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Timing of redun...

Timing of redundancy payments

taggy

2 posts

Joined
8/2/2007

Timing of redundancy payments
Posted: 28 Jul 08 12:32 PM

Dear Buddy,

Are there any rules as to when a redundancy payment must be made, i.e. must it be made to the employee before or on the last day of employment?

Thansk

creynolds

127 posts

Joined
12/12/2006

Re: Timing of redundancy payments
Posted: 30 Jul 08 9:49 AM

Buddy says: Effectively, the employer has a period of six months following the date of termination in which to make the redundancy payment (s.164 of the ERA). If it refuses to do so, the redundant employee may demand payment in writing. If it is not forthcoming, he or she can make a complaint to an employment tribunal (s.163 of the ERA), either as a free-standing claim for the redundancy payment or as part of an unfair dismissal complaint.

In practice however, redundancy pay is usually paid on termination of the contract of employment. In other words:

• The date on which notice expires (where the contract is terminated by notice); or

• The date on which termination takes effect (where the dismissal is without notice).

Employer information: Under the statutory definition (s. 139(1) of the ERA) an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to:

the fact that the employer has ceased or intends to cease:

to carry on the business for the purposes of which the employee was employed by it (ie the whole business is closing), or
to carry on that business in the place where the employee was so employed (ie the plant or office where the employee works is closing); or

the fact that the requirements of that business:

for employees to carry out work of a particular kind, or
for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

have ceased or diminished or are expected to cease or diminish (ie fewer employees of this type or skillset are needed either generally, perhaps due to new ways of working, or in a particular place, perhaps because a function is being centralised in another place).

To be entitled to a redundancy payment, an employee must have been continuously employed for at least two years on the date on which the employment ends. An employee will be entitled to receive the notice pay under their contract as well as any redundancy pay.

In general, if an employer gives notice that an employee's employment will terminate by reason of redundancy on a particular date, the employer is entitled to expect the employee to carry on working until that date. There is, however, a formal process by which the employee can serve notice to terminate the employment earlier without forfeiting his or her redundancy payment (s.142 of the ERA). If the employer objects to this, it can formally request withdrawal of the notice and dispute the payment if the employee insists on going early. It is ultimately for the employment tribunal to decide the issue, depending on the facts of the case. In practice, early departure, with payment intact, usually occurs by agreement and without incident.

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