Benchmarking Redundancy Payments

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Benchmarking Redundancy Payments

Introduction

This factsheet reviews redundancy schemes and provides a comparison of the main features across public sector bargaining groups as well as community, voluntary and private sector organisations. It highlights the common features of schemes and payment arrangements. Specific advice on how to deal with redundancies in your workplace is available through UNISON’s collective redundancy guide and fighting redundancies in local government toolkit.

If you have an example of a redundancy agreement where your branch has negotiated above statutory redundancy rates, please

email a copy of the agreement to bargaining support at [email protected] for our agreements library.

Redundancy Schemes

In a recent survey of employers (July 2015) by XpertHR1looking at redundancy policies and procedures and activity over 2014, they identified that two-thirds of employers only pay the statutory minimum when making employees redundant. The other employers surveyed offered enhanced severance terms which were above the statutory minimum. Out of these the most common schemes included four weeks’ pay per year of service, andenhanced payments - varying by age and length of service and two weeks’ pay per year of service (this was sometimes capped).

XpertHR’s survey identified that employers tried to mitigate making staff compulsory redundant by offering redeployment, voluntary redundancy, freezing posts and reducing the use of agency staff. Where staff were made redundant, two-thirds of employers did not offer a voluntary scheme and made their employees compulsory redundant. In contrast, only one in five employers offered staff a voluntary redundancy scheme. Certain sectors had higher rates of staff leaving on voluntary redundancy terms including manufacturing and the public sector. This can partly be explained by the higher rates of trade union membership and collective agreements in these two sectors2.

Statutory Redundancy Rates

All employees who have worked for the same or an associated employer for two years or more are entitled to statutory redundancy pay, regardless of the hours they work each week.

1_{A survey of 366 employers across all sector types}

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This is the minimum that workers can receive, but employers can provide more. How much money a worker receives depends on their age, and how much service they have accrued with their employer.

You can use the following statutory redundancy payment (SRP) calculations to work out how much money each member is entitled to:

 0.5 weeks’ pay for each full year of service where the age of the member during the year is less than 22

 1 weeks’ pay for each full year of service where the age of the member during the year is 22 or above, but less than 41

 1.5 weeks’ pay for each full year of service where the age of the member during the year is 41+

There is a maximum figure for a week’s pay which is revised in April each year. If you earn more, your redundancy pay is capped at this amount. For April 2016 in England, Wales and Scotland weekly pay is capped at £475 a week and in Northern Ireland weekly pay is capped at £490 a week. A maximum of 20 years’ employment will be included in the calculation.

Enhanced redundancy pay (ERP)

Many local authorities, organisations and private companies have a more generous policy than the statutory minimum and it is up to the employer if they decide if they will enhance redundancy pay. It is essential for branches to develop a strong negotiating position and agree on an enhanced redundancy pay policy as early as possible, before redundancies are announced. Sometimes enhanced redundancy pay is offered to staff as a means of making voluntary redundancy more attractive to staff may want to consider leaving. There are three ways that an employer can increase the redundancy payment for employees:

1. Entitlement – your employer can calculate enhanced redundancy payments using both age and length of service. This can be paid to all employees, including those with less than 2 years service.

2. Multipliers– The employer can decide to multiply the number of week’s pay by the same multiplier for each group.

3. Increasing the maximum – The employer can base a week’s pay on the statutory maximum or any figure between the statutory maximum and actual week’s pay.

The table below is a small sample of employers taken from Labour Research Department’s Payline data. The data used has taken the medium redundancy terms across the small sample of employers in each sector to find the average – It is important to note that more often than not redundancy payments are linked to an employer’s age; therefore the figures below are from an employee aged 22 - 41 years old:

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Source: LRD Payline

What can branches do?

 Ask for a copy of your employer’s redundancy policy including details of any enhanced redundancy pay or policy on awarding compensation on redundancy.  Ask for details of when the employer last reviewed these policies.

 Consider whether the branch needs to start negotiations to improve the policy.

Average Redundancy Payments

Public Sector – average 1.16 weeks pay per year of service

Bassetlaw District Council 1 weeks pay per year of service Liverpool John Moores University 1 weeks pay per year of service Luton Borough Council 1.5 weeks pay per year of service Milton Keynes Council 1.5 weeks pay per year of service Queen's University Belfast 1 weeks pay per year of service Teesside University 1 weeks pay per year of service

Private Sector – average 1.12 weeks pay per year of service

Air France 1 weeks pay per year of service

Air France KLM European Sales & Service Centre

1.5 weeks pay per year of service

Aircelle Ltd 1 weeks pay per year of service

Campden BRI 1 weeks pay per year of service

Cummins Inc (Darlington) 2 weeks pay per year of service Fox's Biscuits (Northern Foods) 1 weeks pay per year of service Society of St James 1 weeks pay per year of service Spooner Industries 0.5 weeks pay per year of service

Voluntary Sector – average 2.25 weeks pay per year of service

ActionAid 3 weeks pay per year of service

Affinity Sutton Group 1 weeks pay per year of service

Age UK 1.75 weeks per year of service

Amnesty International International Secretariat 3.5 weeks per year of service Citizens Advice Bureau 2.5 weeks per year of service

Crisis UK 1.5 weeks per year of service

Employers in Voluntary Housing (EVH) 1.5 weeks per year of service

Greenpeace 4 weeks pay per year of service

International Planned Parenthood Federation (IPPF)

1.5 weeks pay per year of service

One Housing Group 2 weeks pay per year of service

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Below are some examples of redundancy terms across UNISON bargaining groups:

UNISON Bargaining Groups:

Local Government

The NJC green book covers continuous service for the purposes of entitlements including redundancy, but does not cover the amount of redundancy pay. Qualifying periods for redundancy is two years continuous service or more. Most councils and local authorities will be covered by a local agreement which will set out how much redundancy pay staff are entitled to. Payments range from the statutory minimum to higher depending on the agreement.

In addition to the statutory redundancy payment calculated as above Councils can enhance payments to employees by an additional lump sum. A majority base the payment on an actual weeks pay and do not limit it to the statutory maximum.

Please note that statutory pay in Northern Ireland is capped at £490 a week which is slightly higher amount than the rest of the UK at £475 a week.

Mendip District Council (2014) - The calculation of redundancy payments is on the basis of actual salary. The council exercises discretion under the Local Government (Early Termination of employment) (Discretionary Compensation) Regulations 2006, to make compensatory payments to employees being made compulsory redundant based on a multiplier of three times the number of weeks an employee would be entitled to under the statutory redundancy formula, inclusive of any statutory redundancy payment, up to a

NHS Agenda for Change

April 2016

To qualify you must have at least 2 years of continuous full time / part time service, with a maximum of 24 years service.

The redundancy will take the form of a lump sum payment – One month’s pay for each complete year of reckonable service being completed.

For those earning less than £23,000 per year (FTE) the redundancy will be calculated using national full-time annual earnings of £23,000, pro-rated for employees working less than full-time.

For those earning over £80,000 per year the redundancy payment will be calculated using notional full-time earnings of £80,000. No redundancy payment will exceed £160,000 pro-rata

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maximum of 90 weeks' pay.

Caerphilly County Borough Council(2012) – One week’s wages per year of service.

Education

Organisation Effective

Date

Further Education (Lecturers)

Further Education Colleges will be covered under their own local agreement for redundancy.

Sixth Form

Colleges

(Teachers & Support Staff)

2015

Langley Park Sixth Form College – Calculated in accordance with contractual terms and statutory provisions. The relevant statutory provisions are based on the employee’s age, length of continuous employment and the statutory maximum for each week of service.

St Brendon’s Sixth Form College – Redundancy pay for teaching staff – Multiply the number of statutory weeks of entitlement by the normal weekly pay without cap of a maximum of £475 a week.

Redundancy pay for support staff – uses the same calculation as teaching staff.

Teachers

(England & Wales)

2010

2011

United Church School’s Trust – statutory redundancy calculations based on individuals actual weeks pay as opposed to the statutory weeks pay.

Oasis Academies - To qualify for redundancy payments you must have two years continuous service. Employees are entitles to statutory redundancy pay or actual pay (whichever is the greater). The number of weeks pay will be based on an employee’s completed years of service. Employees are entitled to 1 weeks pay for every year of service (if employee is under the age of 41). Employees are entitled to 1.5 weeks for every year of service (if employee is over the age of 41).

Universities (New) & Colleges

of Higher

Education

2013 De-Montfort University– Required element – calculated as SRP and for the enhanced element the university will disregard statutory upper pay limits and employees will receive their actual week’s gross pay for every year of service. Statutory maximum of 20 years service applies. Universities (Old) 2015 Sheffield University - To qualify for redundancy payments

you must have two years continuous service. Redundancy pay is calculated using statutory redundancy pay (SRP) with an enhanced ERP. The SRP is calculated according to a

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2013

2010

member of staff’s length of service, weekly salary and age. The ERP shall be based upon the SRP calculation, enhanced by 100%.

Dundee University– Only offers statutory redundancy pay. There may be an ERP negotiated through the unions.

University of Ulster – The university will pay base pay on NI. Actual weekly earnings and will apply the SRP calculator.

Police & Probation Service

Date

Police support staff

2014 Leicestershire Police – To qualify for redundancy you need to have two years continuous service.

Redundancy pay is calculated and paid on the basis of actual weekly pay.

20 years’ service is the maximum that can be taken into account.

The ready reckoner for redundancy payments from the department of Business, Innovation and Skills is worked out using age of employee and length of service. A minimum payment is 1 weeks’ pay with a maximum of 30 weeks pay. This method is also used to work out statutory redundancy payments. See Appendix 1

Probation Service Local agreements cover compulsory redundancy pay. The national agreement covers the enhanced ‘voluntary’ redundancy scheme. This is based on the employee’s actual weekly pay and not the statutory rate.

Source LRD Payline

Community and Voluntary

Date

Circle Housing Feb 2015

Circle Housing offers 2 weeks actual salary (uncapped) for every full year of service, plus a pro-rata amount for any part completed year, subject to a minimum payment of 13 weeks’ salary and a maximum of 40 weeks’ salary.

Shelter Nov

2013

Up to 1 years service – 1 months pay Up to 2 years service – 2 months pay

Over 2 years service – 3 months’ salary or 2 weeks’ salary for every year worked (whichever the greater)

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Downland Housing Association

Downland Housing Association offers in excess of statutory redundancy entitlements and is calculated at 2 weeks pay per completed year of service. There is a minimum of 4 weeks pay regardless of length of service. An employee within 3 months of completing a service year will be credited that years service for the purposes of calculating severance payments.

Transport

Canals and

Rivers Trust

April 2013

For each complete year of continuous service between the date of entering service and age 21 inclusive – 1 weeks’ pay For each complete year of continuous service between the ages of 22 and 40 inclusive – 2 weeks’ pay

For each complete year of continuous service over the age of 41 – 3 weeks’ pay

The maximum service for the purpose of calculations will be 40 years.

An additional ex-gratia payment will be made on the following basis:

Number of Years’ Service Weeks’ Pay

12 years’ or more 14

11 but less than 12 15

1 but less than 2 8

Source LRD Payline

Utilities & Environment

Date

National Grid 2015 The only statutory entitlement of employees is statutory redundancy pay, which is included in the severance lump sum.

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length of service. It is expressed in a number of weeks’ pay. The terms are based broadly on multiples of the statutory redundancy scheme ranging from a minimum of 13 weeks’ pay (for staff with up to 4 years’ service) increasing to 94 weeks’ for staff who are aged 60 with 39 years’ service.

Private Sector

Date

Co-op Banking Group

2015 3 x statutory payments, uncapped for salary with a maximum of 80 weeks.

Source LRD Payline

Other Public Sector

Date

Bank of England 2014 15% of salary for each year’s service. Maximum payment of three years’ salary.

Source LRD Payline

UNISON has access to the Labour Research Department Payline database, which contains details of redundancy agreements for

employers across the economy. For details of how to access Payline contact the Bargaining Support Group [email protected]

The UNISONagreements librarycontains a wide variety of redundancy agreements with public service employers. UNISON staff have access to this database and if branches wish to check for the availability of a particular agreement, please contact the Bargaining Support Group on

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Appendix 1 – Sample Ready reckoner for redundancy payments (from the Department for Business, Innovation & Skills)

Service (years)

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Age (years)

17 1

18 1 1 ½

19 1 1 ½ 2

20 1 1 ½ 2 2 ½

21 1 1 ½ 2 ½ 2 ½ 3

22 1 2 3 3 3 3 ½

23 1 ½ 2 ½ 3 ½ 3 ½ 3 ½ 4 4 ½

24 2 3 4 4 4 4 ½ 5 5 ½

25 2 3 4 4 ½ 4 ½ 5 5 ½ 6 6 ½

26 2 3 4 5 5 5 ½ 6 6 ½ 7 7 ½

27 2 3 4 5 5 ½ 6 6 ½ 7 7 ½ 8 8 ½

28 2 3 4 5 6 6 ½ 7 7 ½ 8 8 ½ 9 9 ½

29 2 3 4 5 6 7 7 ½ 8 8 ½ 9 9 ½ 10 10 ½

30 2 3 4 5 6 7 8 8 ½ 9 9 ½ 10 10 ½ 11 11 ½

31 2 3 4 5 6 7 8 9 9 ½ 10 10 ½ 11 11 ½ 12 12 ½

32 2 3 4 5 6 7 8 9 10 10 ½ 11 11 ½ 12 12 ½ 13 13 ½

33 2 3 4 5 6 7 8 9 10 11 11 ½ 12 12 ½ 13 13 ½ 14 14 ½

34 2 3 4 5 6 7 8 9 10 11 12 12 ½ 13 13 ½ 14 14 ½ 15 15 ½

35 2 3 4 5 6 7 8 9 10 11 12 13 13 ½ 14 14 ½ 15 15 ½ 16 16

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36 2 3 4 5 6 7 8 9 10 11 12 13 14 14 ½ 15 15 ½ 16 16 ½ 17

37 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15 ½ 16 16 ½ 17 17

½

38 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 16

1/2

17 17 ½ 18

39 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 17 ½ 18 18

½

40 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 18 ½ 19

41 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 19

½

42 2 ½ 3 ½ 4 ½ 5 ½ 6 ½ 7 ½ 8½ 9 ½ 10 ½ 11 ½ 12

½

13 ½ 14 ½ 15 ½ 16 ½ 17 ½ 18 ½ 19 ½ 20 ½

43 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

44 3 4 ½ 5 ½ 6 ½ 7 ½ 8 ½ 9 ½ 10

½

11 ½ 12 ½ 13 ½ 14 ½ 15 ½ 16 ½ 17 ½ 18 ½ 19 ½ 20 ½ 21 ½

45 3 4 ½ 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

46 3 4 ½ 6 7 ½ 8 ½ 9 ½ 10

½

11 ½

12 ½ 13 ½ 14 ½ 15 ½ 16 ½ 17 ½ 18 ½ 19 ½ 20 ½ 21 ½ 22 ½

47 3 4 ½ 6 7 ½ 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

48 3 4 ½ 6 7 ½ 9 10

½

11 ½

12 ½

13 ½ 14 ½ 15 ½ 16 ½ 17 1/2

18 ½ 19 ½ 20 ½ 21 ½ 22 ½ 23 ½

49 3 4 ½ 6 7 ½ 9 10

½

12 13 14 15 16 17 18 19 20 21 22 23 24

50 3 4 ½ 6 7 ½ 9 10

½

12 13

½

14 ½ 15 ½ 16 ½ 17 ½ 18 ½ 19 ½ 20 ½ 21 ½ 22 ½ 23 ½ 24 ½

51 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 17 18 19 20 21 22 23 24 25

52 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 17 ½ 18 ½ 19 ½ 20 ½ 21 ½ 22 ½ 23 ½ 24 ½ 25 ½

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53 3 4 ½ 6 7 ½ 9 10 ½

12 13

½

15 16 ½ 18 19 20 21 22 23 24 25 26

54 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 20 ½ 21 ½ 22 ½ 23 24 ½ 25 ½ 26 ½

55 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 23 23 ½ 25 26 27

56 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 23 ½ 24 25 ½ 26 ½ 27

½

57 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 24 24 ½ 26 27 28

58 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 24 25 26 ½ 27 ½ 28

½

59 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 24 25 ½ 27 28 29

60 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 24 25 ½ 27 28 ½ 29

½

61+ 3 4 ½ 6 7 ½ 9 10

½

12 13

½

15 16 ½ 18 19 ½ 21 22 ½ 24 25 ½ 27 28 ½ 30

 The table starts at age 17, as it is possible for a 17 year old to have 2 years service. Compulsory school leaving age can be 15 ¾ or 15 4/5 where a child is 16 before 1 September.