Voluntary Redundancy - Without any payment (is it legal_

clonkel

Hi,
I applied for voluntary redundancy and the scheme rules state that I get my normal redundancy pay plus 3 months additional pay (as they want to get rid of people).

I am 56 and have worked at the company for 16 years. The redundancy element is around £15k and the 3 months is a further £9k

The board sat last week and replied to me that they will give me the voluntary redundancy (the scheme rules were attached to the email) but they would not be paying me anything because they had to pay an amount to make my pension available to me and they can't afford to pay that as well as my redundancy payment that was listed when I first applied. I have the paperwork which shows what they would give me if I was successful with the application. As I am 56 they said they have to pay a lot to get my pension so I assume this means the penalties that I would have to pay for taking it early. Currently with nearly 11 years to go that is a penalty of 37.7 percent but it is only a small pension as I have been part-time therefore the pension payable now is £8.7k p.a.

So far they have conducted nearly everything by phone rather than email. I did get them to send the email with stating I am being dismissed by reason of redundancy, so that was very clear.

I did go back to them and say that I thought I should receive a payment as a statutory right so they said I could go on garden leave for 2 months and they would pay any outstanding holiday.

Thank you for any help. They are pushing for a decision

penners324

Sounds complete nonsense.
Your pension pot or even a DB scheme should be left alone when you leave a company. 
You need to get the details of your pension scheme ASAP.

clonkel

I have got details of the pension as I got a letter from them at the same time as the voluntary severance letter (with the numbers). I am in Higher Education  so the pension is based on a career average and it is a local government pension.

I want to accept because I don't want to work there any longer and feel if I kick up a fuss they will remove the offer

thank you

Undervalued

clonkel said:

Hi,
I applied for voluntary redundancy and the scheme rules state that I get my normal redundancy pay plus 3 months additional pay (as they want to get rid of people).

I am 56 and have worked at the company for 16 years. The redundancy element is around £15k and the 3 months is a further £9k

The board sat last week and replied to me that they will give me the voluntary redundancy (the scheme rules were attached to the email) but they would not be paying me anything because they had to pay an amount to make my pension available to me and they can't afford to pay that as well as my redundancy payment that was listed when I first applied. I have the paperwork which shows what they would give me if I was successful with the application. As I am 56 they said they have to pay a lot to get my pension so I assume this means the penalties that I would have to pay for taking it early. Currently with nearly 11 years to go that is a penalty of 37.7 percent but it is only a small pension as I have been part-time therefore the pension payable now is £8.7k p.a.

So far they have conducted nearly everything by phone rather than email. I did get them to send the email with stating I am being dismissed by reason of redundancy, so that was very clear.

I did go back to them and say that I thought I should receive a payment as a statutory right so they said I could go on garden leave for 2 months and they would pay any outstanding holiday.

Thank you for any help. They are pushing for a decision

With so called "voluntary redundancy" (technically there is no such thing) the terms are whatever you and the employer agree. There is no "right" to anything.

If your position is genuinely redundant then they can terminate your employment by just paying the amounts laid down in law.

Anything else is a mutually agreed separation but if you are not able to agree terms that you are willing to accept you can continue working as before.

Andy_L

Are the rules for voluntary redundancy  contractual, ie have they existed for years or have they been made up for this specific round of redundancies?
If the former then you have a contractual (not statuatory right) to whatever is in the rules. If its the latter then the offer is whatever they offer and that can be changed before you both agree

In (public sector) defined benefit schemes that include a contractual redundancy payments here is often a option between a redundancy payment (x weeks pay per year of service) and early retirement payout (pension paid out before retirement age with less/no reduction for being taken before normal retirement age) and you only get one or the other Which one you get is generally based on how close you are to retirement. 

clonkel

Thank you for the replies.

The rules state: The Scheme is not a contractual entitlement for <name of company>

So what you are saying is that what they are doing is lawful and above board and in fact they are doing me a favour as I still have nearly 11 years before 67yrs old

thank you
 

Undervalued

clonkel said:

Thank you for the replies.

The rules state: The Scheme is not a contractual entitlement for <name of company>

So what you are saying is that what they are doing is lawful and above board and in fact they are doing me a favour as I still have nearly 11 years before 67yrs old

thank you
 

Basically yes!

It is entirely a matter for negotiation. If they want you gone enough they will have to make it worth your while. If you want out enough then you will regard any money as a bonus, as your only other options are to stay put or resign.

Your original question was "is it legal" to which the answer is yes. Andy_L asked if there was any contractual entitlement to certain terms and it seems not. As I said earlier if you (technically your job) are genuinely redundant then all they have to give you is the minimum the law lays down.

clonkel

Thank you all very much it really puts my mind at rest and I can get on with it. Thank you again

Manxman_in_exile

Sorry if I'm being thick here - you talk of "voluntary redudndancy", but are you taking your pension early as well?  (You haven't explicitly said - I know when I left the NHS on redundancy I had various options offered to me, some including taking a reduced pension immediately, some not.)

If this is a local authority pension scheme, the effects of voluntary redundancy on your pension (and vice versa) ought to be absolutely clear.  Or at least clear in the sense the terms will spell out exeactly what you are entitled to, or that it's entirely negotiable.  (I'm not familiar with LA schemes becaus each is its own, but I'd expect the former rather than the latter.)

Contact your union and/or contact the pension scheme administrators* to see how VR affects your pension, and how taking an early pension may affect your VR deal.  If you are taking your pension early, it may be more expensive for your employers, meaning they don't give you as good a VR deal.

I presume you aren't actually committed at this stage if it turns out not to be a good deal?  Edit:  everything including any offers you accept ought to be in writing

*Contact details should be readily available and ought to be in your annual pension statement.

clonkel

Thank you Manxman

I got the pension estimate with VR and usually at this point it would have 37.7% penalty. I believe under normal redundancy you have access to your pension without penalty. With VS the same applies for my work which means I can take it now without penalty. It is worthwhile given that I get nearly 11 years of it so I will be taking it.

Yes you are correct the VR deal would usually include a redundancy payment (based on length of service) and 3 months additional pay. Due to the cost the employer had to make to the pension, for me to get it now, they won't give me any further payments. I have a friend who also applied and they only have 1 year to go until retirement. In that case they paid the redundancy amount + 3 months as they had less to pay as she had 1 year left

thanks

eamon

If you in a union it would still do no harm to get a 2nd or 3rd opinion on the numbers and is it in keeping with any agreement between the union and employer. Afterall you are potentially giving up a lot of money.