In an economic downturn, every employee is likely to be double and triple checking their employment contracts and company redundancy policy so that they know what to expect if the worst comes to the worst. These documents are likely to be filled with specific legal terms, and just like any legal procedure, redundancy has small print and fine details which it is vital to understand.
Listed below are some of the most common and important terms to understand concerning redundancy – if you think you may be in danger of being made redundant, make sure you read up on all the relevant terms.
Redundancy
Many people think that they know what redundancy is, but the legal definition is quite specific. Essentially, the employee’s position must disappear entirely or require fewer workers to perform satisfactorily. This may occur when a company ceases trading altogether, closes a particular store or department, takes on less business, or invests in technology that makes certain positions unnecessary.
Furthermore, redundancy falls into two categories – voluntary and compulsory. With voluntary redundancy, an employer identifies a part of the company that needs to be reduced in size, and asks for volunteers from that section to be made redundant. With compulsory redundancy, individuals are selected on a number of criteria (including skills, qualifications, and workplace performance) and are made redundant against their wishes.
Lay off
Where an employee has their work temporarily suspended due to a lack of work. This is a short term alternative to redundancy.
Short Time Employment
Where an employee has their hours and pay reduced below half a week of the norm. Another alternative to full redundancy.
Collective Redundancy Consultation
If a company wishes to make more than twenty members of staff redundant, it must go through a collective redundancy consultation, which involves sending a letter to the Department of Business, Enterprise and Regulatory Reform (BERR) and holding a meeting with employee representatives at least thirty days before the first redundancy (ninety days if over a hundred employees are being made redundant.) Failure to do so may result in claims for unfair dismissal and protective awards (see below).
Statutory Redundancy Pay
The sum that an employee is due to receive as part of their redundancy. You are only entitled to Statutory Redundancy Pay if you have been a continuous full time employee for more than two years. The calculations for redundancy pay are somewhat complex, but are based on the number of years an employee has been working for a company, up to a maximum of twenty years. Consult your company’s redundancy policy – it should lay out exactly what kind of payment you are legally entitled to. Unless the redundancy pay is over £30,000, it will not be taxed.
Unfair Dismissal
If you feel you have been unfairly and (more importantly) illegally selected for redundancy, you can lodge a claim for unfair dismissal. If you can prove your case, you may be entitled to reinstatement to your job or a substantial damages claim. Certain reasons for dismissal (usually to do with discrimination on a wide variety of grounds) automatically qualify as unfair dismissal.
Guarantee Payments
If an employee is not given work during a day when they are contractually required to work, they may be entitled to a Guarantee Payment for that day. An employer cannot simply cease providing work for a day and not provide payment – a lay off, short time or part time working arrangement must be reached first.
Protective Award
If a proper redundancy consultation procedure is not followed (i.e. if employees are made redundant without their representatives or themselves being given sufficient notice) the employee has the right to claim a protective award, which typically takes the form of ninety days payment.
This is simply an introduction to a few of the key terms of redundancy – consult your company redundancy policy and the BERR website for a fuller understanding of the process.
Author Resource:-
Iain Mackintosh is the Managing Director of Simply-Docs. The firm provides over 1100 documents covering all aspects of business from equal opportunities in the workplace to a redundancy policy (http://www.simply-docs.co.uk/CustomPage.aspx?customPageID=55).
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