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 3 December 2013
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 pay (subject up to a maximum £13,500).
Employees may also be entitled to contractual redundancy pay, over and above statutory redundancy pay. 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, if the employee is employed for more than one year, the employer will not be able to avoid the unfair dismissal
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Back to Q&A's This article is correct at 02/09/2015
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.