If you would like to view a pdf file of the TUC's leaflet Facing Redundancy (text of which is below), then click on the link here http://www.tuc.org.uk/extras/redundancy.pdf
When the economy is in difficulties, redundancies are in the news every day. But even when times are better firms can re-organise or get taken over, and redundancies follow. This leaflet explains your rights if your job is at risk
This leaflet gives a basic guide to the legal rights of those facing redundancy. It answers some common questions about those rights and issues such as tax and benefits.
Employment rights and these other issues are often very complicated, and before you challenge your employer you should take further advice. If you are in a union, a union rep or official should be able to assist. If not, other sources of help are listed at the end of this leaflet.
We have tried to make this information as accurate as we can, but it is only a short introduction and you should not take it as a comprehensive statement of the law.
Redundancy is not the same as getting the sack. The key difference is between dismissal when an individual loses his or her job, and redundancy when the job itself disappears.
Dismissal can be fair (if you are caught stealing, for example) or unfair (if, for example, you are sacked for being pregnant). Employers must follow fair procedures if they are dismissing someone. Dismissal is dealt with in detail in the leaflet Your job and the law which you can get from the TUC's know your rights line 0870 600 4 882.
Redundancy is different. This happens when an employer needs to reduce their workforce. This means that it is not a redundancy if your employer immediately takes on somebody else to do your job. This would then become a dismissal, and you could well have a case against your employer even if they have told you that you are redundant.
This does not normally stop your employer taking on people to do a different job in your workplace, or people doing your job but in a different workplace. If your contract of employment says you could be moved to a different location or given a different job then you should have been offered these jobs before they were filled with new staff. If you think you might be in this situation, then you should take further advice.
Even if an existing member of staff is given your job, you can still be made redundant as long as there is an overall loss of jobs. An employer can normally reshuffle their workforce after making some people redundant. They do not have to get rid of the people currently doing the jobs that will disappear, as long as they are genuinely reducing the size of the workforce.
If you think you may not be legally redundant, but have been dismissed instead, then you should take advice. You may be entitled to compensation if you make a claim to an Employment Tribunal.
If the redundancies are genuine, there are still rules that your employer must follow, which are set out in this leaflet. In brief your employer:
Many employers will act fairly, and do more than the legal minimum if they are making redundancies. Unions are often able to negotiate far better terms.
But some employers may try to get out of all their legal obligations by trying to put you in such a bad position that you resign.
If your employer intends to make more than 20 people redundant over a 90 day period, he or she must, by law, consult the workforce. If your employer recognises a union, it must be consulted. If not, your employer must establish a representative body or make use of an existing representative body, for example, a staff council, which must be elected by the entire workforce.
The agenda for consultation must include ways of avoiding redundancies or of reducing the numbers affected. Agreement does not have to be reached as a result of the consultation but the employer must consult "in good faith", that is, with a view to reaching agreement. Some information must be disclosed to the representative body including:
Consultation cannot just take place one afternoon when the managing director has a spare hour or two. There are minimum periods during which representatives must be consulted.
This consultation can make a difference. It can make management pause for thought. Some workforces have been able to suggest ways of avoiding compulsory redundancy altogether.
For example, in some workplaces all staff have volunteered to work fewer hours in the knowledge that trading conditions may well improve in the future. In other workplaces the consultations have led to fairer ways of choosing redundancy, perhaps by improving redundancy payments to the point where there are enough volunteers.
Individual notices of redundancy should not be issued until there has been sufficient consultation in line with these requirements. Any complaint that redundancy notices have been issued before consultation ends can be made to an Employment Tribunal. If the Tribunal finds that a complaint is justified it can make a protective award, which will require the employer to pay the employees their normal pay for the period covered by the protective award (that is, 90 days or 30 days as above).
It can be difficult to work out your best course of action if your employer offers you another job. This may mean that you are not legally redundant if you turn this down.
These are the rules.
However if you and your employer disagree about whether the alternative job is suitable you may need to make a claim in an Employment Tribunal and show them why the job was unsuitable. If the Tribunal finds that you have refused a suitable offer of alternative employment you lose your right to a redundancy payment. So, if you thinking of rejecting an alternative job offer, take advice in good time.
The law sets out minimum redundancy pay, to which not everybody is entitled.
To be entitled to the legal minimum you must have:
The legal minimum you should get depends on:
Employers can of course be more generous, though see below for why you should be careful about signing away any rights in return.
This is how the minimum is calculated.
If you are 41 or over:
For each complete year of employment after your 41st birthday, but before you turn 65, you should get one and a half week's pay
If you are aged 22-40:
For each complete year of employment after your 22nd birthday, but before you turn 41, you should get one week's pay
If you are aged 18-21:
For each complete year of employment while you were either 18, 19, 20 or 21 you should get half a week's pay.
But you can only count:
Two bits of good news:
The small print
The basic principles for working our redundancy pay are easily put. But in practice it can be complicated.
1. The first issue is working out how many years of service you have. The period starts with your first day with your current employer, and ends at what is called the "relevant date". This is the day on which your redundancy notice expires, even if your employer has let, or made, you work in the meantime. (See below to find out how to work out your notice.)
It is calculated in calendar years but with no fractions of a year. If you have worked for 10 years and 11 months, then it is counted as 10 years. The period must be of continuous employment. Days on strike do not count but do not break the continuity of the employment. Periods of maternity or parental leave do count and do not break the continuity of employment. Other absences may sometimes count towards a period of continuous employment, even where the contract was broken, for example, by a temporary stoppage of work.
2. The second issue that can be complicated is working out your weekly pay. For those on a salary, this will be straightforward, but not everyone is paid the same each week. There can also be arguments about which week to take and which part of your wage packet counts.
The weeks' wage is taken to be what your contract of employment said you should have been paid in the week your employer gave you notice, for that week's work. (If for some reason your employer did not give you formal notice then it is the week in which he or she should have given you notice.)
If your pay varies each week, for example because you are paid on a piece-work basis, the amount is averaged over the 12 weeks immediately before the calculation date. Overtime and other bonuses only count if you are guaranteed them in your contract of employment.
3. There are also some other important exceptions. You will not get redundancy pay if:
4. If you are coming up to retirement then your redundancy pay may be reduced:
What if your employer offers you more?
Some employers will offer better terms and some will include these in your contract of employment. Your employer may offer a "severance" payment, which is a lump sum, as compensation for ending your employment. This must be above the statutory minimum if your job is being made redundant. In return for this, you may be asked to sign a legal document saying that you accept the sum and will not take any legal action against the employer in relation to the dismissal. If such an offer is made to you and you do not know whether to sign, you should seek advice from your union, from ACAS or from an advice centre.
What if your employer is broke?
If your employer cannot pay because of serious financial problems, the Department of Trade and Industry (DTI) will pay you directly. They will only ever pay the statutory minimum amount even if your contract of employment promised you more. In order to get payment from the DTI, you must first have submitted a claim to the employer in the normal way, as described below.
If your employer is insolvent, the payment is made by the DTI. (They will attempt to recover this from the assets of the business.)
If you lose out in these circumstances because your contract of employment promised you more than the legal minimum, you have a claim against the assets of the company. You will need to lodge a claim with the administrators if they are going through insolvency.
How to get the money?
It is up to your employer to give you your redundancy pay when you leave. You should not have to ask for it. But if you are not paid, then you should make a written request to your employer. If nothing then happens, or if you suspect your former employer will try and avoid paying you, then you should refer the matter to an Employment Tribunal. You need to do this within six calendar months of the date your employment ended. If you do not claim within six months you may lose the right to a payment. (The Tribunal does have discretion to extend this period by a further six months but you should not rely on this.)
What about notice?
If you are made redundant you are entitled to a minimum period of notice. For every year you have worked for your employer, you should get one week's notice, up to a maximum of 12 weeks.
If your employer makes, or lets, you leave before this period you should still be paid for the full notice period.
Your contract of employment may offer you more generous terms.
Make sure your employer gives you:
The first £30,000 of redundancy pay is tax free, but the rest may be taxed.
If you have to pay tax, it counts against your tax bill in the year you receive the money, not the year you were made redundant. If it is paid in instalments, then the £30,000 exemption can be carried forward.
You may be able to reduce your tax liability by paying some of your redundancy pay into a pension.
Redundancy pay or pay in lieu of notice?
Confusion can arise when your contract of employment says you are entitled to a period of notice, but your employer says you can leave immediately and gives you your wages for that period in one lump sum. Your employer might call this redundancy pay. However the tax office will still treat is as normal pay for your notice period and deduct tax and national insurance.
Any statutory redundancy pay to which you may be entitled is in addition to this payment in lieu of notice. The redundancy pay is only taxable after the first £30,000.
Tax will also be levied on any compensation you win if you successfully sue your employer for failure to give you proper notice, or not enough notice pay, or none at all.
What to do with your money?
Many redundancy payments are relatively modest, and will only help tide you over until you get another job. But with long service or a redundancy payment greater than the legal minimum, you may get a tidy sum. A redundancy cheque may be one of the biggest amounts of money you have received in one go. It can be tempting to spend it!
If you know you have another job to go to, this may be reasonable. Or you may want to use the money to take time out from working while you study or retrain for a new career. Other people may want to use the money to set up in business. Others may want to consider themselves as retiring early.
But you should think carefully about your financial situation and take advice before making any hasty decisions.
You may want to consult an independent financial advisor (or IFA). These are professionals skilled in giving independent advice to people about money. They should always provide a free initial consultation. After that they will either make their money from commission they receive on any investments you make, or charge you a fee but pass on the commission payments to you instead, or some combination of the two.
You are almost certainly best advised to consult an IFA rather than your bank. Most banks (though not all) will only try and sell you their own savings and pensions products. Some of these may be good value, but they will not have the wide range available to an IFA. If you want to find an IFA, there are details at the end of this leaflet.
Some IFAs specialise in advising on ethical investment, while some others specialise in the particular needs of the gay and lesbian community.
Typical advice would be to first put your redundancy payment into a high interest savings account while you consider what to do. Many newspapers carry tables that show the accounts paying the best rates. They may well only be available via the Internet or by post, rather than your high street.
The next step would be to look at your debts - such as credit cards and your mortgage and consider paying these off, as the interest on them is likely to cost you more than you would get in interest on your savings.
After that if there is any money left over, you will want to save it in a way that helps your long-term security. You are likely to be advised to keep some in an emergency fund that you can get at easily, with the rest in longerterm savings that minimise the tax you have to pay.
But what you should do will really depend on your own circumstances. That is why you should take independent advice if you get a sizable redundancy payment.
What happens to your pension
If you have a job where your employer runs a pension scheme and you are a member, it is important to understand what will happen to your pension.
If you are old enough, your employer, or the rules of your pension scheme, may allow you to retire early with a reduced pension. In some cases as part of a redundancy package you may be offered a deal more generous than normally on offer for those taking early retirement from your pension scheme. You may still be entitled to redundancy pay in addition - you should not confuse this with the lump sum offered by most pension schemes on retirement.
If you are not old enough to take early retirement you should be offered some or all of the following options:
Members should be told as soon as possible:
Don't forget that if you are made redundant and you are due to receive a payment under an occupational pension scheme within 90 weeks of the dismissal, your redundancy payment may be reduced. See above. Deciding the best thing to do with your pension is often very difficult, and is another area where an IFA would be able to help.
This simplified picture of the benefit system is designed to provide background information you may find useful. Please remember that social security is very complicated, and don't make any decisions until you have had individual advice from your union, a CAB, an unemployed workers' centre or another advice agency.
Jobseeker's Allowance is the main benefit for people of working age who are looking for another job. Some of the most important rules are:
You may qualify for Incapacity Benefit (IB) if you have paid enough NI contributions and are incapable of work because of sickness or disability.
Income Support is a means-tested benefit, so the amount you get depends on your circumstances and other income. Unlike JSA, you don't have to be available for, actively seeking or capable of work to claim, but some people have to attend a 'work-focused interview' to learn how the local Jobcentre could help in getting a job.
Most working age people are expected to claim JSA, not IS, and to look for a job. Some groups, however, are allowed to claim Income Support, such as:
Help with housing costs
You are unlikely to get help at first to pay your mortgage. Anyone who took out their mortgage after 1995 gets no assistance for nine months. If your loan was taken out before 1995 then you may be eligible to get support to cover the interest payments only on mortgages up to £100,000 as long as you do not have a working partner or savings above £8,000.
Housing Benefit and Council Tax Benefit are administered by local authorities. If you are entitled to means-tested JSA, IS or have a low income and are liable for rent and/or council tax for your home you may qualify for Housing Benefit and/or Council Tax Benefit. The amount you get will depend on your rent, your income and savings and your personal and family circumstances.
Some people take out mortgage payment protection insurance with their mortgage that covers them against redundancy. Your policy should explain how you go about claiming. You may well have to provide evidence that you are looking for work, probably by claiming JSA. If you only took out the policy recently, then you may be asked for a letter from your former employer confirming that you did not know you would be made redundant.
Tax and benefits
Jobseeker's Allowance counts as 'taxable income', and you are liable to pay income tax (but not NI contributions) on part of it. The tax isn't deducted from your JSA immediately. When you get a job - or at the end of the tax year, if that comes first - the Jobcentre adds together your JSA and your wages since the end of the last tax year, and works out your tax position.
The tax position of Incapacity Benefit is similar to JSA, but not identical.
Your employer may offer to provide you with training that will help you get a new job as part of the redundancy package. There are both commercial and government services that may be made available.
If you are losing your job as part of a big number of redundancies or major closure it is likely that you will be offered advice by the Employment Service (a government agency), the Regional Development Agency or some other body. This could include direct help with finding a new job, help with job search skills and access to training. Otherwise you can approach your local Jobcentre or Careers Advisory Service.
ACAS Public Enquiry Points
The TUC's know your rights line provides a range of helpful leaflets like this one that cover a wide range of employment rights information, and can advise you on which union you should join - 0870 600 4 882. Calls are charged at the national rate.
The ACAS public enquiry points - general advice for workers and employers on legal rights - www.acas.org.uk
Birmingham - 0121 456 5856
Liverpool - 0151 427 8881
Bristol - 0117 946 9500
London - 020 7396 5100
Cardiff - 029 2076 1126
Manchester - 0161 833 8585
Fleet - 01252 811868
Newcastle-on-Tyne - 0191 261 2191
Glasgow - 0141 204 2677
Nottingham - 0115 969 3355
Leeds - 0113 243 1371
If you think your employer may be discriminating unfairly in selecting who should be made redundant, one of the following may be able to help.
The Employment Tribunal Service
If you need information about making a claim to an Employment Tribunal you should call the Employment Tribunal Service Enquiry Line on 0845 959775.
The Department of Trade and Industry
The DTI is responsible for many employment rights issues. It has produced a short guide to redundancy rights. The orderline is 0870 1502 100. The website is www.dti.gov.uk/er/index.htm
Law centres provide a free and professional legal service to people who live or work in their catchment areas. The Law Centres Federation can tell you if there is a Law Centre near you. Its number is 020 7387 8570. The National Association of Citizens' Advice Bureaux can give you information about your local CAB on 020 7833 2181 or try their website on www.nacab.org.uk Your local library will also have advice on local agencies which may be able to help you.
Careers and re-training
For advice on careers and re-training you can look at the Careers Service website on www.careers-uk.com The Government's Employment Service www.employmentservice.gov.uk) web site is a good starting point, and there are many job search sites on the internet.
Independent Financial Advice
You can get a list of local independent financial advisors from IFA Promotions on 0800 085 3250 or try their website: www.unbiased.co.uk
Many of the rights described in this leaflet have been won by union campaigning. And when redundancies are threatened, members will find unions can provide invaluable help and assistance. They will understand your legal rights, and often be able to negotiate a deal much better than the legal minimum.
But it is not just redundancies, every day unions help thousands of people at work. Last year unions won a record £330 million compensation for their members through legal action. They won £1 million in equal pay claims - an average of £15,000 per member.
And of course unions help negotiate better pay and conditions.
But unions are not just there when something goes wrong. Union workplaces are safer, and more likely to help employees get on with better training and development programmes. Unions themselves provide training and services like
And in the best workplaces employers and unions have put behind them outdated ideas of confrontation and work together in partnership. Partnership employers recognise that staff morale and commitment are improved when they are treated well, have their views taken into account and enjoy job security. And in return staff take more pride in their work and are more ready to embrace the changes modern firms often need to compete.
Unions take on the bad employers, and work with the good to make them better.
To find out more about joining a union visit the workSMART unionfinder.
This page http://www.tuc.org.uk/tuc/rights_redundancy.cfm
printed 19 May 2013 at 12:33 hrs by 22.214.171.124