Can I Re-Employ Someone I Made Redundant?

by
February 23, 2016
Can I Re-Employ Someone I Made Redundant?

We recently published some advice for employers struggling with letting staff go: How to Fire Somebody Respectfully in 10 Easy Steps.

Part of this article addressed some of the challenges associated with making redundancies. But what it didn’t cover, is what happens if business recovers and you want to re-hire somebody who you had to let go.

Can You Re-Hire Somebody You Made Redundant?

The short answer is yes. There is no restriction on an employer re-employing somebody who has been made redundant.

In fact, not only is it perfectly acceptable in the eyes of the law, but in many ways, it’s a very good idea! Think about it – if you had to reduce your headcount because your business was struggling, but then you managed to re-build your position in the market, which option makes more sense: Hiring and training a whole new wave of fresh employees; or re-hiring the people who already have the skills and already know your business?

Of course, there are issues you would need to consider if re-hiring people after redundancy.

Common Issues Re-Employing People You Made Redundant

Here are some things to watch out for if you’re thinking about re-hiring employees who you previously made redundant:

  • – In the case of non-voluntary redundancy, your ex-employees may not be in the right mood to come back and work for you
  • – Unless you are re-hiring on the basis of “continuity of employment” (i.e. you are treating it as though the redundancy was never made), then the re-employed person is not required to return any statutory redundancy payment
  • – If you make a person redundant and then immediately re-hire them, this may look suspicious and you may be investigated by HMRC (in case you are trying to exploit the tax-free status of a redundancy payment).

Tips for Re-Hiring Ex-Employees

Here are a few tips and bits of best-practice advice if you are considering re-hiring people you have made redundant. Following these tips might help you minimise the risk of common problems that arise when re-hiring ex-employees.

  1. Create a One-Week Break. Making sure you leave at least one week between an employee’s redundancy date and the date they return to work is a good way of establishing a clear cut if you wish to avoid continuity and the risks associated with it
  2. Check for Exceptions to the One-Week Rule. Simply leaving a single week between redundancy and re-hire is not always enough to avoid continuity of employment. For example, a temporary cessation of work can last longer than a week while keeping continuity in tact.
  3. Record the Reasons for Redundancy and Re-Hire. As mentioned previously, re-hiring somebody you recently made redundant could attract suspicion from HM Revenue & Customs. Assuming your reasons for making the redundancy and subsequent re-hire were genuine, you have nothing to worry about – but make sure you record these reasons so that you have ammunition for defending potential future claims from staff or HMRC.
  4. Ensure New Reward Packages are Consistent. Re-hiring somebody with a radically different salary or benefits package might not be a great idea. It can work both ways – for example, a significant drop in reward could be seen as you using a redundancy as a way of resetting staff loyalty bonuses or similar schemes; whereas a significant increase could be seen as unfair by staff who remained employed in similar roles, but whose rewards did not change.

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