Redundancy can be a tricky subject and difficult to negotiate. Providing they meet the requirements, domestic workers are entitled to redundancy pay like any other employee. Therefore, it is important to know about the legalities of this process if you employ household staff.
What is redundancy?
Redundancy is a type of dismissal when an employee’s role is no longer needed or if there are significant changes to an employee’s role that the employee is unable or unwilling to accept.
When is redundancy an option?
Redundancy is an option for employers when an employee’s work or services are no longer required and/or when their job becomes obsolete.
It is against the law to make someone redundant due to their gender, age, race, religious beliefs, marital status, sexual orientation, disability, or pregnancy/maternity leave.
Changing Circumstances
Sometimes circumstances change and an employer may no longer have a full-time job for their staff.
If part-time work is still available, the employer is required to first offer the ‘new’ position to the existing staff member. If the staff member chooses not to continue working for them under the new conditions, they are still entitled to redundancy pay.
The employee may also qualify if the employer relocates to another area unless there is a relocation clause in the Employment Contract.
What is the criteria for redundancy?
To qualify for redundancy, the employee must:
• Have at least two years continuous employment with the employer
• Be working as an employee under a PAYE Scheme
How much is redundancy pay?
This is dependent on age and the length of time in employment with the employer.
Under 22: Half a week’s pay for every year of service
22 – 41: One week’s pay for every year of service
41 – Retirement: One and a half week’s pay for every year of service
Being on PAYE, an employee is legally entitled to these amounts. However, the employer is free to pay more than the statutory minimum. No part of the costs can be claimed back from the government and the employee does not have to pay tax on redundancy payments up to £30,000. Length of service is also capped at 20 years.
How can Stafftax help?
Handling Staff Redundancy
Redundancy can be a tricky subject and difficult to negotiate. As a Stafftax client, our HR team can support you through the redundancy procedure and provide the required documentation, whilst our payroll team will ensure the redundancy payments are calculated correctly.
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