Fatman

A friend of mine is, I think, being made redundant. Her boss sat her down last week and said something along the lines of "business isn't going well, we're not going to be able to keep you on". That was backed up in writing this week with a letter saying (not verbatim); "due to the state of the business we're not going to be able to keep you, please consider this your one months' notice".

The thing that's puzzling me is, the word "redundancy" hasn't been mentioned. Why would they shy away from this? She's a permanent member of staff of about 18 months service. As far as I understand it, there's no compulsory redundancy payment in that situation (under 2 years service).

Surely there's only a few ways a contract of employment can be broken...
- employee resigns
- employee dies
- employee is sacked
- employee is made redundant
- business folds (redundancy again?)

...I don't see how an employee can be dismissed (bearing in mind that the condition of the business was already cited) -- and yet it isn't termed as redundancy. Thoughts...?

Diablo

First thought was constructive dismissal, but she's been told she has a months notice so its redundancy. She won't be entitled to a redundancy payment, as you say, but she is entitled to be advised of the reasons for her choice over her colleagues - the selection process.

I suspect the word hasn't been mentioned because the employer is ignorant of the position. Just because you don't qualify for a redundancy payment doesn't mean its not redundancy.

Your friend needs to consider how much of a fuss she wishes to create.

D

Fatman

Yes, I suppose it's possible that they just haven't had to lay anyone off before. It's a small business (<10 heads, I'd guess). She won't get a payoff but, if it were me, I'd like a record that I was being made redundant (rather than quitting or being sacked).

MattW

Planning

1. The employer must draw up a plan to decide who will be kept on and who will be made redundant and why.

2. The employer must inform the workforce as soon as possible, so they have a chance to put forward alternatives or apply for other jobs with the current employer or with another employer.

3. The employer should consider any proposals that the employees or their representatives make as an alternative to redundancy.

4. The employer should decide as soon as possible how many employees will be made redundant.



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Consulting
1. The employer must consult the employee’s representatives (this includes Unions) if 20 or more people are going to be made redundant.

2. The employer must discuss alternatives to redundancy and the selection criteria for redundancy.

3. The employer can carry on the redundancy procedures whilst the consultation is going on (for example, sending out redundancy notices to the affected employees). However, the employer should not issue redundancy notices before he has had a chance to consult properly.

4. If the employer does not consult properly the Employment Tribunal can make the employer pay a “Protective Award”. This states that the employer must keep the employees on and must pay their wages for a certain amount of time (whether they actually remain working or not). The length of this Protective Award period is usually fairly short.



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Department of Trade and Industry
The employer must consult the Department of Trade and Industry (D.T.I.) 30 days before dismissal if they are going to make between 20 - 99 employees redundant. Or 90 days if over 100 are to be dismissed. One of the reasons for this is so that the DTI can compile accurate employment statistics and records.


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Selection Procedure
1. If a group of employees are selected for redundancy the employer must show what type of work they do and why the demand for that work has decreased or stopped completely.

2. If the amount of work has decreased so that only some of the employees within a group are selected, the employer must show how they picked those unlucky ones.

3. The employer must show in detail the selection procedure and criteria. This can range from "last in first out" to a scoring system, with the employer giving points for certain job skills.

4. The selection criteria should not be based upon an individual’s view of each employee (for example, what the personnel manager thinks).

5. Once the criteria has been agreed it should be kept to.

6. The employer should also try and agree the selection criteria with the employees’ representatives or Union.

The selection procedure and criteria cannot be based upon unfair reasons such as:
Trade Union membership or activity.

If the selection criteria is based upon Race, Disability or Sex the affected employee can claim under Unfair Dismissal or the relevant discrimination law.



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Consulting Each Employee
The employer must consult each affected employee before dismissal notices are handed out, so that there is a chance of real consultation and time for the employee to respond. The selected group may change due to the consultation process.
The consultation must involve the following:

1. Why their type of job is under threat.

2. Explain why according to the selection criteria this employee may be chosen for redundancy. (They have not been selected yet as the dismissal notices have yet to be sent out).

3. The employee should be given a couple of days to respond after being told.

4. The employer should consider any views or opinions expressed by the employee.

5. Both the employer and employee should consider any alternative work that the employee could do or any ways in which the employee could stay in their current job.

6. Once the selection has been finally decided the employer should have a second interview with each of the effected employees. This is when the employer can actually hand out the dismissal notices.



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Other Work
The employer can offer the employee other work instead of making them redundant. The employee has a choice whether to accept it or not. Though if the employee unreasonably refuses the offer the employer may avoid paying them redundancy pay.
The employer can offer the employee a job identical to their current job or a job with similar skills. The job must have similar pay, conditions and skill requirements.

Any refusal is looked at from each individual employee’s view. Some employees may accept the offer others for their own personal reasons may not. For example, the new job may require more travelling for some employees than their current job, but less for others.

The alternative job offer must be made before the current job ends and the start date must be no more than 4 weeks after the old job ended.

The first 4 weeks of the new job will be a trial period. During this time or when the 4 weeks have finished the employee can still leave the job and claim dismissal and redundancy pay. The employer and employee can agree a longer trial period for the new job if they want, the 4 weeks is the minimum period.

An employer may claim that a dismissal is because of reorganisation, in order to avoid making a redundancy payment. An employer can legitimately dismiss an employee if he or she will not accept a change in terms and conditions resulting from a reorganisation if the employer can show such changes are necessary to the continued management and efficiency of the business, and the employee's refusal to "fit in" justifies the dismissal.

It is sufficient for an employer to show the reorganisation is for sound business reasons, which require a change in an employee's terms and conditions.

NACRO

If she wants to claim benefits when looking for a new job then the wording of the letter from the employer could be of great importance.


If they regard her as intentionally unemployed- and they will try, then she won't get a penny for some months.

GaryCat

There is another way of being made redundant - your employer gives you a "Compensation Agreement" which is effectively buying your contract of employment back off you. So you get to agree the value of your contract between you and when it is signed you lose all your normal rights. The payment will be taxed and you may not be able to claim benefits.

Markus

what's the usual rule with regards to redundancy payments? I've worked for the same company for 10 years, so what would I get?

As for redundancy

Brit_in_Japan

1 weeks pay per year employed IIRC

workshy_fopp

Any ideas if a normal redundancy payment is taxed or if so at what level? Might make myself redundant as part of a cunning plan.

P1Fanatic

Its also important in reference to payment protection for things like mortgages etc. I would definetly get the wording changed to state redundancy.

Simon.

hades

IIRC, the first £30k of a redundancy payment is tax free, after that it counts as taxed income, so is charged at whatever your marginal rate is.

As a result, it can be better to be made redundant in April than in March, as any taxable redundancy in March is added to your whole Financial Year's worth of earnings for tax purposes. In April, you will have little or no taxable earnings already accrued for that FY. That's probably not very clear, but hopefully you get what I mean?

If your cunning plan is to make yourself redundant from your own company regularly, and then re-join soon after, don't expect the tax man to congratulate you on your cleverness and say "here, keep the tax on all those earnings"

john_s

iTrader: (1)

Markus, the statutory minimum is (as Brit in Japan said) one week per year, up to a maximum of 12 weeks.

Fatman, they may not be terming it as redundancy with her being employed for less than the 2 years needed to trigger a redundancy payment.

John.

fast bloke

The word 'redundany' is shunned by most comapnies. The letter only needs to show that it was the employers decision.

Redundany payments are one weeks salary per year of empolyment up to a maximum of £250.00 per week - so 10 years service will guarantee you £2.5 k. Any additional amount is up to the employer

An employee with less than two years service has no entitlement to redundancy pay

The first 30k of a settlement in non taxable - If you get more than 30k the remainder is added to your taxable pay for that FY and taxed accordingly

imlach

We're all going through another round of redundancy.

Our company gives 1 months pay for every year of service (maximum 12 months pay). This is quite generous, which is why I'm considering it (I've been there 9 years). Given it is tax free up to £30k, it is effectively more than a years salary for me. If you can get remployed straight away, it's a nice bonus in the bank.

MattW

Same here.
We get 1 month per year plus 3 months bonus under 40 years old. over 40 the bonus is higher 7 months I think. Max service is 20 years for entitlement.

There are gonna be a lot of experienced people leaving soon.

workshy_fopp

I don't see what the Revenue can say, it's not a regular occurance. Had a company for 6/7 years which I am now folding. Just looking for the best way out. So if you take say, 30k redundancy on the 1st. April 2004 , does that mean everything you earn in the coming year will be at top rate tax or is it a clean slate? Apologies for hijacking this thread badly

fast bloke

If you take 30k at any time it is non taxable - If you take 40k, the other 10k will be added to your income for that tax year to assess liability. If you want to do it on a tax year basis wait until 6th April

imlach

The £30k tax free part of your entitlement is just that.
ie, your normal tax thresholds are unchanged by the £30k portion.

Therefore, your "income" for the next financial year could be circa £64k (including your £30k tax free "redundancy") before you'd be paying 40% tax (obviously dependent upon your tax code).

Check this with your accountant, but I'm certain I'm correct.

workshy_fopp

I met my accountant today. I'm just checking on here for a second opinion as there are some clued up geezers. It appears I can have my cake and eat it ! Mmmm cake.....

Diablo

Fast Bloke - its £270 per week now.

D