What is statutory redundancy notice?
When making an employee redundant, employers have to ensure they give the minimum applicable redundancy notice, as required by law.
The statutory minimum notice period that must be given to a redundant employee is determined by the number of years they have worked for the employer as follows:
- from one month’s service up to two years, the statutory notice given must be at least one week
- from two years’ service up to twelve years, the statutory notice provision must be at least one week per year worked
- for twelve years’ service or more, the statutory notice provision must be a minimum of twelve weeks
Some employers may offer more than the statutory notice under a term of the employee’s contract. This cannot be less than the minimum statutory requirement.
How to give redundancy notice
An employee will generally be notified of the decision to make them redundant in their final consultation meeting. At this point, they may be told of their leaving date, but official notice must be provided in writing by the employer.
The letter should include confirmation of the redundancy, details of the notice period (dates, whether it will be worked or the employee will receive pay in lieu of notice or garden leave instead, attending job interviews during the notice period, etc) and the employee’s rights during the notice period (e.g. normal rates of pay).
The employer may wish to include details such as how much redundancy pay the employee will receive in this letter or that may be confirmed in a separate letter.
When does the notice period begin?
The notice period begins on the day or shift after the notice in writing is given. The employer should therefore ensure that the employee receives the letter of notice in sufficient time to allow for the intended leaving date.
Employment rights during the notice period
That fact that the employee has been made redundant and will be leaving the organisation does not affect their employment rights. They continue to accrue statutory entitlements and remain protected as employees until their contract is terminated.
Pay during notice period
In this instance, ‘pay’ is the employee’s usual salaried amount. This is separate to the redundancy pay resulting from the dismissal.
During the notice period, the employee is entitled to the pay they would have normally received over that length of time. This could be their usual employment-related pay, or it could be the pay they would receive when absent from work because the employee is on sick leave, whether short or long term, they are on authorised holiday leave, they are on leave related to pregnancy, maternity or paternity, they are on adoption leave or parental leave, or they are on leave because there is no available work for them to carry out for their employer.
This pay will be taxed and subject to national insurance as usual.
Pension and other employment benefits
During the notice period, the employer must provide all of the employee’s employment related benefits as normal, for instance, contribution into a pension scheme, until the notice and the period of employment come to an end.
Time off for job interviews and training
Once an employee knows they may be made redundant, they have the right to a reasonable amount of time off to find a new job by attending interviews or retraining. This continues during the notice period.
What is ‘reasonable’ will be down to the discretion of the employer but must be seen as fair and legal.
Does an employee have to work their notice period?
The answer to this question is ‘not necessarily’. This will depend on the employer, whether the employee has any ongoing workload during the notice period and other factors individual to the business.
It may be that the employee is offered ‘pay in lieu of notice’ (PILON). If an employee receives pay in lieu of notice, their employment will be terminated immediately but they will receive the pay they would have received for their notice period. For instance, if they would generally have worked one month’s notice, they will receive a normal one month’s pay.
This pay will still be taxed, subject to national insurance, and include any employment benefits that the employee would normally receive.
Any arrangement to make pay in lieu of notice must be agreed by the employer, unless it is part of the employee’s contract of employment.
Where the employee either doesn’t have a workload during the notice period or there is any other reason why the employer does not want the employee to return to their workplace, garden leave may be offered.
The employee has the right to their normal pay during garden leave, including any employment benefits, and may wish to use their holiday allowance to cover this period.
Can an employee take holiday during their notice period?
This is at the discretion of the employer. Any holiday taken during the notice period must be paid at the normal rate.
At the end of the notice period, the employee must be paid for any accrued holiday that they did not take.
Can an employee leave during their notice period?
Where an employee would like to start a new job during their notice period, they must obtain permission from their employer to do so if they are to still be considered eligible for a redundancy package.
Should an employee leave during their notice period without the agreement of their employer, it may be deemed that they have resigned and as such are not eligible for redundancy pay.
However, it is generally to the advantage of the employer to allow a redundant employee to leave early because this reduces the amount of money paid to the employee as salary during their notice period.
Voluntary redundancy notice
Where the employee is made redundant on a voluntary basis, that is, they chose to be made redundant, it may be that their notice period is affected.
Voluntary redundancy is generally offered with an incentive such as a higher level of redundancy pay and the opportunity to negotiate elements such as the notice period.
The final arrangement will be set out in writing by the employer. It could be that the employee negotiates to have a different length of notice to the standard that they are eligible for but they should be offered the statutory minimum notice.
What is the procedure for handling redundancy?
Best practice suggests that all employers should have a redundancy policy in place, outlining the procedure for handling redundancy along with other related information such as rates of redundancy pay and the rules around eligibility.
The redundancy procedure should include the following stages.
There should be an initial investigation which should explore alternatives to redundancy, which jobs and employees may no longer be needed and hence face redundancy, and whether voluntary redundancy could be used to prevent compulsory redundancy.
The next stage is to notify the affected workers about the situation and offering voluntary redundancy where appropriate
If more than one employee is affected, a scoring system should be developed to decide which employees are most likely to be made redundant by scoring each employee individually, fairly and objectively.
The consultation period then follows, where meetings are held with the affected employees to discuss the reasons for redundancy, how this will affect them, their redundancy package, alternatives to redundancy and to gather their response.
Following the consultation there should be written communication between the employer and employees to confirm what has been discussed, the arrangements for each consultation meeting, actions to be taken, and outcomes. When making the decision (whether to make the employee redundant or not, details of the redundancy package and the redundancy notice period)
Finally, employees should be made aware of their right to appeal the decision, and employers should make clear what the process is to appeal.
Failure to follow a fair and lawful redundancy procedure puts employers at risk of tribunal claims. Take advice from the outset to ensure compliance throughout the process.