Where the decision has been made to make an employee redundant, and all alternative measures have been considered, the employer should invite the employee to a meeting to confirm the outcome.
As part of the consultation process, employees often ask for details on the redundancy package, which the employer can provide at any point.
What is redundancy pay?
Employees are entitled to statutory redundancy pay If they have worked for the employer for more than two years. The length of service is capped at 20 years. The employee will receive:
- half a week’s pay for each full year of service they were under 22
- one week’s pay for each full year they were 22 or older, but under 41
- one and half week’s pay for each full year they were 41 or older
Weekly pay is calculated based on the average earnings over a 12-week period before redundancy notice. Weekly pay is capped at £571, and the total maximum statutory pay is £17,130 (based on 6 April 2022 rate).
Employers may offer enhanced redundancy pay. This is where the employer offers a higher rate of redundancy pay, on top of the statutory payment. This could include higher weekly pay, longer length of service (not capped), or a one-off discretionary termination bonus.
There is no redundancy pay entitlement where the employee accepts an alternative role and remains employed in the business, or if they resign before the consultation period has ended.
What is the employee contractually entitled to?
Where the decision is to dismiss the employee under redundancy, the employee will be entitled to redundancy pay and contractual entitlements.
- Redundancy pay
- Notice pay. As per the employees employment contract, which is subject to tax and national insurance deductions. This may include a Payment In Lieu of Notice (PILON)
- Holiday pay, for accrued and untaken holiday
- Other applicable payments/benefits as provided for in the employment contract
What is outplacement support?
Where an employee being dismissed has two years’ service the employer must provide reasonable paid time off for the employee to look for alternative employment or training. An employer can also provide ‘outplacement support’ to employees being redundant. This may include preparation of
The employer may have an appointed provider for outplacement support. Support offered to employees may include CV preparation, jobs market planning, interview skills development, mock interviews, career coaching and Employee Assistance Programme access.
Nockolds HR provide outplacement support Nockolds HR – outplacement support
Making redundancies
Where the employer has been unable to avoid redundancies and has carried out a full consultation process, if the decision is to dismiss under redundancy, the employee should be informed in a meeting and followed up with a letter confirming the decision to dismiss under redundancy and outlining the contractual entitlements.
Whilst this is a difficult decision for the employer, having followed a fair and thorough process will reduce the risk of an unfair dismissal claim.
At part of the discussions, the employer can confirm that an employment reference will be available to the future employer.
This concludes our ‘Redundancy Special’ week at Nockolds HR, where we explored areas of redundancy:
- Are we looking at the next wave of Redundancies?
- Alternative options to redundancy
- Planning a redundancy process, and;
- Closing the redundancy and providing outplacement support
For a full listing of all of the articles provided, please go to our website Nockolds HR – Restructure and Redundancy or contact us at enquiries@nockoldshr.co.uk or call 0345 6460406 to speak to an experienced HR Consultant.