conditions (a list of these conditions and a fuller explanation can be found in the Employment Rights Booklet ER 3.

What are the payments?

The introduction of Age Discrimination legislation on 1^st October 2006 removed the lower and upper age limits of 18 and 65. It also removed the age tapering in the year before retirement age.

For redundancies made on or after 1 October 2006, the amount is calculated as –

Up to the age of 21, you will receive half a week’s pay for each completed year of service.
22 – 40 years of age, you will receive one week’s pay for each completed year of service.
41+ years of age, you will receive 1½ weeks' pay for each completed year of service.

How to claim a payment

Time limits

Under the Employment Rights (NI) Order 1996, your employer must make the payment when (or soon after) you are dismissed. There is no need for you to make a claim unless your employer does not pay or says that you are not entitled to a payment.
If this happens, you should write to your employer (keeping a copy) asking for a payment or take the matter to an Industrial Tribunal, or both. You must act within six months of the date your employment ended. If you don't make a written claim, or don't apply to an Industrial Tribunal within six months, you may lose the right to a payment. But a Tribunal will still have the power to decide that you should receive a payment if you take action within a further six months. (See page 8 of Employment RIghts Booklet ER 3 for details of how to apply to an Industrial Tribunal).
If your employer is declared insolvent, or cannot or refuses to pay, and you have done everything you can to get your payment, you can apply to us for a payment from the Northern Ireland National Insurance Fund. But you must have applied in writing to your employer for a payment within six months of the date your employment ended, or applied successfully to an Industrial Tribunal within the six months after that.
If your employer is insolvent we will pay you and claim back the payment from the assets of the business. Ask your employer's representative (for example Liquidator, Receiver or Trustee) for claim form RP1. Fill it in as soon as possible after your employment has ended and send it to the Redundancy Payments Service.
Application can now be made using our secure website at www.redundancyni.gov.uk . Alternatively application forms can be downloaded from the publications area or by contacting this office
(Employment Rights Booklet ER 3 gives general information on the redundancy payments scheme. Other useful booklets in the series can be found in the publications section of this website.)