Redundancy and notice payments

What is redundancy?

Redundancy is a special form of dismissal which happens when an employer needs to reduce the size of its workforce.

Examples may include:

• You are moving to residential care and you no longer need a PA
• Your care package has been reviewed and you no longer receive Direct Payments to employ a PA
• Your care package has been reviewed and your PA does not have the skills to meet the requirements of the new role
• You are moving house and therefore changing the location of the job
• Also, you may be reading this because you are acting on behalf of a Direct Payment (DP) recipient who has died and therefore the job has ceased to exist. Redundancy is very different from dismissal for a reason relating to the poor conduct or capability of a PA which may follow after a disciplinary process.

For a redundancy to be genuine, the job that the PA does must disappear. You can still take on new PAs but not to do the work the redundant PA was doing.

Deciding who will be made redundant

If you are considering making one of more of your PAs redundant you can contact Independent Lives or your Insurance provider for support.

If not all your PAs are going to be made redundant, then you will need to decide which PAs are candidates for redundancy, this is your ‘selection pool’. Your selection criteria must be fair and non-discriminatory. Fair criteria could include:

• standard of work
• experience, skills, and aptitude for work
• attendance records – you must not include absences for maternity, ordinary  paternity, additional paternity or adoption leave
• disciplinary records

Any criteria you use will need supporting evidence e.g. Supervision notes, notes from meetings, CV and application forms, accurate, fully completed timesheets etc.

To avoid the possibility of unlawfully discriminating against anyone in the selection pool, you should use more than one criterion where possible.

You should seek advice from your Insurance company when choosing your selection criteria to ensure that the criteria you have chosen is not deemed unfair as your PA will be able to claim for unfair dismissal.

• You must notify all PAs who you are considering making redundant.
• Schedule individual meetings (‘consultations’) with each of these PAs to explain that you are considering making redundancies and that they are in the selection pool. You can use our employer template 6.2a Letter inviting PA to individual consultation meeting.
• Explain the selection criteria that you will be using to each of the PAs during their consultation meeting.
• If it is appropriate, you can ask your employees if they are willing to take voluntary redundancy and select from those who volunteer.

Advantages of voluntary redundancy:

• It is less demoralising for your PAs than compulsory redundancy
• It can be less disruptive
• Less work is needed to check that redundancy selection criteria are fair

Disadvantages of voluntary redundancy:

• It is often more expensive: longer-serving PAs requiring higher redundancy payments tend to volunteer
• You may wish to offer enhanced redundancy payments to make redundancy more attractive which you may not be able to do
• You may get more volunteers than needed and those not ultimately selected for redundancy may then react negatively
• You could end up with an imbalance in the skills and experience of remaining PAs
• If you need to make compulsory redundancies, apply the selection criteria fairly and objectively.

If any of your PA’s that are being made redundant are on Maternity Leave please speak to your Insurance Provider or Independent Lives before any action is taken.

Notice of termination

Once you have decided which PAs you are making redundant you must issue them with a notice of termination letter to let them know they are being made redundant.

This letter must contain the following details:

• the length of their notice period
• the date their employment will end
• whether you wish them to work during their notice period and if not, detailing that you will be making a payment in lieu of notice
• whether or not they are entitled to a statutory redundancy payment and if so, how much it will be and how it was calculated

It is also a good idea to thank the PA for their work and offer to provide them with references in this letter.

If you wish you can use employer templates 6.2(b) Notice of termination letter (redundancy) 6.2(c) Notice of termination letter (following death of an employer) or 6.2(d) Notice of termination Letter (following death of the DP customer not employer for these purposes.

Other redundancy rights

PAs under notice of redundancy also have the right to:

• be offered suitable alternative employment wherever possible.
• have a trial period in the alternative employment without losing their right to a statutory redundancy payment.
• reasonable time off on full pay for job-hunting or to arrange training.
• not be unfairly selected for redundancy.

Statutory redundancy payments (SRPs)

Any PA with two or more years of continuous service, who is being made redundant, has the right to:

• a statutory redundancy payment
• a written statement setting out the payment amount and how it was calculated. You can contact Independent Lives for help to create this.

You must make the payment when or very soon after you dismiss the PA. You will usually make this payment along with their final wage payment.

Redundancy pay is not taxable if it is less than £30,000. Nor will the payment be subject to National Insurance.  Other termination payments, like payment in lieu of a holiday or notice, must have tax and National Insurance deducted.

Calculating SRP

The SRP due to the PA is based on the PA’s age:

Amount of continuous employment

To qualify for a SRP the PA must have a minimum of two years continuous employment with you. The length of service for SRP is capped at 20 years.

Continuity of employment is not broken by:

• sick, maternity, paternity, adoption or parental leave
• holidays (annual leave)

Where a PA has worked an incomplete year you should round down e.g. two years and seven months = two years for the purposes of calculating their SRP.

Their length of continuous employment should be calculated to include their notice period.

Weekly gross pay

This is pay that has not been subject to tax or National Insurance deductions.

This is the PA’s gross weekly pay on the day they were given notice or the day the job ended if they were not given notice. This is called the ‘calculation date’.

If your PA works varying hours each week, you should calculate the average over the past 12 weeks.

For an SRP there is a maximum of £571 per week. If your PA earns more than this the amount is capped at £571.

Calculating SRP online

You can calculate the SRP due to your PAs by clicking on the following link: https://www.gov.uk/calculate-your-redundancy-pay

You can also speak with an Independent Lives adviser who will be able to help you calculate the SRP due to your PA. To speak to an adviser please call our Information & Advice Service on 01903 219482.

Notice Payments

Notice pay is calculated according to length of service as follows:

During the probationary period :

• One weeks’ notice will be given by the employer.

After the probationary period:

• Employees with six months – two years’ service will be entitled to two weeks’ notice.
• Employees who have worked for more than two years will receive one weeks’ notice for each full year of employment, up to a maximum of 12 weeks’ notice.

You can allow PAs to leave earlier than the planned leaving date, i.e. without notice, by offering payment in lieu of notice. When you make payments in lieu of notice, you have to pay your PA the basic pay they would have got during the notice period and these payments will be subject to deductions for tax and National Insurance contributions.

Frustration of Contract on death of employer

In circumstances where the direct payment recipient has passed away and they were the employer, then this is classed as ‘Frustration of Contract’ under Employment Law.  In this circumstance PAs are not entitled to notice pay, however, they are still entitled to a Statutory Redundancy Payment (SRP) if they meet the eligibility criteria.  If the direct payment recipient was not the employer, then PAs are entitled to notice pay as shown above.