Do I have to give employees redundancy pay?

Yes! If you employ anyone, be it a receptionist, sales person or nanny 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 per year’s service. You will have to pay them their notice period.

In addition, you will have to follow a fair and reasonable consultation process. This needs to be at least 3 weeks long. The employee also has the right of appeal.

Example

Sarah has worked for you for 5 years. Her weekly pay is £500. 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 x £500 notice pay (subject to tax and NI) and 5 x £538 redundancy pay (capped at £538, paid gross).