Redundancy Businesses have faced
extraordinary change over the past few months and despite the government's
furlough scheme many employers have been forced to reduce the size of their
workforce.
If you are facing redundancy or
having to deal with redundancy in your business this is a guide to the minimum
legal requirements.
Employees can be made redundant
if their job no longer exists. This may
be due to reduced business, a change in working practices or maybe even an increase
in the use of technology. If workers have
been employed for less than two years then there are no set procedures to
follow, although the reason for redundancy and the choice of who to make
redundant should still be fair.
Where employees have been employed
for more than two years they are entitled to statutory redundancy pay and
employers should follow a fair redundancy process that includes holding a meeting
to discuss the reasons for redundancy and the procedure that will be
followed.
As a minimum, employees must be
given a paid notice period of one week for each year of employment over 2 years
up to a maximum of 12 weeks and a leaving date should be agreed. Where employees are given a notice period
which is shorter than the statutory minimum they must be paid in lieu of notice.
Employees who have been employed
by the same employer for two years or more are entitled to statutory redundancy
pay equivalent to 1 week for each year of employment after an employees 22nd
birthday and 1.5 weeks pay for each year of employment after an employees 41st
birthday. Payments are based on average weekly pay received
in the 12 weeks prior to redundancy but are capped at £538 per week. The maximum total statutory redundancy pay is
capped at £16,140. Where employees have
been furloughed, average pay is based on the salary or wages they would have earned
had they not been furloughed.
While pay in lieu of notice is
subject to tax and national insurance, the first £30,000 of redundancy pay is
not taxable.
If you want to know more about
redundancy, what you are entitled to and the procedures that should be followed
visit either https://www.gov.uk/staff-redundant
or https://www.citizensadvice.org.uk/work/leaving-a-job/redundancy/check-if-your-redundancy-is-fair/fair-redundancy-process/
Carol Draper FCCA
Clifton-Crick Sharp & Co. Ltd