Redundency payment calculations

[ThingsBehindTheSun]

Nothing has happened yet, but my gut feeling tells me this may be a possibility in the next 12 months if things don't pickup.

I am 52 and have been with the company for 8 years. From looking at the government website, if they deicde to pay me the minimum which would be £719 times 12 (8 years, 1.5 for each year as I am over 41)

= £8,628 (big wowsers)

I really think they are going to do this, infact I don't see why any company wouldn't?

I also understand they have to give me one weeks notice for every year I have worked there. Would I have to work this notice, or would they just pay me up for the 8 weeks? Knowing my company, they wouldn't do anything unless they legally have to.

Just interested to find out what the worst case scenario would be.

[Gargamel]

Normally companies will give you the Payment in Lieu of notice - it is usually that companies feel very uncomfortable having employees around that are being let go. Its awkward all round. Plus I imagine your motivation to go in is going to be on the floor.

Most places - tell you its all over and give you the letter and send you home. That's normal process.

Make sure they also pay your benefits/holiday days etc up until your last day. Obviously your redundancy pay is tax free up to 30k.

[davek_964]

ThingsBehindTheSun said:

....if they deicde to pay me the minimum which would be £719 times 12 (8 years, 1.5 for each year as I am over 41)

= £8,628 (big wowsers)

I really think they are going to do this, infact I don't see why any company wouldn't?

Plenty don't.
My last redundancy paid 4 weeks full pay per year. My current employer made a few redundancies a year or two back and I believe they paid a full month per year.

I think it depends a bit on industry, and obviously how broke the company is.

[SunsetZed]

You might also want to Google redundancy insurance as well.

Having some in place can help both mentally and financially if the worst does happen. If it's financially worth it for you only you can decide but personally I don't begrudge the payments I make each month as I remember how much more relaxed I felt when I was told I was being made redundant even though I didn't end up claiming on it.

[Panamax]

If 20 or more employees are at risk there has to be a 90 day consultation period. Does that apply in your situation?

What does your contract of employment say about (a) notice period, (b) pay in lieu, (c) gardening leave (their right to tell you to stay at home) etc?

Depending how the numbers work you'll want to get as much tax free as possible. At your age this might well include topping up pension instead of wanting immediate cash.

[omniflow]

You've calculated the statutory minimum, but as has already been said many companies pay more than this. 2, 3 or 4 weeks of your current pensionable salary is quite common. If the company has made people redundant in the past in might be worth some discrete enquiries to find out what they paid to those people. I've been made redundant 3 times and each time it was either 4 weeks / year or 1 month / year - with a cap of 18 years service.

The cynic in me thinks that companies do this so they can take shortcuts in the redundancy process. Certainly on the 2 occasions when I consulted an employment lawyer to review my compromise agreement the lawyer identified several mis-steps in the process but advised me to take the money on offer as it was more than I would be awarded by an employment tribunal.

Redundancy insurance can be worth it. I took out a policy when things started to look like they might go bad and successfully claimed after paying just 4 premiums. The downside is that you have to go to the jobcentre every 2 weeks to get a form stamped before your insurance will pay you.

There is absolutely no point in fighting anything - just go with flow - what will happen, will happen regardless of what you do. However, you may have some luck in adjusting the timing of the payment - e.g. get the redundancy paid in April rather than March so you're into the next tax year.

The first £30K is tax free. If you want to lock the money up until you retire and then pay tax on it when you get it back, then shovel everything over that (if there is any) into your pension. Otherwise pay the tax now and use the money to live.

[alscar]

SunsetZed said:

You might also want to Google redundancy insurance as well.

Having some in place can help both mentally and financially if the worst does happen. If it's financially worth it for you only you can decide but personally I don't begrudge the payments I make each month as I remember how much more relaxed I felt when I was told I was being made redundant even though I didn't end up claiming on it.

Sensible advice.
Also just be aware of the small print ie if known to be on the cards Insurers can and will check and may not pay out.
There will also be ( usually ) an excess or grace period ( usually self selected ) which can reduce the premiums but also means potentially no payout for a few weeks/ months.

[ThingsBehindTheSun]

Nothing has been mentioned about redundency so far, but I have seen them out source other teams in the company and then make 80% of that team redundant, keeping the 20% on to manage the outsource team.

I have a sneaky feeling the same thing will happen to our team, especially if multiple members in the team have no paid consultancy work.

As others have said, nothing I can do about it, and if I did get four weeks per year I wouldn't be too upset about it.

The insurance is a good idea, might have a look.

[skeeterm5]

If your job is outsourced then TUPE will most likely apply. If this is the case your company may offer a compromise agreement rather than redundancy which should be at more favourable terms.

[craigjm]

Panamax said:

If 20 or more employees are at risk there has to be a 90 day consultation period.

This is not the case anymore. Yes the 20 or more employees is correct that they then have to run a consultation period but it has not been 90 days since way back in 2013. The rule is 30 days or 45 days if its over 100.

[craigjm]

omniflow said:

The first £30K is tax free.

This is not entirely true. It all depends on what is included in the payment. Some of it can be considered earnings and therefore tax and NI is due. There is no blanket "first 30k of a redundancy is tax free". If they have to you for holiday not taken, bonuses and any pay in lieu of notice included in that payment these are subject to tax and NI. There are a whole host of other things too but they are the main ones. You will also pay tax if PENP applies.

[craigjm]

SunsetZed said:

You might also want to Google redundancy insurance as well.

Having some in place can help both mentally and financially if the worst does happen. If it's financially worth it for you only you can decide but personally I don't begrudge the payments I make each month as I remember how much more relaxed I felt when I was told I was being made redundant even though I didn't end up claiming on it.

Yes but at this point you could be buying a policy that is not worth the paper it is written on. If the company has made redundancies recently then you wouldnt be covered by most policies and if one suspects that redundancies are coming soon then its highly likely that they would use the lack of disclosure clause to avoid paying.

[omniflow]

craigjm said:

Yes but at this point you could be buying a policy that is not worth the paper it is written on. If the company has made redundancies recently then you wouldnt be covered by most policies and if one suspects that redundancies are coming soon then its highly likely that they would use the lack of disclosure clause to avoid paying.

In my experience the insurance company sends your ex-employer a questionnaire, mainly around the process and the timings. If your ex-employer is on the ball then they will answer these questions as if they had followed the redundancy process to the letter - e.g. you, the employee had absolutely no idea about any redundancies until the date it was officially announced.

I paid 4 * £60 in premiums before a successful claim and then another 12 * £60 in premiums for the duration of my claim. I was paid £2,500 / month for 12 months. The most challenging part of this was my 6 monthly review at the job centre where the bloke tried to get me to apply for a job paying £20K / year. He was a bit put out when I told him it was less than I was getting from my insurance policy.

[Panamax]

craigjm said:

This is not the case anymore. Yes the 20 or more employees is correct that they then have to run a consultation period but it has not been 90 days since way back in 2013. The rule is 30 days or 45 days if its over 100.

Thanks for the timing update. The key point is that it's risky for an employer to sidestep consultation if it's supposed to take place. That consultation gives the employees clear warning that something might be headed their way as opposed to speculation. I'm not up to date with the remedies for failure to consultat but I'm pretty sure there would be some extra cash involved.

[ThingsBehindTheSun]

Just a quick question/update. Two members of the South African team have been integrated into our team and I can see they are both being given chargeable work to do.

I on the other hand am looking at a currently completely empty diary for the rest of the year. I have seen this coming for months, but when I have raised this worry on my 1 to 1s I am told "don't worry, they will only be working on South African" clients work which I know is untrue.

So it seems they are giving them work and expecting the rest of the team to help them when they get stuck, whilst giving me no work to do.

I can see the inevitable call with HR where they tell me that due to lack of work coming in they are unfortunately going to have to make me redundant. Here is your 12 times £719 statutory minimum and we expect you to hang around for your notice period where we may or may not find you things to do, probably mopping up the mess when things go wrong or overrun.

I will add that I am probably one of the highest paid consultants in the team, which would be one of the main criterias for getting rid of me.

I assume I should currently be collecting evidence that people in South Africa are being given work in preference to me and I should be thinking about my "I am not going quietly" defence. I know if they want to get rid of me they will, but I assume I should be kicking up a fuss and ensuring that I can get them to give me as much as possible to go quietly?

I assume redundancy will include some amount of money for me to speak to an employment lawyer?

[SoliD]

You'll be given a certain amount to engage a solicitor from the company, as they will need to ensure the terms are legally correct.

[SunsetZed]

SoliD said:

You'll be given a certain amount to engage a solicitor from the company, as they will need to ensure the terms are legally correct.

Possibly including some very basic ones. I had a previous employer who was unable to use find and replace so used my colleagues name instead of mine in multiple places in my redundancy paperwork!

[craigjm]

ThingsBehindTheSun said:

I assume I should currently be collecting evidence that people in South Africa are being given work in preference to me and I should be thinking about my "I am not going quietly" defence. I know if they want to get rid of me they will, but I assume I should be kicking up a fuss and ensuring that I can get them to give me as much as possible to go quietly?

Dont bother. If you have been selected you have been selected. No point pissing anyone off and all that not going quietly stuff. Although people here often talk like that I would say to you do the following.....

Calculate what you think you will get statutory and in lieu of notice then see what they offer you. If you think the offer is low, say so and make a sensible suggestion and then just negotiate and come to an agreement like adults. Include any bonus upcoming and ask for some outplacement support costs to help you brush up to find a new role and maybe the cost of a training course that would benefit you.

The thing is with fighting is that you never really get anywhere and all you do is make potential enemies and you never know where you will meet people again so its always best to leave any company on a positive note.

Edit to add.... question about legal support. You will normally be given a nominal amount enough to have the agreement checked. Its very rare that anytthing is wrong in these situations though