Redundancy

Amendments to the Employment (Jersey) Law 2003 will come into force on 1st January 2011 to provide for statutory redundancy payments and other provisions relating to redundancy. Employers are recommended to develop a redundancy procedure should it become necessary to consider such steps within their organisation. 

If an employee is selected unfairly for redundancy a claim of unfair dismissal may be possible, depending upon whether the employee’s length of service allows such a claim.

Under the Employment Law 2003, a statement must be made as to what redundancy scheme exists. The termination of employment  provisions provide for statutory notice in addition to any redundancy payment and the length of notice increases with increasing length of service. Some organisations in Jersey operate a redundancy policy in which significantly exceeds the statutory provisions that are or will be in place shortly. 

The following gives an overview of good practice.

Income Tax Implications

We have received a great many questions about the tax implications of certain lump sum payments.

The income tax law has changed and the department has now issued general advice. This can be found in our guidelines Redundancy Payments and taxation.

December 2011

What is redundancy?

In general terms, redundancy arises when :-

• the whole business closes down, or is expected to close down;
• the business closes down in a particular place, or is expected to close down;
• the requirements of the business for employees to carry out work of a particular kind cease or diminish because :-
  • the business diminishes
  • productivity increases
  • the work is done in a different way

What is a redundancy payment?

With effect from 1st January 2011, an amendment to the Employment (Jersey) Law 2003 will come into force. It states that an employee will have a right to receive a redundancy payment, subject to a qualifying period of two years continuous service, if he/she is dismissed by reason of redundancy. For the purposes of the Law an employee is taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to:

• either that the employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by him/her,
• or has ceased or intends to cease to carry on that business in the place where the worker was employed.

Consequently, employees in Jersey who are made redundant who have been continuously employed for two years or more will normally be entitled to receive redundancy payments.

The Social Security Minister expects to introduce further amendments dealing with redundancy during 2011. Further information can be found in JACS Guideline No. 11

Where can you get more information?

UK based information about calculating redundancy pay can be found in the Department of Trade and Industry’s booklet PL808 on their website www.dti.gov.uk/er/

JACS can offer advice

ACAS publication:
Redundancy handling