rules on voluntary redundancy payments
MakeMoneyWork
Posts: 24 Forumite
I am in a position where there is an opportunity to take voluntary redundancy due to a reorganisation which has resulted in my job no longer being needed. The organisation does not want compulsory redundancies and would prefer voluntary. Probably for the pension strain costs reason below.
As I will be 59 at the leaving dates being proposed I will get an unreduced pension and lump sum (LGPS).
However, in order to reduce the burden of pension strain costs on the organisation our employer has stated they will be asking staff who apply and are successful in getting voluntary redundancy to pay the strain costs out of their redundancy lump sum.
My redundancy payment would be around £47,000 and my strain costs around £45,000. This will only leave me with a redundancy payment of £2,000.
So my question is, does my employer have to pay at least the statutory redundancy payment (around £19,000 for me) when making someone redundant, even if it is voluntary? Or can they effectively leave you with no redundancy payment? I have read elsewhere that whatever the reason for a redundancy you still retain all your redundancy rights.
As I will be 59 at the leaving dates being proposed I will get an unreduced pension and lump sum (LGPS).
However, in order to reduce the burden of pension strain costs on the organisation our employer has stated they will be asking staff who apply and are successful in getting voluntary redundancy to pay the strain costs out of their redundancy lump sum.
My redundancy payment would be around £47,000 and my strain costs around £45,000. This will only leave me with a redundancy payment of £2,000.
So my question is, does my employer have to pay at least the statutory redundancy payment (around £19,000 for me) when making someone redundant, even if it is voluntary? Or can they effectively leave you with no redundancy payment? I have read elsewhere that whatever the reason for a redundancy you still retain all your redundancy rights.
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Comments
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I don't know if this is of any help
https://www.reed.co.uk/career-advice/voluntary-redundancy-what-are-my-rights/If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales0 -
Thanks for the link. It gets me there regarding still being entitled to redundancy pay.
But this article (sorry I can't post links) says that you can be asked to sign away your statutory rights during a voluntary redundancy process. I guess it will come down to how tough the employer wants to play it to save money. Good to know my legal entitlement though in case they don’t mention signing away statutory rights.
which.co.uk insight/voluntary-redundancy-your-rights0 -
Fairly standard to convert a redundancy into early retirement and take the pension.
If you don't want that option take the redundancy money and standard pentions terms.0 -
MakeMoneyWork wrote: »I am in a position where there is an opportunity to take voluntary redundancy due to a reorganisation which has resulted in my job no longer being needed.
Your "job no longer being needed" is surely the very definition of redundancy, with all its legal protections?
What would happen if you didn't 'volunteer' for redundancy, would your job suddenly be needed again?0 -
Do you mean it’s fairly standard to give up a statutory redundancy payment? Why would you do that?
Under LGPS rules if you are made redundant over age 55, compulsory or voluntarily, you get an unreduced pension immediately.0 -
Your "job no longer being needed" is surely the very definition of redundancy, with all its legal protections?
Following the reorganisation there are 150 or so of us whose jobs didn't match to jobs in the new structure so we have been placed in a Redeployment and Redundancy pool. Some staff have been lucky and applied for other jobs and been successful. Others like me would be quite open to voluntary redundancy due to age and service meaning we would get decent pensions. Plus the work I used to do in genuinely no longer needed.What would happen if you didn't 'volunteer' for redundancy, would your job suddenly be needed again?
No I don’t think so. The organisation really doesn’t want to make any one compulsory redundant. I have worked here 20+ years and can’t remember any one being made compulsory redundant, plenty of voluntary redundancies though.0 -
A 'redeployment pool' is a fairly common way for companies to deal with such reorganisations. Indeed, they may even be obliged to try offering an alternative job, but I'm pretty sure it's ultimately up to the employee to accept or not (I think you may even have the right to 'test' the new job for a period of time before making your final decision).
But my basic point was that if your job has gone then you are, by definition, redundant - regardless of whether the company wishes to avoid compulsory redundancy. So, their only way to guarantee themselves to avoid compulsory redundancy is to give your job back. Presumably they don't want to do that so their only other option is to negotiate voluntary redundancy terms. Nothing wrong with that, per se, but why would you agree to anything less than your benefits payable under compulsory redundancy.
Basically, the company now wants something from you (voluntary redundancy), which should put you in the position of power during negotiations (assuming you actually want to leave). If they offer lesser terms for voluntary redundancy than compulsory redundancy, why would anyone choose it?0 -
You sum it all up quite nicely.Basically, the company now wants something from you (voluntary redundancy), which should put you in the position of power during negotiations (assuming you actually want to leave). If they offer lesser terms for voluntary redundancy than compulsory redundancy, why would anyone choose it?
I think it’s down to staff not knowing their rights and not knowing the pension scheme rules and they end up not choosing the best option from a financial point. It may well be a race to the bottom and who ever agrees to forgo their redundancy payments to pay the pension strain costs will get voluntary redundancy.
I wanted to have all the facts before things progress, namely, unless we are asked to sign away our statutory rights are we entitled to at least the minimum statutory redundancy payment.
Some staff may well have to leave on compulsory redundancy when all options of new job or voluntary redundancy have been explored.0 -
I signed away my statutory rights when I negotiated a 'compromise agreement' to terminate my employment, but only because the final agreement was way in excess of my statutory rights. But I was working for a US-owned company and perhaps they are more into that sort of thing than in the UK. The company so wanted to avoid any possibility of future claims that the compromise agreement included a few £ks to pay for advice from an employment lawyer!0
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Check the terms of the contractual enhanced redundancy.0
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