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Redundancy advice

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Chrisharry12345
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Redundancy advice

Post by Chrisharry12345 »

I have been asked for help with a friend who might be made redundant but to be honest I havent got a clue on where they stand..

I was just wondering where someone would stand if they have 18 months left on a two year fixed term contract and have been told they might be made redundant as their position is no longer going to be there. The employee has not done anything wrong its just the company restructuring. What pay would they be entitled to?

I understand what would happen if they were being made redundant at the end of the fixed term contract but not during it? The employee has been with the company for 4 years


Thanks

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Backlash
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Re: Redundancy advice

Post by Backlash »

Surely he should be owed the remaining 18 months pay if he is on a contract?, I don't think how long he was already there (his case 4 years) has any part in remuneration.

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Chrisharry12345
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Re: Redundancy advice

Post by Chrisharry12345 »

That would be nice anyone in the feild that could confirm?

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Surprised
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Re: Redundancy advice

Post by Surprised »

It is very unlikey they are entitled to the remaining 18 months unless the contract specifically states that.
Statutory redundancy pay will apply unless the company has its own policy. It will be between 0.5 weeks and 1.5 weeks salary for each year of employment dependent on age. This will only apply if they have been there for 2 years or more so it's important as to what the contract says. It is a 2 year contract but they have been there for 4 years so there may have been a break or a legal break in service so redundancy may not apply.

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liquidfootball2
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Re: Redundancy advice

Post by liquidfootball2 »

Chrisharry12345 wrote:That would be nice anyone in the feild that could confirm?

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I've done some contract programming and in my experience the only complication could be that his position is no longer in the new company structure, but generally the contract should always be paid up unless there's something specifically written down in the original contract document that contradicts that.

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eastcentral1
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Re: Redundancy advice

Post by eastcentral1 »

Surprised wrote:It is very unlikey they are entitled to the remaining 18 months unless the contract specifically states that.
+1, except for I believe that the contract should specifically include the right for the employer to terminate early, otherwise it is a breach of contract. The contract is highly likely to include such a provision, but it's the first thing to check.

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Chrisharry12345
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Re: Redundancy advice

Post by Chrisharry12345 »

The contract allows the employer to terminate employment if misconduct but no other mention of early termination

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Re: Redundancy advice

Post by barry »

so why pay someone for 18 months work then send them offski? surely better to have them work for the remainder of the contract?

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Re: Redundancy advice

Post by Surprised »

Chrisharry12345 wrote:The contract allows the employer to terminate employment if misconduct but no other mention of early termination

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Check this carefully and ensure it does not refer to standing rules in normal employment contracts within the company without specifically listing them

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liquidfootball2
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Re: Redundancy advice

Post by liquidfootball2 »

barry wrote:so why pay someone for 18 months work then send them offski? surely better to have them work for the remainder of the contract?
Employers often employ contractors to work on a specific project usually with a finite time limit and can therefore adjust the number of staff according to the phase of the project.

In reality things don't always work out that way so the contract document should always make reference to early termination even if only by saying 'if not specifically stated then these conditions apply'.

In answer to barry's question, yes it is better but not always practical and as a contactor you should always know what happens in the event of early termination and what conditions apply.

t.gridley
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Re: Redundancy advice

Post by t.gridley »

i am currently pondering taking voluntary redundancy. The offer is two years money and i am tempted as I can claim my work pension in just over two years time.
I will have to pay 40% tax after the first £30k.
Would i be able to claim this tax back the following year should I choose not to work?

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Tricky Tree
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Re: Redundancy advice

Post by Tricky Tree »

t.gridley wrote:i am currently pondering taking voluntary redundancy. The offer is two years money and i am tempted as I can claim my work pension in just over two years time.
I will have to pay 40% tax after the first £30k.
Would i be able to claim this tax back the following year should I choose not to work?
Wouldn't have thought so? Seems a no brainier still. Good luck. I recently was made redundant and got 450 for each year ....bar stewards

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Re: Redundancy advice

Post by blahblah »

t.gridley wrote:i am currently pondering taking voluntary redundancy. The offer is two years money and i am tempted as I can claim my work pension in just over two years time.
I will have to pay 40% tax after the first £30k.
Would i be able to claim this tax back the following year should I choose not to work?
Isn't Redundancy tax free, apart from any notice period which is part of it?

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Tricky Tree
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Re: Redundancy advice

Post by Tricky Tree »

£30k (assuming no PILON clause in contract)

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Chrisharry12345
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Re: Redundancy advice

Post by Chrisharry12345 »

Maybe it says the employer has a right to terminate in the company handbook rather than the contract. Ill ask them to have a look today.

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spoogehead
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Re: Redundancy advice

Post by spoogehead »

t.gridley wrote:i am currently pondering taking voluntary redundancy. The offer is two years money and i am tempted as I can claim my work pension in just over two years time.
I will have to pay 40% tax after the first £30k.
Would i be able to claim this tax back the following year should I choose not to work?
I was in same position last year, fortunate enough to be able to take 4 months off before working again, here's how it worked out for me tax-wise:

first 30k of redundancy tax-free
Anything above that + any PILON is subject to tax - you'll also have to pay some additional national insurance
Was then issued a tax code of 0T which is used to calculate the next month's tax

They then very generously make the assumption for tax calculations that the excess redundancy is 'new earnings'. I paid the additional top rate of 45% tax on most of the excess (you will get this back though)

If you don't restart work or claim any benefits, then after 4 weeks you fill in a P50 form, you will then get back any excess tax you paid at the top rate + a little bit for not working that month

As you can use your normal personal tax allowances for these 'new earnings' then taking redundancy in April (new tax year) is the best time to do it if you're considering not working again - most tax-efficient time to go

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Re: Redundancy advice

Post by Giggs11 »

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t.gridley
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Re: Redundancy advice

Post by t.gridley »

Tricky Tree wrote:
t.gridley wrote:i am currently pondering taking voluntary redundancy. The offer is two years money and i am tempted as I can claim my work pension in just over two years time.
I will have to pay 40% tax after the first £30k.
Would i be able to claim this tax back the following year should I choose not to work?
Wouldn't have thought so? Seems a no brainier still. Good luck. I recently was made redundant and got 450 for each year ....bar stewards
Not quite as clear as it seems, should I stay until I am 55 in just over two years time, then I will get my full pension, if I leave now I get two years money but lose 25% of my pension and lump sum.

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