Redundancy payments 

Another of the most significant provisions contained in the Employment Rights Act 1996, is the right of employees to be paid statutory redundancy payments. Under the Act, any employee who has two or more years’ service and who is dismissed in a genuine redundancy situation is entitled to receive a statutory redundancy payment. A genuine redundancy situation only arises if an employer ceases or intends to cease:

  • to carry on the business in which the employee is employed
  • to carry on the business in which the employee is employed at the employee’s place of work
  • to need the employee to do the kind of work he or she is employed to perform

A statutory redundancy payment is calculated on the basis of the employee’s gross weekly rate of pay (subject to a current* statutory maximum of £479 per week, length of service (subject to a maximum of 20 years) and age:

  • Aged under 22, half week’s pay for each full year worked
  • Aged 22 to 41, a week’s pay for each full year worked
  • Aged over 41, one and a half week’s pay for each full year worked

The amount which can be payed out is capped at £14,370.

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In a recent landmark ruling that might affect multiple-site pub operators, the Employment Appeals Tribunal have determined any redundancies involving 20 or more employees whether in a single site or multiple sites must now be given the full 90 day consultation period.

Given the punitive nature of penalties imposed of up to 90 days gross pay per affected employee if an employer fails to collectively consult on proposed redundancies it’s worth getting this in order from the outset.

Even if numbers are less than 20, employers are not completely exempt regarding consultation as individuals should be consulted irrespective of the collective consultation requirements. In practice this means a meaningful and genuine consultation should not be less than 14 days.

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