Q&A on redundancy
Employers must follow certain procedures regarding informing and consulting with employees when they are planning redundancies. Employees, including nannies, are entitled to receive a statutory redundancy payment when they have worked for the same employer for two years or more. The amount they are entitled to depends on age and length of service (see below for further information).
What is a redundancy?
A potential redundancy situation may occur for a nanny when:
- one of the parents is returning to the home full-time, or
- the family is moving away from the area, or
- the child(ren) are at school or nursery so that there is no need/a diminished need for a nanny, or
- the working pattern of one of the parents changes, i.e. they are made redundant or they increase/decrease their hours.
My nanny’s contract of employment states that one month’s notice must be given. Do I still need to follow the redundancy procedures?
Yes, it is advisable to do so. The notice clause in the contract of employment simply specifies the amount of notice which must be given. It does not address the reason for dismissal.
How long does the process take?
Where a single employee is to be made redundant, there is no specified timescale. However, it is advisable to allow at least 48 hours between giving your nanny the letter warning of redundancy and the first consultation meeting.
Do I require a selection process?
If an employee holding a unique post is to be made redundant, such as a nanny, no selection process is required.
What will the consultation process involve?
You should write to your nanny to let her know that her position is at risk of redundancy and invite her to a consultation meeting. Employees have a right to be accompanied to the meeting. At the consultation meeting you should confirm the reasons for making the nanny’s role redundant and inform her of any alternative positions that are available. After the consultation is complete, you should confirm in writing that the position is redundant (Nannytax Legal can provide specimen letters on request).
How much will I have to pay as a redundancy payment?
Employees qualify for Statutory Redundancy Pay when they have been with the same employer for a minimum of two years. The statutory payment is calculated according to age, length of service and salary. The length of service is calculated for complete years only, as follows:
- 0.5 weeks’ pay for every year, where the employee is aged 21 or less at redundancy;
- 1 weeks’ pay for every year, where the employee is aged 22 to 40 at redundancy;
- 1.5 weeks’ pay for every year, where the employee is aged 41+ at redundancy;
Statutory payments are subject to a maximum payment, the rate of which changes annually (please have a look at our current rates and thresholds page to see the up-to-date rates). Statutory redundancy payments which are below £30,000 are exempt from Income Tax.
Can I recruit someone else after the redundancy?
If your circumstances change and you do need to recruit, we would advise that you seek advice first. If you are recruiting soon after the redundancy, you should offer the job to the previous nanny first.
Can my nanny claim unfair dismissal if I make her redundant?
Employers should note that a redundancy is a dismissal and employees who started employment before 6th April 2012 and have been employed by the same employer for one year or more may claim unfair dismissal in a redundancy situation. For employees who started work on or after 6th April 2012, there is a two year qualifying period for unfair dismissal.
Can an employee leave before the end of their notice period?
If an employee asks to leave earlier than their notice period under redundancy they are only entitled to receive pay up to their last working day. The employee will continue to be entitled to statutory redundancy pay.
Can I dismiss an employee on maternity leave?
Yes. It is possible to dismiss an employee on the grounds of redundancy who are currently on maternity leave. However, please note that where an employee becomes redundant during maternity leave they are entitled to be considered for suitable alternative employment in preference to other employees.