Step 3: Ensuring redundancy processes are carried out correctly
As well as selecting and informing staff properly, startups and small businesses that make compulsory redundancies should take account of statutory rules when the redundancy process goes ahead.
Depending on how long they have worked for the company, employees have a right to paid notice of a certain length. If they worked for the company for between one month and two years, at least a week’s notice must be given. For those employed for more than two years, the entitlement is a week per year up to a maximum notice period of 12 weeks. During this time they should be paid the average of their salary for the previous 12 weeks. It is permissible to end employment immediately if the staff member is paid for the notice period.
Employees with more than two years’ service are entitled to statutory redundancy payments. For each full year of employment before their 22nd birthday, half a week’s pay is due, while between their 22nd and 41st birthday, it’s one week’s pay per full year. They are entitled to 1.5 weeks’ pay for each full year after their 41st birthday. A maximum of 20 years are taken into account and there are limits on weekly and total payouts. There is no statutory requirement to pay redundancy to staff with less than two years’ service, but startups and small businesses may choose to do so.
Employers are not required by law to allow staff to appeal their redundancy, but doing so is considered best practice and helps ensure that the overall process is fair. Ideally the individual dealing with the appeal should not be the person who carried out the redundancy processes.
While startups and small businesses have more flexibility than bigger employers carrying out large-scale redundancies, they are still required to go through a fair and open process. Taking care to ensure that the correct steps are followed protects the business from the risk of legal action and, importantly, ensures that what can be a difficult process for everyone is no more problematic than it need be.
Note – this information was correct at the time of posting and we recommend that you carry out your own independent research.
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