REDUNDANCY – GUIDANCE NOTES

REDUNDANCY – GUIDANCE NOTES


1.    Introduction

This applies where there is a redundancy situation as defined by the Employment Rights Act 1996:

    Where business has ceased or diminished
    Where the requirements for work of a particular kind has ceased or diminished
    Where there has been a significant change in the place of employment and there is no suitable alternative employment available

The employee may be eligible for either early retirement or severance depending on the circumstances.

2.    Provisions

In a redundancy situation, as defined by the Employment Rights Act 1996 an employee may be eligible for either early retirement or severance, depending on the circumstances.  

For employees in the Local Government Pension Scheme, the provisions are:

-    early release of pension benefits  (if aged 55 and over with at least three months membership in the LGPS or with transferred pension,
-    the payment of the pension lump sum (if aged 55 with at least three months membership in the LGPS or with transferred pension)
-    a redundancy payment in accordance with the State formula (see chart A) based on the employee’s actual week’s pay.
-    Where normal or full notice cannot be served, pay in lieu of notice will apply


For Voluntary Redundancies/Severance only
•    An additional payment of 0.8 times the statutory payment, bringing the
    total payment to 1.80 times the statutory formula and up to a
    maximum of 50 weeks pay.  This will be reviewed in August 2013.

This additional element is awarded in accordance with the Local Government (Early Termination of Employment) (Discretionary Compensation) Regulations 2000 and the Council reserves the right to change all discretionary elements.


The employee may request the Council to use this additional payment to augment their pensionable membership. This is subject to a maximum enhancement of not more than 10 years.

NOTE:  
-    the statutory redundancy payment cannot be used to purchase pensionable service
-    the full additional severance payment has to be used, it cannot be split (therefore if the maximum augmentation would be exceeded, this option is not available).
-    No pay in lieu of notice will be paid.


If you are under 55 years of age, you will not be entitled to receive your pension and lump sum when you leave.  These will be deferred in the pension scheme until you reach your normal retirement age.  Therefore, if you are under 55 and accept Voluntary redundancy, you will not receive your pension at age 55.  Between the age of 55 and 60 you would only be able to access your deferred pension on the grounds of ill health or on compassionate grounds, for example if you are unable to work as a result of providing long term care for a dependent with a severe medical condition, excluding terminal illness. At age 60 you may apply for your pensions benefits to be released but if you have no protection under the 85 year rule, these benefits will be reduced.  You may also be able to transfer your pension benefits into the pension scheme of a new employer.


Employees who are not in the LGPS will be entitled to:

Compulsory Redundancy  - a redundancy payment in accordance with the State formula based on the employee’s actual week’s pay and where normal or full notice cannot be served, pay in lieu of notice


Voluntary Redundancy  - a redundancy payment in accordance with
the State formula based on the employee’s actual week’s pay plus an
additional payment of 0.8 times the statutory payment, bringing the
total payment to 1.80 times the statutory formula and up to a
maximum of 50 weeks pay. 

This additional element is awarded in accordance with the Local
Government (Early Termination of Employment) (Discretionary
Compensation) Regulations 2000 and the Council reserves the right
to change all discretionary elements.
3.    Process

Where the possibility of redundancies arises, management will enter into consultations with the appropriate employees and employee representatives as early as possible and with a view to discussing of all the options. Please refer to the Restructuring Policy and the Redundancy Policy, Procedure and Toolkit for further details of the process to follow.
Consideration will be given to the following criteria, in order to avoid early retirement/severance, subject to the Council’s business needs at the time.
    Normal employee turnover and retirements
    Recruitment freeze or the use of temporary or fixed term contracts or other short term methods of covering the work, e.g. acting up arrangements.
    Ring fencing vacancies to affected employees
    Partnerships with other local authorites/organizations to advertise their vacancies to Council staff prior to external advertising
    Reducing costs by reducing overtime; reviewing the balance of gradings (using job evaluation as appropriate); reviewing working patterns (to avoid those that attract enhancements); reviewing terms of employment
    Buy out of hours, considering whether employees would be willing to reduce their hours
    Retraining/Reskilling for employees to enable them to develop new skills and so move on either within or outside the Council
    Outplacement and counseling services which may assist employees in finding employment outside of the Council
    Protection of earnings where there is a reasonable alternative job at a lower level.  Salary protection could avoid the need for redundancy/severance and could be a less costly option.
    Redeployment should be considered across services and departments.  It is vital to its success that managers take a positive approach to this and that appropriate help and support is given to the employee, see Redeployment Policy .
    These options should not be seen in isolation but as part of a total approach.  It will rarely be possible to use one option without another.




4.    Costs

Redundancy payments (including severance payment) and the increased cost of pension liabilities arising from the early payment of retirement benefits should be recognised and taken into account when decisions are made.

Services will be charged for the actuarial cost arising from the early release of pension and the one off costs of redundancy and severance.

In a bumped redundancy situation the principle is that the Service which benefits from the retirement/severance should also bear the costs. It is acknowledged these cases the benefits may be shared.  In such circumstances the costs would also need to be shared, matched to the benefit which each Service receives.  The financial arrangements for funding will need to be judged on the specific circumstances of individual cases.  Departmental Finance Managers will need to produce a supporting statement to attach to the application.

5.    Re-employment

In cases of redundancy the requirements of the Redundancy Payments Modification Order will apply; i.e. if an employee takes up any other RMPO employment within 4 weeks they are required to repay their redundancy/severance payment.

The re-employment of any former employees who have left the employment of the Council or Legacy Councils on the grounds of voluntary redundancy/severance will be subject to the agreement of the Head of Human Resources/Organisational Development in conjunction with the Leader and the relevant Portfolio Holder, and will only be on the grounds of truly exceptional circumstances. Reappointment and re-engagement includes all types of contractual relationships whether they be a contract of employment, contract of service, etc and whether the individual is appointed as an employee or engaged as an interim, direct consultancy or via an agency or other supplier.


6.    Appeal Rights

Appeals against decisions not to agree Redundancy/Severance and associated retirements will be considered by the Staffing Officer Panel.

Appeals against dismissal on the grounds of redundancy will be to the Director.