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XpertHR's head of content Jo Stubbs and group editor David Shepherd discuss
frequently asked questions on redundancy. Issues covered include:
recruiting to a post from which an employee has recently been made redundant;
re-employment of a formerly redundant employee; and redundancy rights of
employees on maternity, adoption and extended paternity leave.
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The questions in
full:
Employers will be used to an annual
rise in the maximum week’s pay for the purposes of calculating statutory
redundancy pay on 1 February. But this year there was no increase. Why
was that?
The amount changes on 1 February each year because of the
Employment Relations Act 1999, which provides that the figure increases (or
decreases) in line with the retail prices index for September of the previous
year. However, in a one-off measure designed to mitigate the effects of
recession, the Government legislated to increase the maximum from £350 to £380
on 1 October last year. The same legislation also excluded the operation of
the index on this one occasion, so the maximum week's pay for statutory
redundancy pay remained at £380 on 1 February 2010. The next change in the
maximum is therefore due on 1 February 2011.
If an employer is recruiting to a
position from which an employee was recently made redundant, does the employer
have to offer the job to the person who was made
redundant?
No. There is no duty on employers to offer employment to
an employee who was made redundant from a position to which they are
recruiting. Employers should be cautious when deciding to recruit to the
position soon after the redundancy, as this could raise doubts as to whether or
not the dismissal was due to a genuine redundancy situation. However, a
dismissal can be a fair dismissal for redundancy, even when it becomes necessary
to recruit to that position soon after the redundancy. Employers should
ensure that they can show that there were genuine reasons for the redundancy at
the time of the dismissal, but that the situation has since changed, for example
due to an upturn in demand.
It is good practice for employers to keep in touch with employees
dismissed for redundancy with a view to notifying them of vacancies that arise,
but there is no requirement on them to do so.
And if the employer does re-employ
someone who has been made redundant, can the employee retain his or her
statutory redundancy pay?
An employee who is re-employed after having
been made redundant can retain his or her statutory redundancy
payment. However, under s.214 of the Employment Rights Act 1996, the
receipt of the redundancy payment will break the employee’s continuity of
employment for the purposes of the statutory redundancy pay
scheme. Therefore, if the employee is made redundant again in the future,
he or she will not be entitled to a statutory redundancy payment until he or she
has accrued another two years’ service. The statutory redundancy pay
calculation will be based on the latter period of service only.
An employer should be cautious if there is no break in employment
between termination on the grounds of redundancy and the employee recommencing
work. This may cast doubt over the genuineness of the redundancy and may
cause HM Revenue and Customs to question the tax-free status of the redundancy
payment. The employer should therefore ensure that it can demonstrate that
the redundancy was genuine.
Does an employee made redundant
while on maternity leave have any special rights?
Yes, an employee on
maternity leave is entitled to priority as far as suitable alternative
employment is concerned. Where an appropriate vacancy exists she must be
offered the alternative employment under a new contract that begins on the day
immediately following the day on which her previous contract comes to an
end. The new work must be suitable in relation to the employee and
appropriate for her to do in the circumstances, and the new contract provisions
must not be substantially less favourable than those of the previous
contract.
Where a suitable vacancy exists and the employer fails to offer
it, the employee's dismissal will be automatically unfair. However, where
the employee rejects the alternative employment, or no suitable vacancy exists,
the employer is entitled to dismiss by reason of redundancy.
The same applies to employees on adoption leave. And
employers need to be aware that the draft Additional Paternity Leave Regulations
2010 mirror the applicable wording in the Maternity and Parental Leave etc
Regulations 1999, so employees who are made redundant while on additional
paternity leave will also be entitled to preferential treatment. The
Additional Paternity Leave Regulations 2010 are due to come into force in April
2010 and will affect the parents of babies expected on or after 3 April 2011
(and adoptive parents notified of having been matched for adoption on or after 3
April 2011).
"How to"
section
The XpertHR "how to" section provides practical
step-by-step advice on how to manage common situations faced in the workplace,
including:
Model policies
and documents
From the XpertHR model policies and document
section:
Maternity leave and redundancy
Adoption leave and redundancy
Re-employment of redundant employee
FAQs
From the XpertHR FAQs section:
Forthcoming
law
The XpertHR forthcoming law section
provides guidance, commentary, resources and links on impending changes to
employment law, including:
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