Q: We have made an employee redundant. He was with us for ten years, but for the last 18 months worked part-time. We based his redundancy pay on the last 18 months. Is this correct?
Dec 08 2009
Answered by: Peter Done Ask a question
A significant factor in determining the answer to this question depends on the agreement between you and the employee over the transition to part-time work from full-time work, and tribunal case law has helped to shape opinion.
If the arrangement to work part-time was a genuine and formal change to the employee’s terms and conditions, then you are correct to base your redundancy pay calculation on the earnings in his most recent terms and conditions.
However, if the change is not a formal variation of contract, for example, if an employer places employees on ‘emergency’ short time work because of a downturn in demand, a tribunal would be likely to find that an employee’s redundancy pay should be based on the earnings from their full-time hours. Even if the short time work lasted for a substantial time period, even up to a couple of years, it is still unlikely that a tribunal would determine that that arrangement constitutes a formal variation of contract, and redundancy pay would still be based on previous full-time hours.
Getting it wrong could mean a considerable difference in what is considered ‘a week’s pay’ for an employee in relation to redundancy pay so it is important to understand the calculation.
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