There might be times where you need to make redundancies in your business. This could be because of workplace reshuffles, financial cuts, or if employees themselves leave the business.
If an employee faces redundancy, you need to follow correct legal methods.
This includes following all employee rights, benefits, and leave entitlements during the whole process. Failing this means you risk causing an unlawful redundancy. And this can lead to unfair dismissal claims and compensation fees for lack of consultation.
Discover what is the statutory notice period for redundancy, employee leave benefits, and payments you must legally provide.
What is the notice period for redundancy?
A statutory redundancy notice period is given when an employment contract comes to an end. A notice period for compulsory redundancy will depend on how long the employee has served for.
The minimum notice period for redundancy is 1 weeks’ notice. This stands only if they’ve served between 1 month and 2 years.
Those who have worked between 2 and 12 years are entitled to 1 weeks’ notice for every year they’ve completed. For example, if an employee has worked for 5 years, they’re entitled to 5 weeks’ notice.
The maximum redundancy notice period is 12 weeks’ notice if they’ve served for over 12 years. However, employers can contractually offer an increased notice period if they wish.
Legislation for redundancy notice periods
In employment law redundancy, notice periods fall under the Employment Rights Act (1996).
Contractual notice period is considered the same as the statutory minimum, but it can be longer. This is known as an extension of redundancy notice. However, notice periods cannot be shorter than the legal minimum requirement. If laws are not followed, you could cause an wrongful dismissal.
Redundancy notice extensions can only be applied with the employee’s consent. But if you offer an alternative employment through the extension, they may lose statutory right for redundancy pay.
When does a redundancy notice period start?
It starts after you’ve officially informed the employee about your redundancy decision. It must go through proper procedures, and you must provide an end date.
You don’t have to legally provide a written redundancy notice period in UK law. But it’s considered easier for both parties to document redundancy matters.
Employee rights during redundancy notice periods
Normally, a reasonable notice period is settled between you and the employee. But you must comply with contracts terms, employment law, and staff entitlements.
What happens if I don’t provide a redundancy notice period?
In some situations, you may be faced with making employees redundant without notice. For example, you might not have enough work for them, or are facing financial difficulties.
Here, you should provide the normal notice payment, like PILON (see below) if their contracts state so.
What if employees are on sick leave during a redundancy notice period?
You might have to deal with a worker being off sick during a redundancy notice. Employee rights here must still be actioned, especially if they’re on sick leave.
Here, contractual notice is 1 week more than statutory notice period. This means they should receive one additional week of sick pay.
Can employees work during a redundancy notice period?
In some cases, you might not require employees to work during their redundancy notice period. But you still need to provide notice pay and other benefits included in their contracts.
You can either provide employees with:
• Garden leave: This is when they aren’t required to work, but you still give notice pay.
• Pay in lieu of notice (PILON): This is when the job ends straight away, and they receive all their benefits in one lump sum.
Can company property during a redundancy notice period?
Another entitlement to consider is employees using company property, like computers or a company vehicles, during redundancy notice periods. If the use of company property is contractually outlined, you should continue their use until the end.
If you decide on offering PILON, you need to compensate them for this contractual loss (unless contracts state otherwise). This is normally done by including an appropriate amount to their notice pay.
Notice period for voluntary redundancy
It’s normal for businesses to have a voluntary redundancy process in place.
Sometimes, employees could decide on ending their contracts themselves. They could be considering getting another job during the redundancy notice period. Or feel they’ll be financially better off during workplace reshuffles if they leave earlier.
A voluntary redundancy notice period is then offered to ensure a smoother departure from the business. Here, ensure they receive all available information on voluntary redundancy. Change their notice period dates; and ensure the correct amount of redundancy pay and legal benefits are given.
You should also check their early departure won’t cause impacts to your business. And remember, both parties need to agree to early termination. Or else it could count as a resignation – where redundancy pay doesn’t apply.
Redundancy pay in notice periods
Redundancy payment is based on an employee’s wage earnt over the 12 weeks before the start of the notice period. You must also offer:
• Payment during the notice period.
• Payment in lieu if notice.
Payment in lieu of notice of redundancy
Employees can be let go without notice if their contracts include a PILON term. Although, some employers choose to provide it regardless.
At their departure, ensure that any other contractual benefits, like pension payments and medical insurance, are also given.
Is notice period taxable in redundancy?
All contractual and non-contractual PILON is subject to Income Tax and National Insurance payment. It falls on you to work out what employees would’ve earnt if they did work through a notice period.
Any other kinds of non-contractual payments should be included in the £30,000 tax-free redundancy pay limit.
Get expert guidance on redundancy notice periods
Redundancies, leave, and dismissal are quite difficult to manage – especially when applying employment right and laws.
But, if you don’t follow all the correct legal procedures, you could risk more than an unsavoury termination.
Any claim of unfair redundancy can lead to costly compensation fees and prolonged tribunal hearings. All of which can have lasting impacts on your business reputation, productivity, and brand-name.
Peninsula Business Services provides 24-hour HR advice and will ensure legal compliance for all redundancy and dismissal matters.
Get in touch today; or use our callback form to arrange for us to get in touch at a time that is convenient for you. Call us on 0800 028 2420