What Happens If My Employer Doesn’t Pay My Redundancy Pay?

emily gordon brown
Emily Gordon BrownLegal Assessment Specialist @ Lawhive
Updated on 14th October 2024

Losing your job can be a hard pill to swallow, but missing out on your redundancy pay makes it a lot worse. Redundancy pay is a financial buffer that cushions the effect of having your job terminated unexpectedly. By law, employers are required to pay redundancy to eligible employees to support them with the out-of-work transition process. However, there are instances in the UK where employers don’t fulfil this obligation. 

Therefore, this article will address:

  • The categories of people entitled to redundancy pay

  • What to do if your employer won’t pay redundancy

  • What to do if your company goes into liquidation

  • The legal and regulatory considerations involved

Who is Entitled to Redundancy Pay?

Understanding the qualifications involved in redundancy pay can help ease some of the uncertainty. The eligibility criteria depend on whether the pay is statutory or contractual. 

  • Statutory Redundancy Pay: You’re entitled to statutory redundancy pay if you’ve been employed continuously for two years, and the reason for the termination was genuine and valid. 

  • Contractual Redundancy Pay: This occurs if your employer fails to renew a fixed-term contract that’s above two years. Some employees may also be entitled to additional redundancy pay if their employment contract offers enhanced redundancy terms.

What to Do If You Don’t Receive Redundancy Pay

When an employer refuses to pay redundancy, it becomes more difficult to deal with losing your job unexpectedly. Fortunately, this isn’t the end of the road. Here are some steps to take if your employer won’t pay redundancy: 

1. Contact Your Employer

The first step is to write to your employer, reminding them of the legal requirement to pay redundancy. You can also back this up with relevant evidence, such as payslips or a written agreement. This allows you to resolve the issue amicably without involving an employment tribunal. However, ensure you give the employer a reasonable amount of time to resolve the issue before taking things further. You should also create a settlement agreement containing details on the date and time the redundancy payment will be made. 

2. Making a Claim to an Employment Tribunal

If the employer still doesn’t pay, you can make a redundancy claim to an employment tribunal. This must be done within six months minus one day from the date the employment ended for statutory redundancy pay claims or three months minus one day for contractual redundancy disputes. The tribunal will then order the employer to pay the owed amount.

If A Company Goes Into Liquidation, Can I Get Redundancy Pay?

If your employer has gone into administration, liquidation, or bankruptcy and cannot pay redundancy, you can claim statutory redundancy pay from the government’s Redundancy Payments Service (RPS). It’s also important to act quickly, as claims must be submitted within six months of the redundancy.

Another good thing about the RPS is that you can claim more than statutory redundancy pay. The government may also cover:

  • Up to eight week’s unpaid wages

  • Holiday pay

  • Statutory notice pay (this is subject to certain caps on weekly pay) 

 You’ll usually get the money within six weeks of submitting the claim.

Steps to Take if You Believe You’ve Been Unfairly Dismissed

If you suspect the redundancy process wasn’t handled properly and you were unfairly dismissed, you don’t have to take it with folded arms. Instead, you can take the following steps to assert your redundancy rights and challenge the redundancy process:

  • Appealing the Redundancy Decision: If you feel the redundancy was unfair or your employer failed to offer suitable alternative employment, you may have grounds for an unfair dismissal claim. First, contact your employer to communicate your concerns and request that they review the process. But if this doesn’t work, you can turn to an employment tribunal to handle the case. This must be done within three months, minus one day from your dismissal date. If successful, the tribunal could award you compensation or even order your reinstatement.

  • Consider Legal Advice: If the situation becomes complex, seeking legal advice is best. A legal professional can help you understand your rights and assess the strength of your case. They can also help you explore the best option to get you the compensation you’re entitled to.

Best Practices for Employees Facing Redundancy

When facing redundancy, you must be proactive to protect yourself from potential pitfalls. The key is to apply best practices that prepare you for the steps you need to take.

  • Understand Your Rights: When you hear that your position is being made redundant, your first natural thought is to panic. However, there’s a better way to go about it. Take a moment to understand your rights under UK employment law. This law contains detailed provisions regarding the redundancy process and the eligibility for statutory redundancy pay. For example, you have a right to be consulted during the redundancy process. 

  • Keep Records: What better way to prove your case than to keep relevant records as evidence? Always keep detailed records of your employment, redundancy notices, and any communications with your employer regarding redundancy pay. This will be helpful in case you need to take legal action.

Understanding the legal and regulatory considerations regarding redundancy is key to protecting one's rights and achieving the best outcome. 

Employment Rights Act 1996

The Employment Rights Act 1996 is the primary UK employment law that governs redundancy processes and outlines the minimum statutory entitlements for employees. The Act states that employees who have been continuously employed for at least two years are entitled to statutory redundancy pay. 

The amount is calculated based on age, length of service, and weekly pay to allow employees to enjoy a smooth and fair transition out of work. Additionally, the Act ensures that employees are consulted during the redundancy process, and it emphasises fair procedures to give you legal protection in case of disputes.

Government Redundancy Payments Service

In the UK, the government supports employees in cases of employer insolvency through its Redundancy Payments Service (RPS). This ensures that employees receive their statutory redundancy pay, even if the company cannot provide it.

FAQs

What should I do if my employer refuses to pay my redundancy pay?

In the UK, if your employer refuses to pay redundancy, start by writing to remind them of their legal obligation. You can also support this relevant evidence, such as payslips or a written agreement. You can submit a redundancy claim to an employment tribunal if this doesn't work.

How do I claim redundancy pay if my employer is insolvent?

If your employer is insolvent, you can claim statutory redundancy pay from the government’s Redundancy Payments Service (RPS).

Who Pays Statutory Redundancy Pay?

If your employer goes out of business, you can claim statutory redundancy pay from the government.

Can I claim more than statutory redundancy pay?

Yes, the RPS also covers up to eight weeks' unpaid wages, holiday pay, and statutory notice pay, subject to certain weekly pay caps.

How long do I have to make a claim to an employment tribunal?

For statutory redundancy pay claims, you must submit the claim within six months minus one day from the date the employment ended. On the other hand, it’s three months minus one day for contractual redundancy disputes.

What happens if my employer delays paying redundancy pay?

If your employer delays paying your redundancy pay, you should contact them in writing to remind them of their legal obligation. You can submit a claim to an employment tribunal if they still don't pay. The tribunal will then order your employer to pay what they owe. However, if your employer is insolvent, you can claim through the government’s Redundancy Payments Service instead.

Conclusion

Redundancy pay is designed to serve as a financial cushion to help lessen the harshness of sudden job loss. However, there are instances where UK employers refuse to pay redundancy. The first step to addressing this is knowing if you qualify for redundancy pay. Your entitlement depends on whether it’s statutory or contractual redundancy. 

After this, contact your employer to remind them of their legal obligation. But if this doesn’t work, you can escalate the issue to an employment tribunal in the UK to claim your redundancy pay. You can also employ best practices by understanding your rights and keeping relevant records. 

For personalised advice on redundancy disputes and non-payment issues, you can consult with our employment lawyers and experts at Lawhive. They can guide you on what to do if your employer doesn’t pay redundancy. They can also help you assess the strength of your case and walk you through the steps required to protect your rights. 


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