Redundancy Procedure and Payments
Redundancy Procedure and Payments
Guidance note 11 to the EMPLOYMENT (JERSEY) LAW 2003 incorporating Employment (Amendment Nos. 5, 6 and 7) (Jersey) Law 2012
This short statement is intended to explain to employers and employees the Redundancy rights which are set out in the new Part 6A of the Employment Law. It is not intended to cover the requirements of the Law, nor does it represent a statement of the Law. It constitutes a guide only and detailed legal advice should be taken in relation to each individual situation.
The main aims of the Amendment are to:
- Set out an employee's entitlement to a redundancy payment, the qualifying and associated conditions.
- Provide for paid time off to seek, or arrange training for, future employment.
- Provide for collective consultation in certain circumstances.
- Provide for a means of enforcement of these provisions.
The fundamental principle is that employees with a minimum of 2 years qualifying service have an entitlement to a redundancy payment of 1 week's pay subject to a "cap" on the value of a week's pay, for each year of service, in addition to any statutory or contractual notice.
1.1 "Effective date of termination" means the date as determined in Article 63 of the principal law, i.e.
a) the date on which the notice expires, whether given by employer or employee.
b) when termination is without notice, the date termination took place.
c) in relation to a fixed term contract which is not renewed under the same contract, the actual date of expiry.
2. The right to a redundancy payment and qualifying service.
An employee with a minimum of 2 years' qualifying service, who is dismissed by reason of redundancy, has a right to a redundancy payment.
3. Statutory minimum redundancy payment.
The minimum redundancy payment is one week's pay per year of service ("year" is defined as 12 calendar months). All service counts, including service before the age of 16 and there is no upper age limit.
The value of a week's pay (determined in accordance with Schedule 1 of the Employment Law) is capped at a maximum level. The cap from 25 September 2019 will be £770 per week. This means that, where an employee's effective date of termination is 25 September 2019 or later, the maximum week's pay for the purpose of the statutory redundancy pay calculation will be £770.
Redundancy payments are payable in addition to statutory or contractual notice periods. Certain elements of compensation may be liable to income tax e.g. payments in lieu of notice and redundancy compensation exceeding £50,000.
4. Statutory Notice Periods
Statutory notice periods apply to those over the age of 16. The period of notice to be given by the employer is:
1 week's notice if continuous service is less than 2 years
2 week's notice if continuous service is 2 years or more but less than 3 years
Plus 1 week's notice for each additional year's continuous service up to a maximum of 12 weeks.
5. Time limits applicable to redundancy payments.
For an employee to be entitled to a redundancy payment, any of the following must have occurred within 6 months from the date of termination of employment;
- the payment must have been agreed and paid;
- the employee must have claimed the payment from the employer in writing;
- a claim for redundancy payment must have been made to the Tribunal; or
- a claim for unfair dismissal must have been presented to the Tribunal.
However, even if none of the above has occurred, the Tribunal may allow an employee to claim redundancy if, within a further period of 6 months, the employee claims a redundancy payment from the employer in writing and refers the claim to the Tribunal or presents a claim for unfair dismissal to the Tribunal. In considering a late application the Tribunal will consider the reason given by the employee for their failure to apply within 6 months and other relevant circumstances.
6. Right to take time off to look for work or arrange for training.
An employee who is given notice of dismissal by reason of redundancy and who has been continuously employed for 2 years or more (inclusive of notice period) is entitled to take paid time off during the notice period equivalent to 40% of one of their normal working weeks (i.e. a total of 2 working days for those working a standard 5 day week), for the purposes of:
- Looking for new employment, or
- Making arrangements for training for future employment
Note: The two working days is a total entitlement, there is not an entitlement to two days per week. The time may be taken in hours, half days or whole days.
An employee who is refused permission to take such time off or who was not paid the whole of the amount due to them may make a complaint to the Tribunal within a period of 8 weeks beginning with the date on which it is alleged the time off should have been permitted (the Tribunal has the discretion to extend this 8 week period if it decides it was not reasonably practicable for the complaint to be submitted within the 8 weeks). Where the Tribunal finds such a complaint well-founded, it may direct the employer to pay a sum which could be greater than 40% of the employee's normal weekly pay.
7. Individual consultation
Although not specifically mentioned in the Law, individual consultation in respect of redundancy remains as currently required for unfair dismissal purposes, to show that a fair process has been undertaken. While there is no set period for consultation in individual cases, where compulsory redundancy is necessary, case law shows that the Tribunal will take the matter of consultation into account i.e. the employer should follow four ordinary principles of fairness which should always be considered in situations of redundancy:
- The duty to consult with the employee
- The duty to warn of redundancy
- The duty to establish fair criteria for selection of employees for redundancy
- The duty to explore alternatives to redundancy.
8. Fixed Term Contracts
The non-renewal of a fixed term contract amounts to dismissal. Where the job has come to an end this may be construed as redundancy and, subject to the employee having a minimum of 2 years' continuous service (which can be achieved through a single FTC or a series of FTCs where the interval between contracts has been less than 9 weeks), statutory redundancy provisions could apply.
Note: after 26 weeks' continuous service termination of a FTC can lead to a claim of unfair dismissal. For unfair dismissal purposes, the interval between FTCs for the purpose of calculating accrued service remains at 26 weeks.
Qualifying service for fixed term contract employees : (for redundancy purposes only): While, for purposes such as unfair dismissal, service is still treated as being continuous when the interval between successive FTCs is not more than 26 weeks, for the purposes of redundancy only if the interval between successive FTCs exceeds 9 weeks, continuity of service is broken.
Calculation of a week's pay for redundancy and time off for training: The calculation of a week's pay for the purpose of redundancy pay and time off to look for work or arrange training is in accordance with Schedule 1 to the Employment Law 2003 (i.e. the same calculation as is used to determine a week's pay for holiday purposes). This clarifies the calculation when working hours are variable.
Continuous service on re-employment following a redundancy i.e. resetting continuous service to zero: When a redundancy payment is made and the employer (or a new employer who has acquired the business) decides to re-employ that person, then continuity of service is deemed to have been broken and will not count again if that person is subsequently made redundant.
Refusal of suitable alternative employment : If an employee, who might otherwise be made redundant, refuses to accept a reasonable offer of the same or similar, suitable employment to start within 4 weeks of the date of termination of employment, then the employee would not be entitled to a redundancy payment - the role should be in the same capacity and place as the previous role and the other terms and conditions should not differ either wholly or in part.
If there is any variance in either the capacity and place of the terms of conditions do differ (wholly or in part) then this amendment provides for a trial period, and if at the end of this trial period the role is not working out then redundancy payments would still be due.
Collective Consultation : employers are required to consult with elected representatives when a larger number of employees are to be made redundant in a specified period. When an employer proposes to dismiss as redundant 12 or more employees (whether unionised or non-unionised) at one establishment within a capture period of 30 days then the employer is required to consult with elected representatives on behalf of employees. Please see guidance notes.
Protective awards : Employers who fail to consult properly may face a claim for additional compensation, called a "protective award". The claim for such an award, which could be up to an additional 9 weeks' pay to each affected employee, must be made to the Tribunal by the representative(s), or by individual employees if no representatives were appointed.
Exceptions to collective consultation and time off to look for work etc. : These collective consultation requirements (and the right to time off to look for work or arrange training) will not apply to any employee who is employed under a fixed term contract (FTC) of one year or less unless such employee was previously employed under another FTC of one year or less by the same employer and the interval between the two contracts was not more than 9 weeks.
Notifying the Minister: An employer is required to notify the Social Security Minister when proposing 12 or more redundancies at one establishment in a 30 day capture period. The Minister must be advised before any notice is given to employees and/or at least 30 days before the first dismissal takes place, whichever is the earlier date. A draft notification form can be accessed here.