Archive for the ‘Redundancy Payment’ Category
By Liam - Wednesday, June 18th, 2008
If you are still awake after reading the title of this blog post (and even if you are not), these little used regulations provide a means of employers who offer their employees pensions with a means of dismissing employees by reason of redundancy without making a redundancy payment or with a reduced redundancy payment. In practice, they are only likely to be of significant assistance where the employee has a defined benefit (final salary) pension or a sizeable pension pot in a defined contribution (money purchase) scheme.
The regulations only apply in limited circumstances:
1. Where the employee is entitled to draw his pension (both periodical payments and lump sum) immediately on ceasing to be an employee and the annual pension payable will be equal to or greater than one third of his annual pay, no redundancy pay is due to the employee.
2. Where the employee is entitled to draw his pension (both periodical payments and lump sum) immediately on ceasing to be an employee, his redundancy pay can be reduced by the proportion which the annual value of the pension bears to one-third of that employee’s annual pay.
3. Where an employee is entitled to draw his pension (both periodical payments and lump sum) within 90 weeks of the termination of his employment, his redundancy pay can be reduced by the proportion which the annual value of the pension bears to one-third of that employee’s annual pay providing that for each week that is to elapse between the end of employment and the start of pension payments, the weekly value of the pension is added to the proportion of redundancy pay that is payable. There is a limit of the amount of redundancy pay the employee would receive but for the 1965 Regulations on the total of the redundancy pay and pension pay added together.
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By Philip - Friday, May 16th, 2008
Is an employee entitled to a redundancy payment where a suitable offer of alternative employment has been made. It’s a shame that this area of law is tricky as it involves making decisions about whether to stay with an employer or claim a redundancy payment, either decision potentially having a big financial impact on the employee.
It’s a shame also that sometimes employers cloud the waters by refusing to pay a redundancy payment and applying a rigidly objective test, rather than looking at the issue through the eyes of the particular employee.
In essence there is a two stage test was the offer “suitable,” if so was it unreasonable to turn the offer down?
In practice the issue revolves around whether the test is objective or subjective, in terms of suitability and unreasonabless.
I would urge you to read this case as it sets out the relevant case law and summarises the principles involved.
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By Philip - Monday, March 10th, 2008
For those of you out there wrestling with the issue as to whether an enhanced redundancy payment scheme has become contractual by custom and practice, there is a useful review of the relevant cases here
In summary if a scheme has been regularly used down the years, at different times, and has been communicated then it is likely to become incorporated into the employees’ contracts by custom and practice.
For those of you practising the black arts of personnel practice, it is probably a good idea to vary the means of calculating any enhanced redundancy package for each redundancy exercise this will then break any regular pattern of payment.
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By Sarah - Wednesday, January 30th, 2008
On the 1st February the amount for a week’s pay will increase from £310 to £330 for the cap for statutory redundancy and basic award.
This also means that the cap for Unfair Dismissal claims will rise to £63,000 after the 1st February 2008. Not many get to that level in any event unless the employee has long service and high earnings.
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By Philip - Monday, January 7th, 2008
A protective award is now something of a misnomer following the Susie Radin case.
Where an employer fails to consult where the employer is proposing to make 20+ or 100+ employees redundant, then a Trade Union, an employee representative, or an employee can apply to a Tribunal for a protective award.
Under section 188 where there are more than twenty redundancies but fewer than 99 redundancies then the obligation to consult arises 30 days before the first proposed dismissal by redundancy.
Under section 188 where there are more than 99 redundancies then the obligation to consult arises no later than 90 days before the first proposed dismissal by redundancy.
If you are logical, an employee who is dismissed without collective consultation (where there are fewer than 99 redundancies in total) has missed out on at most a further 30 days pay as proper consultation collectively would have lasted a maximum of 30 days.
Being EU law, a more nuanced approach is taken where the failure by the employer to consult is looked at rather than the loss to the employee caused by that failure. If the failure to consult is total (ie there was no real attempt to consult collectively) then the starting point is a punitive penalty of 90 days protective award.
In the case reported here the Employment Appeal Tribunal awarded 90 days protective award in a case involving fewer than 99 redundancies, thus, arguably making the affected employees better off financially through their employer’s default. Had proper consultation taken place they would have gained a maximum of a further 30 days pay.
Perhaps the protective award should be re-named the punitive award as this seems to be a closer and more accurate description.
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By Liam - Thursday, January 3rd, 2008
For dismissals occurring on or after 1 February 2008, the maximum compensatory award for Unfair Dismissal is set to increase to £63,000.00 and the cap on a week’s pay (used to calculate Statutory Redundancy Pay and the Basic Award for Unfair Dismissal for those who earn in excess of the cap) is set to increase to £330.00.
Various other limits are also increasing, such as the rate for guarantee pay and the minimum amount for Basic Awards in certain types of case.
Full details can be found here.
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By Philip - Tuesday, October 30th, 2007
The application of employment law in the workplace can often be reduced to a series of steps or processes. In a redundancy , an employer needs to consult properly, ensure pooling and selection is carried out correctly, and take steps to ensure the issue of alternative employment is addressed, as well as following the statutory dismissal procedure.
In the case reported here, the Scottish EAT upheld a decision not to award compensation in a case concerning an unfair redundancy dismissal. The Tribunal found the dismissal unfair for failing to follow the statutory dismissal procedure but awarded no compensation on the basis his employment was bound to have ended had a proper procedure been followed.
Central to the finding of no compensation was the fact that the Claimant, prior to being dismissed, had been offered alternative employment albeit at a lower salary and with a probationary period.
As the contract on which the Claimant was working had come to an end, the conclusion was inevitable.
In cases where there is a clear need for redundancies, and no issue of selection, then the issue of alternative employment is at centre stage.
Where the employer can show, as in this case, that they had addressed their mind to the problem of alternative employment and come up with an offer, then the employee’s prospects of being awarded substantial compensation are slim as effectively by declining the offer they have elected to leave employment.
There is scope for confusion as the issue of alternative employment can become conflated with the issue of suitable alternative employment. Where the employee unreasonably rejects suitable alternative employment, his right to a redundancy payment may evaporate. That issue is different to the employer’s need in unfair dismissal cases of bringing to the affected employee’s attention any alternative employment. If alternative employment has not been addressed either at all or adequately a Tribunal can then make a finding that there was, say, a 50% chance of retaining employment, and the compensatory award is predicated on that basis.
Making an offer of alternative employment can close down the Tribunal’s options as the Tribunal will know that such an offer was made and rejected.
In the case under discussion,as the offer of alternative employment made by the employer was crucial in the Tribunal’s determination of zero compensation, the question remains, why do so few employers make offers of alternative employment to redundant employees when redundancies are made?
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By Philip - Tuesday, September 25th, 2007
In redundancy situations, the 4 week trial period is a tricky section of law to navigate through.
Put simply there is a statutory right to a 4 week trial period if a suitable offer of employment has been made within 4 weeks of a contract coming to an end through redundancy. If accepted, the employee and the employer have 4 weeks to declare whether the trial is a success or not. If it is not a success the employee defaults back to redundancy and receives the redundancy payment that would have been received had the offer of alternative employment not been accepted.
What causes some difficulty is what the situation is where the employee declares the trial unsuccessful outside the four week trial period.
The case reported here gives an unequivocal answer, not even a shopping trip to the stores pictured above will save the redundancy payment. If you want to declare the trial unsuccesful you must do it within the statutory 28 days of the trial period. If you are outside that time frame, tough.
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By Philip - Monday, January 29th, 2007
Just a reminder that redundancy pay goes up to £310.00 on Thursday. Unfair dismissal compensation up to £60k + All the information is here.
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By Philip - Friday, November 24th, 2006
The Government has just announced an inflation busting increase to statutory redundancy payments up from £290.00 to £310.00, and unfair dismissal compensation up from £58,400 to £60,600.00, effective from 1 February 2007. All the info is here http://www.opsi.gov.uk/si/si2006/20063045.htm
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