Redundancy regulations are changing – What it means for your payroll and policies
From 6 April 2024, UK redundancy rules will change, particularly surrounding pregnant employees and those on family-related leave.
The new legislation extends the ‘protected period’ for redundancy to 18 months after the birth or adoption placement, requiring employers to prioritise these employees for suitable alternative employment in case of redundancies.
The financial impact on your business, because of these changes, could be significant too if you must consider making redundancies.
You will likely face higher operational costs as under the rules surrounding maternity or parental leave you must offer them alternative roles, even if someone else might be more qualified for the role.
If you don’t, then you could be challenged legally by the employee that you are trying to make redundant if they can prove that the reason for the redundancy was because they were taking family-related leave.
Therefore, if you intend to make someone in this position redundant, it cannot be related to this or any other protected characteristics during this period. You must be able to evidence this and show that there are no other roles within your organisation that this person can fill.
The tax treatment of redundancy payments, which are tax-free up to £30,000, will also need careful consideration to ensure compliance with HM Revenue & Customs (HMRC).
Adjustments in payroll and HR practices should also be considered, and you will need to update your redundancy policies and consultation process to align with the new rules.
From a purely payroll perspective, these changes make it all the more important to accurately track maternity, adoption, or shared parental leave.
By preparing now, you can ensure that you meet these new requirements, minimise financial risk, and support your employees effectively during these critical life stages.
If you require further guidance or information on payroll changes relating to redundancy, please don’t hesitate to get in touch.
