The two Job Support Schemes are intended to help employers keep paying their employees, albeit likely reduced amounts. However, it is inevitable that some businesses will be so badly hit by the current crisis they will have no choice but to make at least some of their staff redundant.
Redundancy occurs when a job ceases to exist. At the moment this is likely to be because a business has reduced capacity, hence needing fewer employees to operate. Unless a business is making all similar staff redundant, then they must adopt a fair means of determining which staff are made redundant. This can include asking individuals to volunteer for redundancy to see if the necessary numbers can be achieved that way. A brief consultancy period is required with the possibility of redundant employees being moved to other positions discussed.
Employees only become entitled to statutory redundancy when they have worked continuously for the same employer for at least two years. The amount of statutory redundancy they are entitled to depends on how old they are at the date of termination and how many full years they have been employed for as follows.
• Half a week for every year under age 22
• One week for every year from age 22 to 40.
• One and a half weeks for every year from age 41.
Entitlement is for a maximum of 20 years service, counting years back from the termination date.
Unless there is a term in the employee’s contract entitling them to a payment on termination (referred to as a golden parachute clause) then the first £30,000 of redundancy pay is tax-free. Any other payments made at the same time, such as those for untaken holiday or payment in lieu of notice, are taxable as normal.
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