Statutory redundancy pay: What happens if the employee leaves before the end of their notice period?

Andrew Masters

Partner & Head of Employment

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October 19, 2020

Categories Employment Law

Two weeks ago, one of our employees received confirmation that they were being made redundant. Her contract required one month’s notice from either side, but the contract is old and the notice provisions are out of date. She had been employed over 12 years and the contract fell short of the statutory notice that employers are required to give employees when serving notice of termination. We therefore issued her with her 12 weeks’ statutory notice of termination. She will remain on Garden Leave throughout. We provided her with the terms of her redundancy, which was based solely on her statutory entitlement. She has since written to us serving four weeks’ notice as she has secured a new job which she wishes to start as soon as possible.

Q. Is our employee still entitled to their redundancy pay?

There are specific provisions in the Employment Rights Act 1996 to deal with this situation – the short answer is possibly!

  • An employee can serve written counter notice during the “obligatory notice period” the employer must serve. This is the minimum notice period an employer must provide – whether statutory or contractual. In this case it is the 12 week statutory notice, as you have not provided extended notice.
  • If you either accept her notice or do nothing, then the employee will remain entitled to their statutory redundancy payment.
  • There is no clear authority on the length of notice an employee must provide in order to gain this protection. However, she has served her contractual notice, and it is highly likely this would be sufficient to gain the protection required.

If you take the following action, then the employee may forfeit their statutory redundancy payment:

  • Before her 4 week notice period expires, you serve a written notice on her which:
    • Requires her to withdraw her notice and remain in employment until the expiry of the 12 week notice period; and
    • State that unless she does so, you will contest any liability to pay her a statutory redundancy payment in relation to the termination of her employment.

Many employees accept at this stage that they are forfeiting their statutory redundancy pay, in favour of securing new work moving forwards.

However, it is open to the employee to apply to an employment tribunal for an “appropriate payment” (whether that be all of the payment or any portion of the redundancy pay the tribunal thinks fit).

In deciding whether to award any payment, a tribunal will look at a number of factors including: why the employee wanted to leave (and when), whether the conduct of the employer contributed towards this, and the reason why the employer has said no (is it simply to avoid the payment being made, or are they required to work/ complete a handover etc.

In this situation it is possible a tribunal may make an award proportionate to the length of service the employee has served.

This has yet to be tested in the unprecedented ‘covid’ situation, and you should put some thought as to whether you wish to withhold any statutory redundancy payments in this situation.

To withhold redundancy payments during an unprecedented pandemic may leave a nasty taste at the end of the employment relationship, and be bad for employee relations with your remaining staff, and this must be balanced with the obvious cost benefit in difficult times.

If you would like advice on redundancy pay or employment law please contact a member of our Employment team, on 01227 763939.