It can be a misconception that once you’ve undertaken a full statutory redundancy procedure, and decided who will be leaving your business, you don’t need to do any further work.
The employee gets made redundant there and then, right? Well, no. That’s a breach of redundancy notice period rights.
There are clear rules to follow when considering a redundancy notice period and what staff should be paid in this period.
Fundamentally, a redundancy is a dismissal. So usual rules on providing notice will need to apply.
Notice period for compulsory redundancy
In situations where you have informed your staff they are to be made redundant, the law is clear on how much notice they must be given.
The statutory redundancy notice periods are the minimum periods of notice as outlined by the government. They are set by the length of an employee's service. So, as follows:
- Between one month and two years’ service: One week notice period.
- Between two years and 12 years’ service: An extra week for every year completed.
- More than 12 years’ service: 12 weeks of notice period.
It’s worth noting these are the minimum periods stated by law. Individual employment contracts might offer longer periods or periods calculated by taking other factors into account.
The minimum and maximum redundancy notice periods are:
- A minimum of one week of notice, if an employee is with your business between one and two years.
- A maximum of 12 weeks of notice if the employee has been with you for 12 years or more.
But no matter what form the redundancy notice period takes, it can’t work out to be shorter than the three periods shown above.
Employees must also be paid during this period as they usually would, unless circumstances dictate otherwise.
Notice period for voluntary redundancy
It’s not uncommon for businesses to offer a voluntary redundancy notice period to staff members.
You should make sure your staff member has all the relevant information available to them, so that they can make an informed decision.
The primary difference is the offer will likely be a more lucrative redundancy package than standard redundancy.
When someone takes voluntary redundancy, the length of the notice period will depend on the terms they have received.
Again, this has to be at least the statutory notice period—not forgetting any additional notice contained in their employment contract.
Off sick during redundancy notice—employee rights
If the period of sickness is the same as the statutory notice period, employees should receive their normal full pay.
If the contractual notice period is longer than the statutory notice period and they’re off sick, you should pay what they’d normally get as sick pay for the additional time.
Making employees redundant without notice
Under certain circumstances, you may dismiss an employee without allowing them to serve their notice period.
This can occur if you’ve included a clause in your staff’s contract of employment stating that you may dismiss them without notice.
In this situation, they must receive payment for the period that would have served as their notice period – see payment in lieu of notice below.
Payment in lieu of notice of redundancy
If you don’t have enough work for the employee during their notice period, you could look to use a payment in lieu of notice (PILON) if an employment contract permits this.
PILON is basically where you provide pay that the employee would have received whilst they worked their notice in one lump sum, without them doing any more work for you.
How much notice for redundancy during coronavirus pandemic?
You may wonder if it will be legally acceptable for you to consider making employees redundant without notice due to coronavirus, and the issues it may be causing your company.
You need to remember that despite the coronavirus situation, usual redundancy rules apply.
This means staff will still need to be the appropriate notice. Or paid in lieu of this notice if their contract allows.
Extension of redundancy notice
Depending on the circumstances, you may need to extend the redundancy notice period. This may occur because of changes to the business’s financial situation.
Receiving a notice of redundancy is legally binding and you cannot withdraw it without your employee first agreeing to it.
Whatever your reason is for extending the redundancy notice period, you’ll need your employee’s express consent.
However, according to section 141 of the Employment Rights Act of 1996, if you offer them alternative and suitable employment by way of extending their notice period and they refuse, they may lose their right to a statutory redundancy payment.
A company car during redundancy—a notice period’s effects
As well as their entitlement to pay, your staff must also continue to receive other contractual benefits as set out in their employment contract.
This includes the continued use of a company car during the redundancy notice period if it is a contractual benefit.
In a PILON situation, generally you would need to compensate the employee for the loss of this contractual right by including an appropriate amount in their notice pay.
However, you can avoid this if you have included within their contract that you exclude the right to payment in lieu of contractual benefits above basic salary.
Need you help?
We can help your business with any redundancy requirements. Get in touch for support: 0800 028 2420.