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Redundancy
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- Lemon Half
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Redundancy
Unfortunately we have had to make the decision to make our only member of staff redundant. The stream of work that she was hire to do has sried up and there is no longer anything for her to work on.
She has been employed by us for one year and she was furloughed at the start of the scheme and has been on furlough ever since. At the end of the furlough scheme there is no longer any financial case for keeping her on.
Since she has not been employed for two years then I understand that she is not entitled to any redundancy payments. Are there any things that we need to do apart from giving her contractual notice period?
TIA
John
She has been employed by us for one year and she was furloughed at the start of the scheme and has been on furlough ever since. At the end of the furlough scheme there is no longer any financial case for keeping her on.
Since she has not been employed for two years then I understand that she is not entitled to any redundancy payments. Are there any things that we need to do apart from giving her contractual notice period?
TIA
John
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- Lemon Half
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Re: Redundancy
The employer must give a consultation about why redundancy is happening and what alternatives might be. However if fewer than 20 employees are being made redundant, there are no rules about how the employer carries out the consultation.
This of course renders it pointless, but since you can be taken to an employment tribunal if it doesn't happen, it'd be worth formalising it somehow.
(I got an extra grand from an employer who summarily "made me redundant" at a meeting without warning, when I subsequently threatened with a tribunal due to lack of consultation.)
Scott.
This of course renders it pointless, but since you can be taken to an employment tribunal if it doesn't happen, it'd be worth formalising it somehow.
(I got an extra grand from an employer who summarily "made me redundant" at a meeting without warning, when I subsequently threatened with a tribunal due to lack of consultation.)
Scott.
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- Lemon Slice
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Re: Redundancy
As you've described it, it looks like the role is now redundant, and the question is, what do you need to do to bring the relationship to a clean end.
1. Look on the ACAS website (loads of useful info from both employer and employee perspective)
2. Call them for specific advice if required.
3. Be seen to "do the right thing", if you can afford it, and especially if that is how you feel. (paying special attention to making sure that anything which is salary based is based on the full basic/contractual salary, rather than the 80% furlough level - an easy way to look like a skinflint)
4. Pay attention to untaken annual leave - particularly leave that may have been booked during the furlough period, and not taken or not paid in full.
PochiSoldi
1. Look on the ACAS website (loads of useful info from both employer and employee perspective)
2. Call them for specific advice if required.
3. Be seen to "do the right thing", if you can afford it, and especially if that is how you feel. (paying special attention to making sure that anything which is salary based is based on the full basic/contractual salary, rather than the 80% furlough level - an easy way to look like a skinflint)
4. Pay attention to untaken annual leave - particularly leave that may have been booked during the furlough period, and not taken or not paid in full.
PochiSoldi
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- Lemon Half
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Re: Redundancy
Unless things have changed since I was in the employment arena, you can still make ex gratia redundancy payments if you wish. And I think they're tax free to the recipient, up to £30K . Might help to ease the process along a little?
Whatever you do, don't try to rush the process. I was once called to help somebody (admittedly of more than two years' standing) who'd arrived at work one morning to find a black sack for his belongings, and who was told that he had to sign his redundancy conditions by 11 am, or else he'd get nothing, not even a reference.
He was a bit of an awkward cuss, this employee, and he'd firmly refused to accept having to work with a computer, so his face really didn't fit his company role any more. But he had his rights, all the same. I got on the phone to ACAS, who reminded the employer that it was committing an offence for which the directors could be found personally liable, and possibly charged. Quickest doubling of a redundancy offer we ever achieved.
Much of this is irrelevant to the OP's case, of course, because of the short period of service, but it confirmed ACAS's usefulness - we've dealt with them several times since, and they are firmly impartial between employer and employee. And very good at answering the phone.
BJ
Whatever you do, don't try to rush the process. I was once called to help somebody (admittedly of more than two years' standing) who'd arrived at work one morning to find a black sack for his belongings, and who was told that he had to sign his redundancy conditions by 11 am, or else he'd get nothing, not even a reference.
He was a bit of an awkward cuss, this employee, and he'd firmly refused to accept having to work with a computer, so his face really didn't fit his company role any more. But he had his rights, all the same. I got on the phone to ACAS, who reminded the employer that it was committing an offence for which the directors could be found personally liable, and possibly charged. Quickest doubling of a redundancy offer we ever achieved.
Much of this is irrelevant to the OP's case, of course, because of the short period of service, but it confirmed ACAS's usefulness - we've dealt with them several times since, and they are firmly impartial between employer and employee. And very good at answering the phone.
BJ
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- Lemon Slice
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Re: Redundancy
The advice to contact ACAS is very good. Their advice will be very clear and helpful. Broadly speaking, you will need to tell her she is being made redundant, tell her what her last working day will be, give her a fair reason (you have a very good reason) and give her the week's notice or pay her in lieu to which she is entitled (she may be entitled to more if her contract says so). With less than two years' employment she has no rights to go to a tribunal for unfair dismissal (except in certain specific circumstances, such as dismissals that are deemed to be automatically unfair, and which probably don't apply here). It is always best to be legal, decent, honest and truthful (as the old ASA slogan went).
Re: Redundancy
If a Payment in Lieu of Notice is being contemplated, note that all PILONs are now liable to PAYE and NIC, including non-contractual PILONs (which prior to 6 April 2018 were tax and NI-free).
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- Lemon Half
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Re: Redundancy
Ex gratias are still tax free up to a limit, but you have to be careful to keep them from being too directly linked to redundancy.
regards, dspp
regards, dspp
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- Lemon Half
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Re: Redundancy
Thanks for the useful replies. We definitely wish to do the right thing by her. ACAS sounds like a good call.
One more question, if in the future some time the work comes back, is there any issue to re-employing someone who has been made redundant?
John
One more question, if in the future some time the work comes back, is there any issue to re-employing someone who has been made redundant?
John
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- The full Lemon
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Re: Redundancy
bungeejumper wrote:Unless things have changed since I was in the employment arena, you can still make ex gratia redundancy payments if you wish. And I think they're tax free to the recipient
Yes, a few years ago a friend of mine entered into a series of transactions that involved his father making him the manager of the family business,
and the son then making the father redundant with a tax-free sum. The father then loaned that sum back to the son who used it to buy the business off his father!
I may not have the exact sequence right but that was the bare bones of it.
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Re: Redundancy
Lootman wrote:bungeejumper wrote:Unless things have changed since I was in the employment arena, you can still make ex gratia redundancy payments if you wish. And I think they're tax free to the recipient
Yes, a few years ago a friend of mine entered into a series of transactions that involved his father making him the manager of the family business,
and the son then making the father redundant with a tax-free sum. The father then loaned that sum back to the son who used it to buy the business off his father!
I may not have the exact sequence right but that was the bare bones of it.
The tax-free limit is £30,000. Every little helps, I suppose.
Scott.
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Re: Redundancy
swill453 wrote:Lootman wrote:bungeejumper wrote:Unless things have changed since I was in the employment arena, you can still make ex gratia redundancy payments if you wish. And I think they're tax free to the recipient
Yes, a few years ago a friend of mine entered into a series of transactions that involved his father making him the manager of the family business,
and the son then making the father redundant with a tax-free sum. The father then loaned that sum back to the son who used it to buy the business off his father!
I may not have the exact sequence right but that was the bare bones of it.
The tax-free limit is £30,000. Every little helps, I suppose.
Of course, why not? I once got a tax-free sum equivalent to 3 months gross salary when a job I had been offered was withdrawn. The manager (who had fired the guy who hired me) just pulled a chequebook out of his desk drawer and wrote the cheque right in front of me, asking me "if that was OK"?
I replied: "Under the circumstances, that seems reasonable". And then I went back to my old job!
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- Lemon Slice
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Re: Redundancy
redsturgeon wrote:One more question, if in the future some time the work comes back, is there any issue to re-employing someone who has been made redundant?
As I understand it, if you make a position redundant, and then a new (but different) position is created, then the only issues are:
* Does any tax free redundancy payment that was made, look like tax avoidance?
(Not an issue unless a redundancy payment is made)
* Making it clear regarding continuity of employment/continuous service.
(Not an issue if at least a clear week between the two jobs, and the contract of employment makes it clear - the longer the gap, the harder to prove continuity)
I have had previous employers who had policies like "no return within 2 years" (=lazy/silly/"shooting oneself in the foot") and "no return within 6 months" (=intended to provoke due diligence within the company against tax avoidance claims).
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