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    Redundancy payment after pension age
    • #1
    • 22nd Apr 09, 7:58 AM
    Redundancy payment after pension age 22nd Apr 09 at 7:58 AM
    My OH finds herself in a unique situation within her company and your thoughts would be appreciated -apologies for the long post

    She was advised last month, that she will be made redundant later this year. However, the blue chip company for which she works is struggling to work out a redundancy payment for her that does not breach discrimmination regulations.

    Although not contractual the company has traditionally given a disgressionary payment = 1 months salary for every year worked. However this is capped so that the payment does not exceed the amount that would have been paid in salary upto pension age which is 60. ( At least that's what we believe - the actual formula used is not made public)

    So say -30 years service , redundancy at 58 - 30 months pay due but capped at 24 months.
    Simplistic Formula for someone age 58 with 30 years service
    payment = [(60-58) x 12 x monthly salary]

    The problem arises because OH decided to work on a part time basis beyond pension age age so she is 63 and under current legistation can work til 65 but the company pension age is still 60
    The formula then gives a -ive ie in theory she should pay them
    payment = [(60-63) x12 x monthly salary]

    {Although the payment is "discressionary" we understand that as it has been traditionally paid in this way for many years that it is in fact contractual}.

    We believe the company is anxious not to disadvantage OH nor to disadvantage other staff by giving her a payment based on her planned "leaving age" 65. -

    ( On this basis - she has actually for worked 40 years at age 63 so would be entitled to 40 months capped to 24 months).

    I suppose they could change the basis of payment from pension age to 65, but that would be costly when most people may not be planning to work beyond pension age; or say no redundancy payments beyond statutory levels for those beyond pesion age, but that would be discriminatory; or change the pension age to 65, but that would have huge consequences and no chance of implementing that before she goes.

    An unforseen consequence of the legislation allowing people to work beyond retirement age I guess!
    Last edited by D1zzy; 22-04-2009 at 8:12 AM.
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