Redundancy Notice Guide for Employers

UK employment law sets out specific guidelines that govern how much redundancy notice an employer must provide as a minimum to employees being made redundant.

These rules are designed to give employees adequate time to prepare for the end of their employment. Failure to give the relevant amount of notice for redundancy can result in claims for unfair dismissal.

The following guide provides an overview of the rules relating to redundancy notice periods and how to manage legal risk when informing employees that they are being dismissed due to redundancy.

 

Section A: Redundancy Notice Legal Framework

 

Employers have to follow specific procedural and legal obligations when making people redundant, including giving a minimum period of notice to affected workers.

 

1. Employment Rights Act 1996

 

The Employment Rights Act 1996 defines what constitutes a redundancy situation and outlines the rights and obligations of both employers and employees throughout the process.

Key aspects of the Act related to redundancies include:

 

a. Definition of Redundancy: The Act specifies that redundancy occurs when an employer needs to reduce their workforce due to the closure of the business, relocation, or a diminished need for employees to carry out work of a particular kind.

 

b. Fair Selection Criteria: Employers are required to use fair and objective criteria when selecting employees for redundancy. This helps prevent discrimination and ensures a transparent process.

 

c. Redundancy Pay: It outlines the entitlement to statutory redundancy pay for employees who have at least two years of continuous service.

 

d. Right to Consultation: Employers must consult with employees who are at risk of redundancy, providing information and considering any alternatives to redundancy.

 

e. Notice Periods: The Act mandates statutory minimum notice periods that employers must give to employees based on their length of continuous service.

 

2. Redundancy Notice Requirements

 

If you are making an employee redundant, as part of a fair and lawful redundancy process, you must provide them with their statutory entitlements. This may include paying them statutory redundancy pay and giving a minimum set notice period before the contract of employment can be brought to an end.

The statutory redundancy notice periods are as follows:

 

a. At least 1 week’s notice if the individual has been employed between 1 month and 2 years

b. 1 week’s notice for each year if they have been employed between 2 and 12 years

c. 12 weeks’ notice if they have been employed for 12 years or more

 

These are the minimum periods required by statute, applicable to both voluntary and compulsory redundancies.

However, if the employee’s employment contract provides for a longer period of notice, this must be complied with.

Employers cannot give employees less redundancy notice than they are entitled to, either under the statutory rules or, where relevant, the contractual terms.

Importantly, employers can only provide employees with notice of redundancy once the redundancy selection and consultation stages have concluded.

The notice must be provided in writing, stating the termination date, the reason for redundancy, and details about redundancy pay and other entitlements.

The notice should include information about the notice period, how redundancy pay is calculated, and any rights to appeal or complain.

 

3. Redundancy Notice Period & Pay

 

Yes, employees are entitled to redundancy pay during the redundancy notice period, but it is important to distinguish between redundancy pay and notice pay.

Redundancy pay is a separate payment provided to employees who are being made redundant, and it is typically calculated based on factors like age, length of service, and weekly pay. Employees with at least two years of continuous service are entitled to statutory redundancy pay, which is separate from any pay they receive during their notice period.

During the redundancy notice period, employees are entitled to be paid notice pay, which is their normal salary, even if they are placed on garden leave or receive payment in lieu of notice (PILON) instead of working through the notice period.

For example, the employer may wish to ask an employee not to work their notice period by paying them PILON or through a specific redundancy settlement agreement. As such, the employee does not need to work their notice period to receive notice pay.

[Insert table 1: Employers’ Options During Redundancy Notice Period]

In all of these cases, the employee is entitled to receive notice pay, whether or not they are required to work during the notice period. The method of receiving notice pay depends on the employer’s decision regarding how the notice period is handled.

In some cases, employees may receive both redundancy pay and notice pay at the same time, depending on the employer’s policies and the employee’s entitlement.

The employee is also still entitled to receive work benefits during their period of notice, such as pension contributions, unless their contract says otherwise.

If suitable alternative employment is offered during the notice period and the employee unreasonably refuses it, they could risk losing their entitlement to redundancy pay.

 

Section B: Redundancy Notice Periods

 

Statutory notice periods are the minimum legal requirements set by the UK government that employers must adhere to when terminating an employee’s contract due to redundancy. These periods are designed to protect employees by ensuring they have sufficient time to adjust to the impending job loss and seek new employment opportunities.

 

1. Minimum Statutory Redundancy Notice Periods

 

Employees who have been continuously employed for between one month and two years are entitled to one week’s notice. For those with two to twelve years of service, the notice period increases to one week for each year of continuous employment. For example, an employee with five years of service would be entitled to five weeks’ notice. Employees with twelve or more years of continuous service are entitled to a maximum of twelve weeks’ notice.

[Insert table 2: Min periods]

The statutory notice periods apply equally to both part-time and full-time employees.

The length of continuous service is crucial in determining the statutory notice period. Breaks in employment can affect this calculation, which will be discussed in the section on calculating continuous employment.

Employers may choose to pay employees instead of requiring them to work during the notice period. This must be agreed upon and, in some cases, stipulated in the employment contract.

Employers might place employees on garden leave during the notice period, where the employee is not required to attend work but remains on the payroll and bound by contractual obligations.

Employees are entitled to their normal pay and benefits during the statutory notice period, even if they are not required to work.

Employees with at least two years of continuous service are entitled to reasonable time off to look for new employment or arrange training, with up to 40% of a week’s pay provided by the employer for time taken off.

 

2. Contractual Notice Periods

 

Contractual notice periods are those specified within an employee’s contract of employment and may differ from the statutory minimum notice periods. Employers and employees can agree to longer notice periods than the statutory minimum but cannot agree to shorter periods.

If the contractual notice period is longer than the statutory minimum, the employee is entitled to the longer period.

Employment contracts should clearly state the notice period required by both the employer and the employee upon termination of employment.

Any changes to the contractual notice period must be mutually agreed upon by both the employer and the employee, typically in writing.

Contractual notice periods are legally binding. Failure to honour them can result in a breach of contract claim.

For example, an employment contract may stipulate a three-month notice period for senior management positions exceeding the statutory minimum.

Employers should ensure consistency in contractual notice periods across similar roles to avoid claims of unfair treatment.

Regularly reviewing and updating employment contracts can help maintain compliance with current laws and reflect any changes in the business structure or employee roles.

 

3. Calculating Continuous Employment

 

Continuous employment refers to the length of unbroken service an employee has with their employer and is an important factor in determining statutory rights, including redundancy notice periods and pay.

Continuous employment typically starts from the first day the employee begins working for the employer. The period must be unbroken by any events that legally end the continuous employment, such as resignation or dismissal without immediate re-employment.

To calculate the length of service:

 

Step 1: Identify the Start Date: Determine the date when the employee’s continuous employment began.

Step 2: Identify the End Date: This is typically the last day of the notice period or the last day of employment.

Step 3: Calculate Total Time: Measure the total length of service from the start date to the end date, accounting for any periods that do not break continuity but may not count towards total service.

Step 4: Exclude Non-Counting Periods: Deduct any periods that do not count towards continuous employment, such as days of industrial action.

 

Events affecting continuous employment could include:

 

a. Temporary Cessations: Short breaks in employment, such as temporary layoffs or agreed periods of unpaid leave, generally do not break continuous employment.

b. Statutory Leave: Time off for statutory leave, including maternity, paternity, adoption, shared parental leave, and sick leave, counts towards continuous employment.

c. Re-Employment: If an employee is re-employed within a week of leaving, their continuous employment is usually preserved.

d. Industrial Action: Days when an employee is on strike do not count towards continuous employment, but do not break it either.

 

If a business is transferred to a new owner under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the employee’s continuous service is preserved.

 

Section C: When to Give Notice of Redundancy

 

Employers must be careful to issue the notice at the appropriate time, ensuring that they comply with both legal requirements and best practices for employee relations. Failure to time the issuance correctly can lead to legal repercussions and damage to the employer’s reputation.

 

1. Timing of the Notice

The redundancy notice should only be issued after the employer has completed all required consultation processes. In the UK, redundancy is considered a fair reason for dismissal, but only if the process is handled properly and includes meaningful consultation with affected employees or their representatives.

Issuing a redundancy notice prematurely—before consultations have been completed—can result in legal claims from employees, such as claims of unfair dismissal. Employers are obligated to engage in consultations that allow employees to contribute to the decision-making process.

If employees feel that the decision was made before their input was considered, this can lead to a breakdown in trust and morale, as well as potential claims to employment tribunals.

Before issuing the redundancy notice, employers must also ensure that the redundancy selection process has been conducted fairly and transparently. This means that the criteria used to select employees for redundancy must be objective, non-discriminatory, and consistently applied across the workforce. Employees should be fully informed about how the selection process was conducted and how decisions were made. Fairness in the selection process is essential to avoid claims of unfair dismissal or discrimination under the Equality Act 2010.

 

2. Individual Consultation

Individual consultation is required for all employees facing redundancy, regardless of the number of redundancies being made. This involves a private discussion between the employer and each affected employee.

During this consultation, the employer must clearly explain the reasons for the proposed redundancy and allow the employee to ask questions, voice concerns, and suggest alternatives. It is important that these consultations are genuine and meaningful—merely informing the employee that they are being made redundant without considering their input does not fulfil the legal requirement for consultation.

Employers should provide employees with sufficient time to prepare for these consultations, and they should document the discussions to ensure transparency and compliance with legal obligations. Employees have the right to be accompanied by a colleague or trade union representative during these consultations, further ensuring that the process is fair and supportive.

 

3. Collective Consultation

Collective consultation is required when an employer is proposing to make 20 or more employees redundant within a 90-day period at a single establishment. This process is more formal and involves consultation with recognised trade unions or elected employee representatives rather than just with individual employees.

The legal requirements for collective consultation are strict, and employers must adhere to specific timelines:

 

a. At least 30 days before the first dismissal if 20-99 employees are being made redundant.

b. At least 45 days before the first dismissal if 100 or more employees are being made redundant.

 

During collective consultations, employers are required to provide representatives with detailed information, including the reasons for the proposed redundancies, the number and categories of employees affected, the method of selection, the proposed method for carrying out the redundancies, including the timeline and details of redundancy pay, including any enhanced terms offered beyond statutory entitlements.

 

Section D: Redundancy Notice Requirements

 

The redundancy notice is used to formally inform the employee that their role is being made redundant, outlining the reasons, final arrangements, and any rights they have as they transition out of the organisation.

 

1. Content of the Redundancy Notice

 

To ensure compliance with employment law and to communicate clearly and respectfully, the notice should include specific information:

[Insert Table 4: Redundancy Notice Contents]

 

a. Termination Date

The redundancy notice must clearly specify the exact date on which the employee’s contract will end. This date must align with the correct notice period, whether it is the statutory minimum or a longer contractual period. Providing a clear termination date helps the employee plan their next steps, both personally and professionally, and ensures transparency throughout the process.

For example: “Your employment with [Company Name] will be terminated effective [Date], following a [number of weeks] notice period as per your contract of employment.”

 

b. Reason for Redundancy

The redundancy notice should provide a concise and clear explanation of the reasons for the redundancy. This explanation should be factual and free from jargon, helping the employee understand why their role is being made redundant. Common reasons might include restructuring, business closure, relocation, or a reduced demand for services. This explanation reassures the employee that the redundancy is due to legitimate business reasons rather than personal performance.

For example: “Due to the restructuring of our operations and a reduction in the need for [specific roles], it has become necessary to reduce the workforce in this department.”

 

c. Notice Period

The notice period should be clearly outlined in the redundancy notice. Employers must specify the length of the notice period in accordance with either statutory or contractual requirements. It should also be noted whether the employee will be expected to work through the notice period, be placed on garden leave, or receive Payment in Lieu of Notice (PILON). If PILON is to be paid, details of this payment, including how it has been calculated, should be provided in the notice.

For example: “You are entitled to a [number of weeks] notice period. During this period, you will [continue to work/ be placed on garden leave/ receive payment in lieu of notice]. If PILON is applicable, further details of the payment will be provided.”

 

d. Redundancy Pay

The notice must include a detailed breakdown of the redundancy pay the employee will receive. This includes statutory redundancy pay (if applicable) and any enhanced redundancy pay the company may offer. Statutory redundancy pay is calculated based on the employee’s age, length of service, and weekly pay (subject to a statutory cap), and it is important to outline how these figures have been calculated. If enhanced redundancy pay is being offered, a breakdown of how the amount was determined should also be included.

For example: “You are entitled to statutory redundancy pay of [£XXX], calculated based on your [X] years of service, in accordance with the Employment Rights Act 1996. Additionally, as part of [Company Name]’s enhanced redundancy package, you will receive an additional payment of [£XXX].”

 

e. Outstanding Entitlements

The notice should provide information on any other entitlements that the employee is owed at the time of termination. This could include accrued but untaken annual leave, bonuses, or other financial entitlements that are part of the employee’s contract. Employers should ensure they accurately calculate and provide details of these amounts, as failure to settle outstanding entitlements can lead to disputes.

For example: “In addition to your redundancy pay, you will receive payment for [X] days of accrued but untaken annual leave. This will be included in your final payment of [£XXX].”

 

f. Right to Appeal

Employees have the right to appeal the decision to make their role redundant if they believe the process was unfair or discriminatory. The redundancy notice should clearly explain the process for submitting an appeal, including the timeframe within which the appeal must be made, the contact person or department responsible for handling appeals, and any supporting documentation that should be submitted as part of the appeal.

For example: “If you wish to appeal the decision, please submit a written appeal to [contact person/department] within [number of days] of receiving this notice. Appeals should include the reasons for your challenge and any supporting information.”

 

g. Support Services

Many employers offer additional support services to assist employees during the redundancy process. These may include outplacement services, career counselling, training opportunities, or emotional support such as access to an employee assistance programme (EAP). Offering such services shows a level of care and commitment to helping employees transition into new roles or careers. Details of any support services available should be included in the redundancy notice to inform the employee of the resources at their disposal.

For example: “To assist you in your transition, [Company Name] is offering career counselling and job placement support through [service provider]. You are also entitled to access our Employee Assistance Programme (EAP) for emotional support during this time.”

 

h. Next Steps and Obligations

The notice should outline any actions the employee needs to take following the redundancy, such as returning company property (e.g., laptops, phones, access cards). It should also remind the employee of any ongoing post-employment obligations, such as confidentiality agreements or restrictive covenants. Providing clear instructions on these matters helps avoid confusion and ensures that both parties meet their obligations during and after the redundancy process.

For example: “Please ensure that all company property, including your laptop and access card, is returned to the HR department by [date]. Please be reminded that the confidentiality agreement you signed on [date] remains in effect after your departure.”

 

2. Delivering the Redundancy Notice

 

Redundancy is often a distressing experience for employees, and the delivery method of the notice can significantly impact how the employee perceives both the process and the employer. Employers should approach the delivery of redundancy notices with empathy and care, ensuring they meet legal requirements while also providing emotional support and clarity.

 

a. Face-to-Face Meeting

The preferred and most respectful method of delivering a redundancy notice is through a face-to-face meeting. This allows for a direct and personal interaction between the employer and the employee, providing an opportunity for clear communication and immediate support. A face-to-face meeting also allows the employee to process the information in a private setting, ask questions, and receive real-time responses from the employer.

Choose a private, neutral space where the employee can feel comfortable and respected. The meeting should take place in a quiet room where interruptions are unlikely, allowing both parties to focus on the discussion. Employers should prepare thoroughly for this meeting, ensuring that all relevant documents, including the written redundancy notice and any additional information, are ready for presentation.

The employee should be given the option to bring a colleague, trade union representative, or another support person to the meeting. This ensures that the employee has someone to provide emotional or procedural support, which can help them process the information more effectively and feel more secure during the conversation. Allowing a representative to attend also shows that the employer is committed to a fair and transparent process.

 

b. Written Notice

After the face-to-face meeting, it is essential to provide the employee with a formal written redundancy notice. The written notice serves as the official document outlining the termination of employment, the reasons for redundancy, and all relevant details regarding notice periods, redundancy pay, and entitlements. It is important that the written notice is handed directly to the employee during the meeting or sent via recorded post to ensure that the employee has received it.

If the redundancy meeting takes place in person, the written notice should be given to the employee at the end of the meeting. This allows the employee to take the document home and review it at their own pace. Employers should explain the key points of the notice during the meeting to ensure the employee understands its contents but encourage them to read through it later when they have had time to process the information.

In situations where the employee cannot attend a face-to-face meeting (such as long-term absence or illness), the written notice should be sent via recorded delivery. This ensures there is proof that the employee has received the notice. Recorded delivery also provides a level of security, as the sensitive nature of the document requires careful handling.

 

c. Remote Delivery

In some cases, delivering the redundancy notice in person may not be feasible. This could be due to geographical distance, remote working arrangements, or external factors like public health restrictions. In such cases, employers can conduct a redundancy meeting via secure video conferencing tools. Remote delivery should still maintain the same level of respect, professionalism, and clarity as an in-person meeting.

When delivering a redundancy notice remotely, it is important to set up the virtual meeting with care. Employers should use a secure video conferencing platform to ensure privacy and confidentiality. The meeting should be conducted in the same respectful manner as a face-to-face conversation, with the employer providing clear information and allowing the employee to ask questions. It is crucial that the virtual meeting feels as personal as possible despite the physical distance.

After the virtual meeting, the written redundancy notice must still be provided. Employers should send the document via recorded delivery or email, ensuring that the employee receives a formal copy of the notice. If sending via email, it is recommended to use a secure method of transmission and confirm receipt with the employee.

 

3. Handling the Conversation

 

Regardless of the method of delivery, how the redundancy conversation is handled plays a crucial role in shaping the employee’s experience. Employers should aim to create an environment of empathy and clarity, helping the employee understand the reasons for redundancy and their options moving forward.

 

a. Clear Communication

It is important to explain the redundancy situation in a clear and straightforward manner. Avoiding jargon and complex language helps the employee grasp the key points without confusion. Employers should explain the business reasons for the redundancy, ensuring the employee understands that the decision is not based on their personal performance but rather on organisational needs. This transparency helps mitigate feelings of unfairness or personal inadequacy.

 

b. Allow Time to Process

Redundancy can be overwhelming, and employees may need time to absorb the information. Employers should allow employees time to process what they have been told and not rush through the conversation. After explaining the situation, provide the employee with space to ask questions or seek clarification. Giving the employee time to respond demonstrates respect for their emotions and helps to foster a more supportive environment.

 

c. Demonstrating Empathy

Demonstrating empathy is key during a redundancy meeting. Redundancy can be a stressful and emotional experience, and how the employer delivers the news can significantly impact how the employee feels about the situation. Employers should acknowledge the difficulty of the conversation and express regret that the redundancy has become necessary. Offering support, whether emotional or practical, can make the process more bearable for the employee.

 

d. Providing Support

Once the redundancy has been explained, employers should provide information about the support available to the employee. This could include career counselling, job placement services, or access to an employee assistance programme (EAP) for emotional support. By offering practical resources, employers show that they are committed to helping the employee move forward.

 

Section E: Employee Rights During Notice Period

 

Once employees are formally notified of their redundancy, they have certain rights and protections during the notice period.

 

1. Time Off to Find New Employment

 

One of the most important rights for employees who are made redundant is the right to take time off to find new employment. This entitlement applies to employees who have completed at least two years of continuous service with their employer. During the notice period, these employees are allowed to take a reasonable amount of paid time off to look for another job or arrange for training that will help them secure future employment.

 

a. What Is Considered Reasonable Time Off?

The concept of “reasonable” time off is not explicitly defined in terms of hours or days, but it generally means that the time off should be sufficient for the employee to pursue legitimate activities related to finding new employment or training. This could include attending job interviews, job fairs, or professional development courses that enhance their employability. The amount of time off required will depend on the circumstances, such as the length of the notice period and the nature of the employee’s job search. However, it is expected that both parties act in good faith to agree on a reasonable amount of time.

 

b. Entitlement to Paid Time Off

Employees are entitled to paid time off during their notice period for job-hunting or training. The law requires that employers pay up to 40% of the employee’s weekly wage for the time they take off for these activities. For example, if an employee’s weekly pay is £500, the employer is required to pay up to £200 for the time the employee spends looking for new work or attending training. This ensures that employees are not financially penalised for taking steps to secure their future after redundancy.

 

c. How to Request Time Off

Employees should give their employer reasonable notice when requesting time off for job-hunting or training. This allows the employer to manage work schedules and ensures that the request can be accommodated without causing operational difficulties. Employers should handle these requests fairly, keeping in mind the employee’s need to secure new employment.

 

2. Right to Appeal

 

In the event that an employee believes their redundancy was handled unfairly, they have the legal right to appeal the decision. The right to appeal provides employees with an opportunity to challenge the redundancy, especially if they feel that the selection process was discriminatory, biased, or did not follow proper procedures. Employers must ensure that the redundancy notice clearly outlines the steps for filing an appeal, including the deadlines and who to contact for further discussions.

 

a. Grounds for Appeal

Employees may appeal their redundancy if they believe that the process was not handled properly. Grounds for appeal could include:

 

i. Unfair Selection Criteria: If an employee feels they were selected for redundancy based on unfair or discriminatory criteria, such as their age, gender, disability, or another protected characteristic under the Equality Act 2010, they can raise this as part of their appeal.

ii. Improper Consultation: If the employer failed to engage in meaningful consultation with the employee or their representatives, or if consultation was insufficient or rushed, this could also be grounds for appeal.

iii. Failure to Consider Alternatives: Employees can appeal if they believe the employer did not properly consider alternative options to redundancy, such as redeployment to another role within the organisation or changes in working hours.

iv. Misapplication of Selection Process: If an employee believes that the selection process was not applied fairly or consistently across all employees, this could form the basis for an appeal.

 

b. Appeal Procedure

Employers are required to include details of the appeal procedure within the redundancy notice. This should outline:

 

i. How to Submit an Appeal: Employees should be informed of how to formally submit an appeal. This is typically done in writing, and employees are usually required to state the reasons for their appeal and provide any supporting evidence.

ii. Timeframe: The appeal procedure should specify the timeframe within which the employee must submit their appeal. It is common practice for employers to set a deadline of around 5 to 10 working days from the date the redundancy notice was received.

iii. Who to Contact: The redundancy notice should include the contact details of the person or department responsible for handling appeals. This is often an HR representative or senior manager who was not directly involved in the initial redundancy decision, ensuring impartiality in the review process.

 

c. Appeal Hearing

Once the appeal is submitted, the employer should arrange a meeting to discuss the employee’s concerns and review the evidence. It is important that the appeal is handled fairly and impartially. The appeal meeting provides an opportunity for the employee to explain why they believe the redundancy decision was incorrect and for the employer to reconsider the decision in light of the employee’s feedback.

 

d. Outcome of the Appeal

After reviewing the appeal, the employer must provide the employee with a written response explaining the outcome. If the appeal is successful, the employer may reverse the redundancy decision or offer redeployment or alternative arrangements. If the appeal is unsuccessful, the employer should provide a clear explanation of why the original decision stands. This ensures that the employee is informed and understands the rationale behind the decision.

 

3. Additional Statutory Protections

 

In addition to the right to time off for job searching and the right to appeal, employees have other statutory protections during the redundancy process:

[Insert table 3: Additional Statutory Protections]

 

a. Statutory Redundancy Pay

Employees with at least two years of continuous service are entitled to statutory redundancy pay, which is calculated based on their age, length of service, and weekly pay (subject to a statutory cap). This ensures that employees receive financial compensation for their loss of employment.

 

b. Notice Pay

Employees are entitled to notice pay during the redundancy process. This may involve working through the notice period, being placed on garden leave, or receiving payment in lieu of notice (PILON). Employers must ensure that notice pay reflects the terms of the employee’s contract and complies with statutory requirements.

 

c. Unfair Dismissal Protection

Employees who believe they were unfairly selected for redundancy can file a claim for unfair dismissal with an employment tribunal. This protection applies to employees who have at least two years of continuous service and provides a legal avenue for challenging unjust or discriminatory redundancies.

 

d. Non-Discrimination

Employers must ensure that redundancy decisions are not based on discriminatory factors, such as race, gender, disability, or any other protected characteristic under the Equality Act 2010. Failure to do so can result in legal claims for discrimination.

 

Section F: Common Risks

 

Handling redundancy notice periods requires careful adherence to legal requirements and good practice to avoid potential pitfalls. Employers can face significant risks, including legal claims, financial penalties, and reputational damage if notice periods are not managed properly.

 

1. Failing to Provide the Correct Notice Period

One of the most frequent mistakes employers make is failing to provide the correct notice period. UK employment law mandates statutory minimum notice periods based on the employee’s length of continuous service. Not providing the legally required notice period can result in claims of wrongful dismissal, where the employer is seen to have breached the employment contract. In some cases, employers may misunderstand the difference between statutory notice and any enhanced contractual notice period.

Always check the employee’s length of continuous service to calculate the correct notice period. Be mindful of both statutory requirements and any contractual terms that may offer a longer notice period than the legal minimum. Regularly review employment contracts and stay updated with changes in employment law to ensure compliance.

 

2. Overlooking Contractual Notice Periods

Another mistake is overlooking the notice periods set out in employment contracts. While statutory notice periods provide the legal minimum, many employment contracts include enhanced notice periods that exceed the statutory minimum. Failing to honour these contractual terms can lead to legal disputes. Employees can claim breach of contract if the notice period provided does not meet the terms agreed upon in the employment contract, which can result in the employer having to pay compensation.

Employers should carefully review each employee’s contract to ensure the notice period provided complies with the terms agreed upon. Ensure that HR teams are aware of the distinction between statutory and contractual notice periods and factor this into redundancy planning. Keep all employment contracts up to date and clearly outline notice periods at the outset of employment.

 

3. Mismanaging Payment in Lieu of Notice (PILON)

Employers sometimes opt for Payment in Lieu of Notice (PILON), where they pay an employee a lump sum instead of having them work their notice period. However, confusion can arise over the correct amount to pay, and employers may fail to communicate clearly how this payment works. Also, PILON is subject to tax and National Insurance contributions, which is sometimes overlooked.

Underpaying or incorrectly calculating PILON can result in potential claims for unpaid wages while failing to tax PILON correctly can lead to tax liabilities for both the employer and the employee.

Ensure that any PILON payments are calculated correctly and reflect the employee’s full earnings, including benefits and allowances. Be clear in redundancy communications about how PILON is calculated and ensure it is properly taxed. If in doubt, seek legal or payroll advice to ensure compliance with HMRC rules.

 

4. Failure to Provide Adequate Consultation

Employers are legally required to engage in meaningful consultation with employees before making redundancies. Failing to properly consult employees about the redundancy and its implications, including the notice period, can lead to claims of unfair dismissal. This is especially important in cases of collective redundancies, where specific timelines for consultation must be followed.

Lack of consultation can result in claims for unfair dismissal, potentially leading to compensation awards from employment tribunals. In collective redundancy situations, failing to consult may lead to protective awards, where employees receive additional payments due to non-compliance.

Conduct a thorough consultation process for all employees at risk of redundancy, ensuring that it is genuine and meaningful. Employees should be informed of the reasons for redundancy, the selection process, and their rights, including notice periods and redundancy pay. For collective redundancies (20 or more employees), ensure consultation with employee representatives or trade unions in compliance with the Trade Union and Labour Relations (Consolidation) Act 1992.

 

5. Overlooking Garden Leave as an Option

Some employers fail to consider garden leave as an option during the notice period. Garden leave is when an employee is instructed not to attend work during their notice period but remains employed and continues to receive their salary and benefits. It can be a useful option in cases where employers want to prevent employees from accessing sensitive information or working for competitors during the notice period. However, failing to correctly manage garden leave can lead to confusion or disputes over pay and responsibilities.

Miscommunication regarding the terms of garden leave can lead to disputes over pay or employee obligations. Employers may also inadvertently allow access to confidential information if garden leave is not used in sensitive situations.

Be clear in redundancy communications about the terms of garden leave, including what is expected from the employee during this period (e.g., remaining available for consultation) and what access they will have to company systems or property. Ensure the employee understands that they are still employed and being paid, even if they are not actively working. Garden leave can be a protective measure for the business, so use it where appropriate.

 

6. Incorrectly Handling Reasonable Time Off for Job Hunting

Employees under notice of redundancy are entitled to a reasonable amount of paid time off to look for new jobs or undertake training if they have at least two years of continuous service. Employers sometimes fail to offer this entitlement or misunderstand what constitutes “reasonable” time off, which can lead to employee dissatisfaction or legal challenges.

Failing to provide employees with reasonable time off during the notice period can lead to grievances or potential legal claims. It can also negatively affect employee morale.

Make sure that employees under notice of redundancy are informed of
their right to paid time off for job searching or training. Work with employees to agree on what constitutes reasonable time off, based on their needs and the operational requirements of the business. This will show good faith and help employees transition to new employment smoothly.

 

7. Not Accounting for Continuous Employment in Notice Calculations

Calculating continuous employment incorrectly is another common mistake. Periods of service are critical in determining the length of the statutory notice period. If employers miscalculate continuous service, they risk providing the wrong notice period or redundancy pay, leading to potential claims.

Ensure continuous employment is calculated accurately, considering any breaks in service that might affect the total. Certain interruptions, such as maternity leave or sickness absence, should not break continuity, while others may. Employers should regularly review employee records to ensure accurate and up-to-date information.

 

Section G: Summary

 

A redundancy notice period is the legally required amount of time an employer must provide to an employee before their role is terminated due to redundancy. The length of the notice period depends on the employee’s continuous service. For example, employees with between one month and two years of service must receive at least one week’s notice, while employees with 12 or more years are entitled to 12 weeks’ notice.

Employers can also opt to provide payment in lieu of notice (PILON), allowing them to pay the employee for the notice period without requiring them to work.

Employers face several risks when managing redundancy notice periods. Providing less than the required notice can lead to wrongful dismissal claims, where the employer may be required to pay compensation. Miscalculating continuous service and not factoring in contractual obligations can also cause legal issues.

Another risk comes with mishandling payment in lieu of notice or failing to properly tax the payment, leading to potential disputes.

Employers must also ensure they provide adequate consultation before issuing notices, as failure to do so can result in claims of unfair dismissal.

To avoid these risks, employers must be clear on both legal requirements and the terms in employment contracts while maintaining transparent communication throughout the redundancy process.

 

Section H: Need Assistance?

 

When dealing with workforce issues, it is important to consider the full legal risks and rights of your workforce. Our specialists are on hand to help you assess the circumstances and understand the options that are in your best interests, not least to avoid unwanted tribunal claims and damage to your reputation.

As employment law specialists, we can assist if you have any queries relating to redundancy, changing contract terms and working arrangements or settlement agreements, particularly in complex situations. Speak to our experts today for advice.

 

Section I: FAQs

 

What is a redundancy notice?
A redundancy notice is a formal communication from an employer informing an employee that their job is being made redundant. The notice includes essential details such as the reasons for the redundancy, the employee’s termination date, the notice period, and information about redundancy pay.

 

How much notice should be given before redundancy?
The notice period depends on the employee’s length of service. Statutory minimum notice periods are 1 week’s notice for employees with 1 month to less than 2 years of service, 1 week’s notice for each year of service for employees with 2 to 12 years of service, and 12 weeks’ notice for employees with 12 or more years of service. If the employment contract provides a longer notice period, that contractual period must be honoured.

 

Are employees entitled to redundancy pay?
Yes, employees who have at least two years of continuous service are entitled to statutory redundancy pay. The amount is calculated based on age, length of service, and weekly pay, subject to a statutory cap. Employers may offer enhanced redundancy packages, but this is not required by law.

 

Can an employer make me redundant without consultation?
Employers are legally required to consult with employees who are at risk of redundancy. Individual consultations must take place before any final decisions are made. In cases of collective redundancy (20 or more employees), employers must also consult with employee representatives or trade unions.

 

What rights do I have if I believe my redundancy is unfair?
If you believe your redundancy was handled unfairly, you can appeal the decision using the employer’s internal appeal process. You may also be able to file a claim for unfair dismissal at an employment tribunal, especially if the redundancy selection criteria were discriminatory or if proper consultation did not take place.

 

Can I take time off to look for a new job if I’ve been given notice of redundancy?
Employees with at least two years of continuous service are entitled to a reasonable amount of paid time off to look for new work or attend training during their notice period. Employers must pay up to 40% of a week’s pay for the time taken off.

 

What happens if I refuse suitable alternative employment?
If an employer offers you a suitable alternative role within the organisation and you unreasonably refuse it, you may lose your entitlement to statutory redundancy pay. Whether a role is considered “suitable” depends on factors such as pay, status, location, and working conditions.

 

Can I be made redundant while on maternity or sick leave?
You can be made redundant while on maternity or sick leave, but the process must be fair and non-discriminatory. Employees on maternity leave have special protections and must be offered any suitable alternative vacancies before other employees. Redundancy must be based on business reasons, not because of the employee’s leave.

 

What is collective redundancy?
Collective redundancy occurs when an employer proposes to make 20 or more employees redundant within a 90-day period at a single establishment. In such cases, employers are required to engage in collective consultation with employee representatives or trade unions, as well as provide notification to the government’s Redundancy Payments Service.

 

What is payment in lieu of notice (PILON)?
Payment in lieu of notice (PILON) is when an employer chooses to pay an employee instead of requiring them to work through their notice period. The employee receives the equivalent amount of pay they would have earned during the notice period, and their employment ends immediately.

 

How is redundancy pay taxed?
Statutory redundancy pay up to £30,000 is tax-free. Any payments above this threshold are subject to Income Tax. Payments such as holiday pay or payment in lieu of notice (PILON) are treated as regular earnings and are subject to Income Tax and National Insurance contributions.

 

Can I claim benefits after being made redundant?
Yes, you may be eligible for benefits such as Universal Credit or Jobseeker’s Allowance after being made redundant, depending on your personal circumstances, including savings and household income. Jobcentre Plus can provide assistance with benefits and help you find new employment.

 

What is a protective award?
A protective award is compensation awarded by an employment tribunal if an employer fails to properly consult employees or their representatives during collective redundancies. Employees can be awarded up to 90 days’ pay as part of a protective award claim.

 

Do employees have to work their redundancy notice period?
An employee may not be required to work their notice period if their contract of employment allows their employer to provide pay in lieu of notice. Where a business is forced to close or shuts down unexpectedly, an employee will be entitled to what they would’ve been paid if they had been able to work.

 

What is the statutory notice period?
The minimum statutory redundancy notice periods are 1 week’s notice if employed between a month and 2 years, 1 week’s notice for each year if employed between 2 and 12 years, and 12 weeks’ notice if employed for 12 years or more. The contract of employment may provide for longer periods.

 

Do you get paid notice period when made redundant?
When made redundant, an employee is still entitled to their notice period or to pay in lieu of notice (PILON). The PILON calculation will be based on the minimum statutory redundancy notice periods of between 1 to 12 weeks.

 

Section J: Glossary

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Section K: Additional Resources

 

Acas – Advisory, Conciliation and Arbitration Service
https://www.acas.org.uk
Acas provides free and impartial advice on workplace disputes and employment law, including redundancy procedures, consultations, and employee rights. It also offers practical guidance on handling redundancies fairly and lawfully.

 

GOV.UK – Redundancy: Your Rights
https://www.gov.uk/redundancy-your-rights
This government resource outlines employee rights during redundancy, including eligibility for redundancy pay, notice periods, and the steps employers must follow when making redundancies.

 

Citizens Advice – Redundancy
https://www.citizensadvice.org.uk/work/leaving-a-job/redundancy/
Citizens Advice offers information on employee rights during redundancy, including how to handle unfair dismissals, redundancy pay entitlements, and what to do if you are selected for redundancy.

 

The Law Society – Find a Solicitor
https://solicitors.lawsociety.org.uk/
The Law Society’s directory allows users to find qualified solicitors specialising in employment law, including redundancy issues, unfair dismissal claims, and settlement agreements.

 

Chartered Institute of Personnel and Development (CIPD) – Redundancy Guidance
https://www.cipd.co.uk/knowledge/fundamentals/people/restructuring/redundancy-factsheet
CIPD offers a comprehensive factsheet for employers on managing redundancies, covering legal requirements, best practices, and advice on handling redundancies sensitively and efficiently.

 

Mind – Redundancy and Mental Health
https://www.mind.org.uk/information-support/coronavirus/coronavirus-and-your-wellbeing/#CopingWithRedundancy
Mind offers guidance on managing the mental health impacts of redundancy, providing coping strategies and links to support services for individuals affected by job loss.

 

HMRC – Tax on Redundancy Payments
https://www.gov.uk/termination-payments-and-benefits
This resource provides information on how redundancy payments are taxed, explaining the rules around tax-free thresholds and what elements of redundancy pay are subject to tax and National Insurance.

 

Equality and Human Rights Commission – Equality Act 2010 Guidance

https://www.equalityhumanrights.com/en/advice-and-guidance/guidance-employers
This guide explains employer responsibilities under the Equality Act 2010, ensuring that redundancy processes are free from discrimination and that all employees are treated fairly.