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Help for small firms

Handling small-scale redundancies - A step-by-step guide

Handling small-scale redundancies - Step 4

Give redundancy notice and pay

When you have used your selection criteria to identify which staff will be made redundant and completed the previous steps, you need to give notice that you are dismissing them - and to make sure they are paid correctly.

It is good practice to do this in a formal dismissal meeting and confirm the details in writing, making sure you give clear instructions on how to appeal against the decision. Keep a note of the date you gave the notice and the date the employment ends. Check contracts of employment for any formal dismissal procedure that may apply.

Issuing notice of dismissal

Notice starts on the first full day after the employee receives the notice, so be careful if you're posting out written notice or have employees on leave.

Notice periods for redundancy are usually the same as those you would give when terminating a contract of employment. At the very least, it needs to be the longer out of a) what's in the employee's contract, or b) what their minimum statutory entitlement would be.

The statutory minimums for periods of notice are:

  • one week if the employee has been continuously employed for one month or more, but less than two years
  • one week for each year of employment (up to a maximum of 12 weeks) if the employee has been continuously employed for two years or more.

Statutory notice pay protection

If you are contractually required to give notice which is at least one week longer than your employee would be statutorily entitled to, this section does not apply to you. For example if your employee has a contractual right to 3 weeks notice but has worked for you for 5 years, that would mean they would have a 5 week statutory notice entitlement that overrides your contractual provision, and the protection mentioned below would apply.

All employees must receive at least the statutory level of notice. If your contract sets notice at the statutory level, you will be legally required to pay employees for their full weekly pay (if they have normal working hours) or an average known as a 'week's pay' (if they have irregular working hours or normal working hours where the pay varies with the work done) during their notice period.

Where your employees are working their usual hours, this would happen anyway, but if any of the employees are:

  • ready and willing to work, but you don't/can't provide them with work
  • incapable of work because of sickness or injury
  • absent from work wholly or partly because of pregnancy, childbirth, maternity leave, paternity leave or adoption leave
  • absent from work to take holidays, then you will need to make sure they still receive their normal week's pay.

This is a complex area of employment law. If you have a specific query, contact the Acas helpline on 0300 123 1100.

Arrange redundancy pay

If you have no contractually-enhanced redundancy pay arrangements, all your employees with at least two years' continuous employment get a statutory redundancy pay entitlement of:

  • 0.5 week's pay for each full year of service while they were under 22
  • 1 week's pay for each full year of service while they were 22 or older, but under 41
  • 1.5 week's pay for each full year of service while they were 41 or older.

Employees can only count a maximum of 20 years' service and the 'weekly pay' is subject to an upper limit. You can find the current limit from the Redundancy payments and notice page.

If you have a contractually-enhanced redundancy pay arrangement, your employees must receive more than they would have under the statutory scheme, and your arrangements should mirror the age-based provisions of the statutory scheme, too.

Redundancy pay under £30,000 is not taxable and is something an employee receives in addition to any other payments such as notice and outstanding annual leave etc. You must give your employees a written statement showing how you have calculated their individual entitlement and should make it very clear how much they will be getting - and when they can expect to receive it.

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