Do I Have To Give Employees Redundancy Pay?

Yes! If you employ anyone, be it a cleaner, nanny, or sales person means that you have responsibilities under employment law.

As is usual in law, ignorance is not a defence and will not protect you!

You don’t need to pay redundancy to staff who have worked less than two years for you. You will obviously have to pay them their notice period.

You do need to pay redundancy to staff who have worked for you for more than two years. Statutory redundancy pay is currently max £538 for every completed year’s service. You will have to pay them their notice period.

NB Statutory redundancy pay changes every April.

In addition, you will have to follow a fair and reasonable consultation process. This needs to be at least 3 weeks long.

Example

Sarah has worked for you for 5 years. Her notice period is one week for every completed year of service. Her weekly pay is £600. You would start the redundancy consultation process. You would pay her and she would work for those weeks, as usual. Then you would terminate her employment. You would give her 5 weeks x £600 notice pay (subject to tax and NI) and 5 x £538 redundancy pay (week’s pay capped at £538, paid gross).