Law change puts jobs at risk

Monday, January 12, 2009

More jobs will be lost this month as a result of changes to minimum redundancy payments, it has been claimed.

As from February 1, the statutory rate that employers must pay redundant staff will go up for all workers and it is feared that some employers will act early in order to save money.

Law firm Mace & Jones is predicting a sharp increase in redundancies this month as a result of the measures. Currently, all employees are entitled to a redundancy payment provided that they have performed two years continuous service.

Redundancy payments are staggered according to the age of the employee being made redundant and the length of services The statutory rate is up to £330 per week unless the staff member is paid less, but this will rise to £350 at the start of next month. Employees younger than 22 receive half a week’s pay for each year of employment, those between 22 and 41 get one week and those over 41 get one and a half.

Mark Hatfield, of Mace & Jones, said that this combined with a poor Christmas trading period is going to lead to more job losses.

“We have seen employers who have done their best to keep staff over Christmas but who are now examining their balance sheets and seeing that job losses are inevitable to balance books,” he said.

“The reality is that this is not a process to rush into despite financial pressures. Employers can walk into a minefield of costly and time consuming problems if they mis-manage the redundancy process.”