Page last updated at 16:24 GMT, Thursday, 23 October 2008 17:24 UK

How to negotiate during redundancy

Money Talk
By Brendan Barber
TUC general secretary

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Unemployment has been rising and more job losses are expected

Britain - indeed the global economy - faces recession. Unemployment will rise to two million, and some say three million, next year.

Even more are worried about losing their jobs.

But most people won't lose their jobs, even if the recession is a tough one. So our first piece of advice is do not get too gloomy, most people will come through.

But it is still wise to check up on your rights and get a basic knowledge of what is involved if you are made redundant.

'A better package'

The law provides some rules about minimum treatment, and you may be able to negotiate a better package, especially if you have a union on your side.

If you have worked continuously for the same employer for two years or more, you are likely to be entitled to statutory redundancy pay (SRP). The exception is if you are not an employee, but have the lesser legal status of a worker, where you do not have a contract of employment.

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If your employer is simply slimming their workforce, then the employer pays redundancy pay. If your employer goes bust, then the state steps in to pay it.

Those with less than two years' service may still get something from a better employer, but you do not have a legal right to redundancy pay.

Casual workers, including agency workers, who are not employees, even if they have worked for more than two years for the same employer, will not have any legal right to redundancy pay (or much else).

How much statutory redundancy pay an employee will get depends on their age, length of service and level of weekly pay.

Employees aged under 22 are entitled to half a week's pay for each full year of service; those aged 22-40 are entitled to one week's pay for each full year of service; while employees who are aged 41 or over are entitled to 1.5 weeks' pay for each full year of service.

But - and this is a big but for the better-paid - only up to 330 of an employee's weekly pay will be taken into account when working out their statutory redundancy pay. The TUC thinks this should be higher.

Taxes

The first 30,000 of redundancy pay is tax-free, but the rest, including unpaid wages and bonuses, may be taxed. Again the TUC is campaigning for this to be higher.

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More people are expected to be searching for work

Some employers offer more generous redundancy packages than the statutory minimum.

Workplace redundancy arrangements may be contained in an employee's contract of employment or staff handbook, but are more likely to be included in a workplace policy or agreed by an employer when redundancies are being considered.

If you think you may be selected for redundancy, it is worth finding out what policies apply in your workplace before approaching your employer about redundancy pay.

But talking to your employer alone can be a daunting task, particularly when you may be about to lose your job. This is one of those times when it is really helpful to be in a union.

Consultation

Where employers are thinking about making more than a few redundancies, they must consult with recognised trade unions over the when, who and how of redundancies. In some cases, they must even consult over the reasons why an organisation faces closure.

Where there is not a trade union, employers must still consult with workplace representatives. These will need to be elected by those who are likely to be affected by redundancy.

Trade unions will normally try to negotiate redundancy pay above the statutory minimum, try to ensure redundancies are voluntary rather than compulsory, and win funding for training and assistance to help people find new jobs.

They will also ensure that employers' selection criteria for redundancies are fair, transparent and do not unfairly discriminate against particular groups.

The various laws against unfair discrimination on grounds of sex, age, race, disability, religious belief and sexuality apply to redundancies, and employers must be able to show that they are choosing people for redundancy in a fair way.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.




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