Articles Redundancy Redundancy payments

Making Redundancy Payment

Redundancy payment is fairly well defined within UK law but it doesn't necessarily follow that companies and their employees know the full and proper requirements of that law.

When a company first starts up everyone in it is looking forward to a rosy future and good business success. In our modern day and age however, an increasing number of companies find that changing business practices and fluctuations in the market can mean that the rosy future may not happen for everyone. Companies can go broke or have too many employees or their product may no longer be in demand, which often means that the company closes down and the staff are made redundant.

Every company could one day find themselves having to make a payment and to effectively sack their employee whether redundancy occurs because the business is going down, there is no longer a requirement for certain skills, or a non-cost effective branch is closing; the employer still has a duty to their employees to explain the situation and to make a payment.

Redundancy Payment Protection

All employees who have been with a company for two years or more are not protected by law and have no fiscal claim if they are made redundant. Employees of longer standing will receive a payment, the basis of this is clearly defined in employment law and will differ depending on how long someone has been with a company and also how old they are. For persons employed with the company for two years or more one weeks salary for every year of service should be paid. If the employer's cash flow will not be able to cover these payments then the government has made arrangements for them to be paid by other means.

Employers should be very clear on their duty to the employees they no longer need or it could end up costing them more money than they thought it would. When a person is made redundant he or she should be able to see some sort of statement by the employer about the amount and terms of any payment and how it was arrived at.

Employers not only give employees the correct information when they give a statement; they are also protecting themselves in case the employee is unhappy with the payment terms and decides to take the matter to an employment tribunal. Employers should make sure that they are completely clear on their responsibilities regarding redundancy payment.

 

Deminos are HR Outsourcing and employment law specialists. To find out more please call us on 0191 460 1111 or visit http://www.deminos.co.uk

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