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Extended unpaid leave effect on redundancy

Tracy

| 0 Posts

29 Mar, 2017 09:51

Hi All

An employee who has worked for my company for over 7 years took a years extended unpaid leave, 3 years ago.

Our finance department are preparing long term budgets and want to estimate redundancy payments (we are a charity and need to plan use of our reserves to calculate how long we can operate). Should the redundancy be calculated on the full 7 years of employment, or should it be reduced to allow for the year when the employee was away?

During the period of extended leave we employed someone else to fill the role and we weren't certain that the original person would return at the end of their extended leave.....

Many thanks!

Tracy

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  • Samantha

    | 0 Posts

    29 Mar, 2017 10:11

    I'm not 100% sure but would it depend if the person was still employed during the break? If they were then I'd say the redundancy should be calculated on the whole period they were employed.
  • Teresa

    | 0 Posts

    29 Mar, 2017 10:45

    Yes, if their employment continued during the period of unpaid leave (and as it is referred to as unpaid leave, it sounds as though it did), then their redundancy should be calculated on their full 7 years service.

    The only way it would be different would be if you had a clear unpaid leave/career break policy that said that a period of unpaid leave would be excluded for calculation of continuous service for redundancy.
  • Tracy

    | 0 Posts

    29 Mar, 2017 12:01

    In reply to Teresa:

    Thanks, at that time we didn't have any HR support and nothing was specified in the agreement that was made. Or in the resulting basic summary in the staff handbook that any career breaks would be considered by the management committee....
  • David

    | 0 Posts

    29 Mar, 2017 12:12

    In reply to Tracy:

    Hi Tracy

    It surely won't be too cataclysmic an event for the employer even were continuous employment (and rightly, probably) be assumed?
  • Tracy

    | 0 Posts

    29 Mar, 2017 12:18

    In reply to David:

    The only issue will be if we don't budget the right amount to accrue in our reserves :) :)
  • Ray

    | 0 Posts

    29 Mar, 2017 13:38

    In reply to Tracy:

    Tracy
    As others have said, in the absence of anything agreed and recorded to the contrary, employment will be continuous. Long unpaid leave of absence can be something of a minefield if the deal is not clearly recorded.
    As an example, consider death in service benefits. In the event of death during the leave does the family have a right to a lump sum? If yes, does your insurer agree that its included in the cover you have bought? If not, where will thhe money come from?
    There's a good learning opportunity here.....
  • Keith

    | 0 Posts

    29 Mar, 2017 14:54

    In reply to Tracy:

    Its instructive that you (and I assume the organisation) refer to him being on unpaid leave - suggesting that in the organisational consciousness he remained still employed. In the absence of anything to the contrary (and if you didn't issue a new contract/offer etc when it came to an end) then at least for budgetary purposes I would assume 7 years at this stage.