The definition of redundancy covers three situations:-
Where the employer ceases to continue business/trading (other than involving a transfer of an undertaking) on a permanent or temporary basis;
Where the employer ends business in the place where the employee is employed/ based;
Where the employer’s business no longer requires any employees or as many employees to do a particular kind of work (whether generally or in the place where the employee was employed).
If your job is made redundant because of a need to reduce the work force, and one of the remaining employees moves into your job, you will still qualify for a redundancy payment as long as no vacancy exists in the area (type of work and location) where you previously worked.
Unfortunately it seems that once you are Plus Fifty you are perceived by some of the less honourable companies as a non-essential commodity. Redundancy for the Plus Fifty age group is now unacceptably raised and at their highest level since June 1997. Statistics are indicating that the trend is going to continue to deteriorate. Redundancy policies at work should state that you are not being selected for redundancy because of your age. However in this period of recession it seems uncanny just how many Plus Fifties are being made redundant under the “recession” umbrella. Employers should make selection based on skills experience and business requirements, and not breech employment law by disguising ageism as redundancy.
If you feel you have been unfairly selected for Redundancy, you can make a claim to an Employment Tribunal within three months or seek advice from an employment law solicitor.
Redundancy Payment
You will be entitled to a redundancy payment if: -
You are made redundant
If you have at least two years continuous service since 1 October 2006 there is no age restriction
You must be working as an employee under a contract of employment .The contract may be written or verbal or a combination. By actually turning up to work for an employer there is an unwritten agreement of employment.
Self-employed people and members of a partnership do not qualify for redundancy payments.
Many employers unfortunately will only pay the statutory minimum redundancy pay, whilst others are more generous, for example, one month’s gross salary for every year worked. If you have a contract with your employer, it is a good idea to check it over to see if as well as your statutory entitlements to notice , you may also be entitled to pay in lieu of notice and a redundancy payment.
If you are to be paid the statutory minimum amount, this payment will be governed by:
How long you have been continuously employed with your employer
How your years of continuous service relate to a particular age band
The weekly pay, up to a legal limit – this amount is reviewed annually
If you are being made redundant after many years of service you can calculate your redundancy payment due on the Statutory Redundancy Payments pay calculator click here for further details
Is Statutory Redundancy Pay Taxable?
You should not have to pay tax on redundancy payment up to £30,000 as a result of HM Revenue and Customs exemptions.
Please be aware that if your employer offers you alternative employment, it should be “suitable” i.e.
- Similar Pay
- Status
- Hours
- Location
If you unreasonably turn such an offer down, you may lose your right to a redundancy payment, you will need to consult legal representation if this is the case.
If the terms and conditions vary in the alternative job you have been offered, you can work for a four week trial period. If you then find it unsuitable, you may leave and you could still retain your right to a Redundancy Payment
If you are made Redundant because your employer has been declared insolvent, you may be able to claim your Redundancy payment and certain other payments from the Insolvency Service’s Redundancy Payments Office. click here for further details
Once you have received your Redundancy Payment, be careful about how you spend the money until you have taken professional advice on the implications on your benefits and tax position
Pensions may not be offset against statutory redundancy payments made to employees dismissed on or after 1 October 2006.
If you are looking to get straight back into a new job click here for Top Tips
Redundancy Insurance Policies
These are often sold with mortgages, credit cards and purchases, they are called ‘Income Payment Protection Insurance (IPPI)’ or ‘Mortgage Payment Protection Insurance (MPPI)’ these are insurance policies that offer payments usually for a set period of time when someone loses their job, due to either redundancy, unemployment , sickness or accident. Companies offer combinations of cover or individual policies. As with all documents it is worth checking the small print carefully to ensure you are adequately covering your family outgoings.
If you have already been made redundant it may be worthwhile checking existing policies for mortgages or credit cards to see if you are already covered. Payment protect can be expensive even more so now and companies who have sold you these policies usually only need to give you 30 days’ notice before raising the monthly payment from you. Do check around for competitive prices if you are in the market for so it pays to look at alternative policies.
Typical Exclusions for
Waiting period – from when you take out the policy – before you are eligible for payments (i.e 3 months)
Eligibility criteria (i.e. in permanent work for a period for at least 6 months prior to payment)
Period after redundancy before payments start (typically 30 days)
Period that payments will go on for (typically 12 months)
Redundancy Payments Offices
A helpline is available to answer any of your queries, no matter where in England, Scotland or Wales your firm is based. Tel 0845 145 0004.
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