As we have to pay redundancy for employees whose term exceeds 2 years, are we able to avoid this cost – can we issue contracts for just under 2 years? If contracts are issued purely to avoid the redundancy legislation, would they automatically become unlawful?Posted in : First Tuesday Q&A NI on 2 August 2011
Employees with a least two years' continuous employment are entitled to a statutory redundancy payment if they are dismissed by reason of redundancy. The amount of statutory redundancy pay to which an employee is entitled depends on his or her age, length of service and weekly pay (up to a maximum weekly limit of £400). Employees may also be entitled to contractual redundancy pay, over and above their statutory entitlement.
A contract of employment that is issued for a fixed term of less than two years to avoid the employer having to pay statutory redundancy pay is not unlawful. However, the
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