There is a lot of confusion with regards to domestic employees and redundancy. Many people assume that because of the unique circumstances that exist between a domestic employee and their employer, they don’t qualify for redundancy pay. But providing they meet the requirements they are entitled to redundancy pay just like any other employee.
To qualify the employee must be 18 or over and have at least two years continuous employment. This means that they must have been working for the same household, without any breaks, apart from maternity, paternity, sickness and unpaid leave, for at least two years. They must also be working as an employee under an employment contract and have a PAYE scheme set up. This does not mean that they need to have a written contract, as some employers unfortunately don't provide this. They are still considered an employee working under a contract even if there is nothing in writing.
If an employer's circumstances change and they no longer have a full-time job to offer their employee and they want to employ someone on a part-time basis, the employer is required to first offer the "new" position to the existing employee. If they choose not to continue working for the employer under the new conditions they are still entitled to redundancy pay, unless they are on a fixed term contract.
The employee will also qualify for redundancy pay if their employer moves to a different part of the country, providing there is no relocation clause in the contract.
For current redundancy pay rates, please refer to the rates and thresholds page.
As long as the employee is on PAYE, they are legally entitled to these amounts; however, the employer is free to pay more than the statutory minimum at their discretion. The employer cannot claim any part of these costs back from the state. The employee does not have to pay tax on redundancy payments up to £30,000.
Please contact Stafftax if you wish to clarify any of the above points.
information for domestic workers
When your employee is off sick for longer than three days you have the responsibility as their employer to administer Statutory Sick Pay (SSP) on their behalf. The first three consecutive days (excluding days not normally worked) of illness are known as 'waiting days' and any payment during this period is at your discretion. From the fourth consecutive day SSP can be paid instead of, or as a part of the normal rate of pay. Please refer to our Rates and Thresholds page for details of the current SSP rate.
Changes to the law from 6 April 2014
From the start of the tax year 2014/15, The Percentage Threshold Scheme (PTS) which allowed, in certain circumstances, employers to recover SSP has been abolished. Employers will no longer be to reclaim SSP although recovery of unclaimed SSP for previous tax years may be possible for a limited period. In replacement of the PTS, the government have announced they will be moving the funding into a new scheme as part of the cross-government Health, Work and Wellbeing Initiative. Under this new scheme, which is expected to launch in 2015, help will be made available to employees who have been incapacitated for four weeks or more, to get them back to work.
Introducing an incentive
Incentives are not a legal requirement but because many employers are dependent on their employees coming to work an increasing number now offer an incentive instead. An incentive can be a Friday afternoon off, a voucher or a meal at a local restaurant. If you decide to offer an incentive make sure you include the terms in the employment contract.