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Extended unpaid leave effect on redundancy

Tracy

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