With the government’s Coronavirus Job Retention Scheme winding down, many businesses are having to make tough decisions about retaining staff. For large layoffs, this means collective redundancy, which you can read about in our post here. With any redundancy, businesses must attend to a whole host of legal requirements.
Employees have a number of rights which must be addressed and accommodated during redundancy, depending on how long they have worked for the business. Failing to deliver on any of these could leave your business vulnerable to successful claims of unfair dismissal and discrimination. We explain what redundancy notice periods and payments employees are entitled to.
Redundancy and collective redundancy
As a result of ongoing financial pressures due to the coronavirus pandemic, many employers are unfortunately having to consider redundancies. By law, employers must fulfill three conditions when making employees redundant:
- Warn and inform the affected employees in advance that their positions are at risk
- Consult with the affected employees before making final decisions
- Continue to pay the employees until they leave their job
- Provide statutory redundancy pay (if applicable)
Under most circumstances, employees who have been made redundant will continue to work for the duration of their notice period. There may be exceptions to this however, including furloughed employees, employees on ‘garden leave’, and employees who wish to leave their job early (i.e. to start a new job). These are covered in more detail below.
Businesses making 20 or more people redundant within a 90-day period must undertake a collective redundancy process and submit an HR1 form to the Government. This collective process involves a longer notice period in which the employer must arrange for the election of reps as well as informing and consult with employee representatives about the proposed redundancies. Failing to comply with this process can lead to the company paying 90 days’ wages to each affected employee.
How long is the notice period for redundancy?
The notice period for redundancy will differ depending on how long you have been working for your employer. The minimum periods for statutory notice are as follows:
- Less than 1 month – no notice required
- 1 month to 2 years – 1 week
- 2 to 12 years – 1 week for each year worked
- 12 or more years – 12 weeks
The point at which a notice period starts can be defined in your contract. Otherwise, notice periods start the day after an employee is given their redundancy notice or in the case of receiving a notice by email or post, the day after they have been able to read it. For this reason, it is best for employers to submit redundancy notices in person.
How much pay do you receive during your notice period?
If you are working for the duration of your notice period, you should receive full pay. You are also entitled to full pay even if you are not working for the duration of the notice period, as long as your notice period is the statutory minimum or no longer than six days more than the statutory minimum.
If you are not working for any period of time during your notice, your pay will depend on whether your notice period is statutory (prescribed by law) or contractual (written into your contract). If you receive contractual notice one week or more above the statutory minimum, you may not receive normal pay for any time spent:
- On holiday (annual leave)
- On sick leave
- On maternity, paternity or adoption leave
- Temporarily laid off or with reduced hours (short-time working)
- Able to work but without being given work
In these cases, you would receive whatever pay you would normally receive for that kind of absence. This might include sick pay for sick leave, and holiday pay for annual leave. Depending on the nature of your contract, this may be less than your normal full pay.
How much pay do furloughed employees receive during their notice period?
There no legislation in statute to clarify how much pay furloughed employees should receive if they are subsequently made redundant. An orthodox view would suggest that employees who do not have a legal or contractual entitlement to full pay (e.g. being entitled to one week’s greater notice under their contract) would continue to receive 80% of their salary under furlough, as long as the notice period takes place entirely within the bounds of the furlough scheme. Others argue the guidance instead suggests it should be full pay.
While the position is not certain, there are a number of mechanisms that a subsequent Employment Tribunal might use to find that an employee should have received 100% of their pay if it is challenged later. It is up to employers as to decide whether or not to pay the full 100% now or wait until it is challenged successfully later.
Can you leave during your notice period?
It is possible for employees to leave their job during the notice period. However, they must secure an agreement with their employer otherwise it would be a breach of contract, and potentially result in the loss of any redundancy pay.
If all parties agree that an employee can leave before their notice period ends, the employer is not required to pay the employee for the rest of the notice period. However, the employee should still be eligible for the same redundancy pay they would have received (unless the employee agrees to waive it!).
What is garden leave?
Garden leave is any period where members of staff are still being employed but are not required to attend work after they have been given notice of termination of their employment. Individuals on garden leave are paid as usual, but may be required to take any unused holiday.
Garden leave is often a strategic measure to keep individuals separate from a business, its assets and in particular confidential information during their notice period. Employees on garden leave are still bound by the terms of their contracts.
How Loch Associates Group can help
Businesses who fail to adhere to follow a fair and due process when considering making redundancies run the risk of unfair dismissal and other claims like discrimination. By using an experienced third party, you help to ensure that your business survives through this challenging period and make sure the staff who remain are looked after too!
Loch Associates Group have a wealth of experience overseeing both small-scale and collective redundancies, from the planning stage to communicating with employees. We can also advise further on the redundancy notice periods and payments employees are entitled to. Visit our Employment Law page to find out more, or please get in touch with us today.