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Redundancy Guide Part 3: Calculating payments, the notice period, and managing the aftermath

Solicitor Jean Sapeta outlines the key points for practices when making staff redundant, in Part 3 of our comprehensive three-part series.

A big question for practices when considering making staff roles redundant, is how much the changes will cost.

What payments is an employee entitled to on being made redundant?

An employee must have worked for their employer for at least two years before they are entitled to a statutory redundancy payment.

For employees on maternity leave, the statutory redundancy pay must be based on their normal weekly pay or average weekly pay prior to the start of maternity leave.

If the employee’s contract entitles them to a more generous scheme than the statutory scheme (for example any employee employed on Agenda for Change terms and conditions) they must be paid their contractual redundancy entitlement. 

Salaried GPs in GMS practices on the model contract with two years of service in the practice may be entitled to take previous continuous NHS service into account, and therefore can be extremely expensive to make redundant.

The basic statutory entitlement to redundancy pay applies to those who have at least two years of continuous service. 

For each complete year of service up to a maximum of 20, employees are entitled to:

  •  Half a week of pay for each year of service under the age of 22.
  •  A week of pay for each year of service at age 22 but under 41.
  • 1.5 weeks of pay for each year of service at age 41 or over.

Every employee is entitled to be given a written statement of how the redundancy payment is calculated. Contractual entitlements might be higher than this amount.

There is a maximum statutory limit (£430 from 1 February 2012) on the amount of week’s pay that may be reckoned and a practice can pay in excess of the statutory minimum.

What notice do I have to give?

Notice can be an issue where contracts do not reflect the statutory entitlement to notice.

Whatever the contract says, an employee who has been employed for more than two years is entitled to one week’s notice for each complete year of employment up to a total of 12 weeks.

Managing the aftermath

Employees not directly affected by redundancy can be affected by the experiences of their colleagues. Some may see this as a sign that they need to look for alternative work. If critical people are required for the further development of the practice, discussions should take place to reassure those individuals.

Where problems can arise:

  1. Using personal preferences as opposed to objective selection criteria. This can open up the practice to allegations of unfair dismissal or discrimination.
  2. Asking employees to work on different sites, without adequate additional support, when their contracts do not require them to work in different locations. This can result in the rejection of alternative employment that would otherwise be ‘suitable’.
  3. Failure to remember to consult absent employees (absent through sickness or maternity or on sabbatical). This can result in the consultation process being inadequate.
  4. Failure to have reviewed in advance the contractual documentation, and to have calculated potential redundancy costs (particularly in the case of salaried GPs). This can result in a much higher redundancy bill than was anticipated, potentially obliterating the cost savings that the process was meant to achieve.
  5. Failure to keep clear records, stick to a timeline, and communicate clearly and effectively with individuals throughout. This can make it difficult to defend any unfair dismissal claim that may result from the process. Employment tribunals can only make decisions on the basis of evidence.  Clear, contemporaneous documents written in considerate language is always helpful.

It is always helpful to have an appeal process when there is competition for limited opportunities, and individuals feel that there has been any misapplication of the selection criteria.

Those who are tasked with delivering a process need support as well as those who are undergoing the process.

There can be ‘survivor guilt’ in those who remain behind, and care should be taken to manage the process after the redundant employees have left the practice.

It is important to allow employees to have time off work to look for new work, or to undertake training. Those employed for at least two years have a statutory entitlement to a reasonable amount of time off to look for another job or arrange training. The time off must be allowed before the expiry of the period of notice.

Redundancy Guide Part 1: Preparation, the pool system, and selection of staff

Redundancy Guide Part 2: Breaking the news, maternity leave, and alternative employment

  • Jean Sapeta is head of London employment at specialist healthcare solicitors Hempsons

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