Redundancy

Losing your job is one of the most stressful events in a worker’s life.
 
While Usdaw always tries to minimise job losses this is not always achievable and redundancies often follow.  Usdaw always tries to negotiate an enhanced severance package in these circumstances.
 
Workers do have some rights, both statutory and contractual.  It is important members seek advice from their rep and Union official if they are involved in redundancy.
 
When a company goes bust the situation becomes even more complicated.
 
Redundancy occurs when you are dismissed because:

Your workplace closes or moves.
 
  • Your staff numbers are cut.
  • Your job no longer exists because of new technology, job re-design or restructuring.
In a redundancy situation you have the right to be:
 
  • Consulted.
  • Selected fairly.
  • Considered for alternative work.
  • Paid redundancy pay; accrued holiday pay, wages, etc.
  • Given paid time off to find other work.
The company must consult before making more than 20 employees redundant at your workplace with:
 
  • Usdaw if we are recognised.
  • Staff consultation body (where there is no recognised union).
  • The individuals if there is no appropriate body.
The consultation should cover:
 
  • Ways of avoiding the redundancy situation or dismissals.
  • Ways of reducing the number of dismissals involved.
  • Mitigating the effects of the dismissals, i.e. severance packages, support in finding work.
Where Usdaw is recognised and/or has members we will demand consultation.
 
Where there are 20 – 99 potential redundancies the consultation period should be 30 days.
 
Where there are 100 or more potential redundancies the consultation period should be 45 days.
 
Payments on Redundancy
 
Statutory Redundancy Pay is based on:
 
  • Age.
  • Service.
  • Normal weekly wages.
Your entitlement:
 
  • Half a week’s pay for each complete year of continuous service below the age of 22. 
  • A full week’s pay for each complete year of continuous service between the ages of 22 and 41.
  • A week and a half’s pay for each complete year of continuous service above the age of 41.
Points to Note
 
Age
 
  • Service under 18 and over 65 counts.
Service
 
  • You must have a minimum of two years’ service.
  • A maximum of 20 years’ service will be counted.
Weekly Wages
 
  • Normal contractual weekly wages – gross.
  • Capped at £475 per week.
  • If no normal wages – average wages. 
Part 1
 
If you are dismissed for redundancy, your entitlements include the following:
 
  • Statutory redundancy pay.
  • Statutory notice pay.
  • Accrued holiday pay.
  • Wages (including commission, bonus, overtime, etc).
  • Statutory sick pay/maternity pay/paternity pay, etc.
  • Contractual payments due, e.g. banked holidays, annualised hours reconciliation, contractual sick pay, contractual maternity/paternity pay, etc.
Part 2
 
You may also be entitled to additional payments negotiated by Usdaw as part of the severance terms, e.g:
 
  • Enhanced redundancy pay.
  • Loyalty bonus.
  • Notice pay.
  • If your employer offers you a suitable alternative job which you unreasonably refuse you will lose your right to a redundancy payment.
  • If you leave before your dismissal date you may lose your redundancy entitlements.
  • Payments on redundancy are usually tax free up to £30,000.
  • If your employer fails to pay the sums due, contact your local Usdaw office for advice on how to enforce the payments. This is normally through the employment tribunal where there are very strict time limits (usually three months less one day from the date of dismissal) so act fast.
  • If your company becomes insolvent then the payments in Part 1 will be paid by the state, but payments in Part 2 will depend on whether there is any money to pay unsecured creditors – very rare meaning many workers miss out on these additional payments.
Statutory redundancy payment calculator
 
Use the Government’s online ready reckoner to work out your entitlement:
www.gov.uk/calculate-your-redundancy-pay
 
When companies go bust
 
When a company goes bust the technical term is insolvency.  This is when an employer cannot meet its financial obligations and has to take formal steps to sort out the financial problems by selling or winding up the business.
 
For insolvent companies the most common practice is the appointment of an administrator to try and sell the business as a going concern.
 
When an administrator takes over you can expect:
 
  • Early redundancies to cut down the wage bill of staff the administrator considers to be non-essential.
  • Business as usual for a period while attempts are made to sell the business or parts of it.
  • Sale of the business, or part of it, as a going concern with some staff transferring.
  • Redundancy for those not transferring with the business.
  • The administrator has a duty to consult and follow the procedures we would expect of an employer.  Usdaw will demand consultation where we are recognised and where we have members and will keep members briefed through our reps, letters and circulars and the Usdaw website. Usdaw’s advice is to co-operate with the administrator.
In these circumstances it is the Government’s Redundancy Payment Services office that picks up the bill for paying workers their redundancy entitlement but at the statutory level.  Usdaw has won a number of high profile legal cases against administrators who refused to consult with Usdaw and won compensation (called a protective award) for members.  The Union is also pursuing a legal case at the Court of Justice of the European Union (CJEU) in Luxembourg to win compensation for workers who worked in small stores and missed out on a protective award when they were made redundant at Woolworths, Ethel Austin and other retailers.
 
Usdaw wants to see the law on redundancy substantially changed to give workers more rights and protection.

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