Continuous Service and Redundancy Payments

With the continuing squeeze on school finances redundancies are regrettably likely to continue to be needed. But it is not uncommon for a school to be in this situation: 1) it makes an employee redundant, 2) it pays redundancy money as compensation for loss of employment to the employee, and then 3) the employee starts work at a different academy/maintained school. Many schools are unaware that there is a statutory Order which may mean that that, although an employee was time-qualified to receive a redundancy payment, the dismissing school did not need to pay the employee any redundancy money in these circumstances.

The Redundancy Payments (Continuity of Employment in Local Government etc) (Modification) Order 1999 (“RMO”) concerns redundancy payments to employees of certain public sector bodies (listed bodies). The order includes Academy Trusts and maintained schools, rendering them ‘associated employers’ for the purpose of redundancy.

If a school employee who has been made redundant receives a job offer from another listed body and starts the new role within four weeks of ending their old job, they are considered to have ‘continuity of service’. There will be no dismissal for redundancy payment purposes, no redundancy payment and continuity of employment will be preserved in the new job. (Where Burgundy Book or equivalent agreements apply it is important to remember that the termination date is not the end of term).

For example, Academy Trust 1 needs to make Mr Smith redundant and Mr Smith’s employment will terminate at the end of the school year (August). In the meantime, Mr Smith gets offered another job at Academy Trust 2, and this job will commence at the start of the new school year (September).

  • Mr Smith is under a notice of redundancy;
  • He has received a new job offer from another ‘listed employer;’ and
  • He will take up the new job offer within 4 weeks of the end of his previous job.

Continuity of service will be preserved and he will not be entitled to his redundancy payment.

However, if Mr Smith’s new employer wants to make him redundant further down the line, it will have to include Mr Smith’s period of employment at the previous school when calculating his redundancy eligibility and payment.

If Mr Smith starts his new job after four weeks have passed from the end of August then continuity of service will be broken – he is entitled to his redundancy payment from the first school but will not be treated as having ‘continuous service’. If he is made redundant again in his new job, the only relevant period of employment will be the current one and the length of service at the previous school will be irrelevant (as continuous service has been broken).

Before making a redundancy payment, the maintained school/academy should ask the employee if he/she has been offered another job with another ‘listed employer’ (e.g. another academy or maintained school) and, if so, whether he/she intends to take it up within four weeks of finishing his/ her current job. This might mean that the RMO applies and a redundancy payment is not required.

The law and practice referred to in this article has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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