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Your
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Facing
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www.worksmart.org.uk
redundancy
With the economy in difficulties, redundancies are in the news
every day. But even when times are better redundancies
happen when firms reorganise or get taken over.
This leaflet explains your rights if you are threatened with
redundancy and offers some tips for the newly unemployed.
About this booklet
This booklet gives you a basic guide to
the law about redundancy and answers
some common questions about what
happens when you lose your job.
But the law is often complicated. A
booklet like this cannot contain all the
detail you would find in a legal textbook.
What it does is set out what should
happen if you are made redundant and
explain the law in simple terms to help
you decide whether you should seek
further advice – which you should always
do before legally challenging your
employer. If you are in a union, they
should be able to help. If not, other
sources are listed at the end.
While we have tried to make this booklet
as accurate as we can, you cannot take a
short introduction like this as a
comprehensive statement of the law.
The photographs in this booklet are posed by
models for illustrative purposes only.
3
What
is
redundancy?
Redundancy is a form of dismissal. Many workplace representatives before making
of the general rules about when groups of workers redundant. These
dismissals are fair apply to redundancies. rights do not apply to other types of
dismissals.
The law says that redundancy is a
potentially fair reason for an employer to This booklet explains the steps that
dismiss an individual. As with other employers should follow before making
forms of dismissal, for a redundancy staff redundant. For information on other
dismissal to be lawful an employer must forms of dismissal see our leaflet Your
have followed a fair procedure before Job and the Law, which you can get from
laying an individual off. An employer the TUC’s Know your Rights line on 0870
must use fair and objective criteria when 600 4 882.
selecting individuals for redundancy. It is
Redundancies take place when an
unlawful to select an individual for
employer reduces their workforce. This
redundancy because of their sex, race,
may be because a workplace is closing
sexual orientation, disability, age, religion
down or because fewer people are
or belief or because they are a trade
needed for work of a particular kind.
union member. The employer should also
meet with an employee to explain why It will not normally be a redundancy if
they have been selected for redundancy, your employer immediately takes on
explore any other employment options someone else to do your job. In such
and allow the employee to appeal any situations you could well have a case
redundancy decision. against your employer, even though they
have told you are redundant.
When they make staff redundant
employers are also expected to follow But this does not automatically stop your
legal rules that are slightly different to employer from taking on any new staff.
when they sack individuals for other They could argue they picked up an
reasons, such as misconduct or poor unexpected order or contract. They are
performance. For example, many also free to take on someone to do a
employees who are made redundant will completely different job in your
be entitled to redundancy pay. Employers workplace, or someone to do your job but
must also consult trade unions or in a different workplace.
4
They may also require you to move and exploring any alternative job
workplaces if that is in your contract of opportunities
employment. If it is and you refuse to
■ have to give notice of redundancies
move you may not get redundancy pay.
and consult formally with the
On the other hand, your contract may say
workforce where they are considering
that in a redundancy situation you should
making more than 20 employees
be offered a chance to move. In that
redundant over a period of 90 days
instance the employer should make you
that offer before offering that post to ■ will have to pay redundancy pay to
other staff. You should seek further advice most staff who have worked for more
if either of these situations affects you. than two years
Even if an existing member of staff is ■ must not choose who gets made
given your job, you can still be made redundant on the basis of their sex,
redundant legally, provided there is an race, disability, age unless objectively
overall loss of jobs. This means that an justified, sexual orientation,
employer can normally reshuffle their transgender status, religion or belief,
workforce after making some people pregnancy or trade union membership.
redundant as long as they are genuinely
If they don’t follow these requirements,
reducing the size of their workforce.
they may not be able to make the
At a time when the economy is in trouble redundancies or may have to pay
and redundancies common an employer compensation to people who have been
may be tempted to get rid of you if your treated unfairly.
face doesn’t fit and call it a redundancy. If
Employers should also provide you with
you think that you have been dismissed
time off for job hunting or to arrange
and the real reason isn’t redundancy you
training.
should take advice. You may be able to
win some compensation at an Much of the rest of this leaflet goes
employment tribunal. But if your through these requirements in more detail.
employer is genuinely reducing the size
Some employers will treat redundancy as
of the workforce then it will most likely
a last resort, do their best to act fairly,
be a redundancy.
and do more than the legal minimum.
Unions can often negotiate far better
Rules for employers making people terms than the legal minimum if your
redundant workplace is unionised.
If your employer wants to make people But some employers may ignore or not
redundant, they have to follow a series of understand the law – failing to consult
legal requirements. In brief, they: properly is a common fault.
■ must follow a redundancy dismissal Some employers will even try to treat
procedure during which they must tell people so badly they resign, so that they
you the reasons for the redundancy avoid the responsibilities they owe staff
5
made redundant. In this case you might Step 2 Your employer should hold a
have a claim for constructive dismissal – meeting with you to discuss the
see the leaflet Your Job and the Law, redundancy and to consider whether
available from the TUC’s Know Your there is another suitable job that you
Rights Line on 0870 600 4 882. can do. You have the right to be
accompanied at this meeting by a trade
And if your employer goes bust, you will
union official or a colleague. After the
still get the legal minimum redundancy
meeting your employer should tell you
pay from the Government.
the decision and how to exercise your
Meeting with your employer right to appeal.
If an employer starts the process towards Step 3 If you ask for one your employer
making you redundant before 6 April must hold an appeal meeting. Again you
2009, and they are not carrying out have the right to be accompanied at the
consultations on collective redundancies meeting by a trade union official or a
(described page 6) your employer must colleague (whether or not you took
follow a statutory dismissal procedure. someone to your first meeting). Your
The main steps of this procedure are: employer must then tell you the final
decision.
Step 1 Your employer should write to you
telling you the reason for the redundancy It is important to note that your
and inviting you to attend a meeting. employer is required to follow the three-
6
step procedure if they have sent you a Consultation on redundancy
Step 1 letter, held a consultation meeting If your employer is considering making
with you or made you redundant before 6 more than 20 people redundant over a
April 2009. 90-day period, they must, by law, consult
If your employer does not follow these representatives of employees who are
steps an employment tribunal may find affected directly or indirectly by the
that your dismissal is automatically possible redundancies. In many cases,
unfair and you may receive some redundancies may affect the entire
compensation. You may receive less workforce.
compensation if you do not attend the If your employer recognises a union, then
Step 2 meeting with your employer or do the consultation should be with the
not use your right to appeal. union. If not, your employer must consult
When your employer is carrying out with elected employee representatives.
collective consultations (see below), your Employee representatives may either have
redundancy may still be unfair if they do been elected specially to be consulted on
not meet with you individually to explain the proposed redundancies or may be
the reason for the redundancy and to part of an existing elected representative
consult with you about alternative body such as a staff council.
employment options. In such cases you The agenda for consultation must include
may be entitled to compensation. ways of avoiding redundancies or of
If your employer starts the redundancy reducing the numbers affected. Where a
procedure after 6 April 2009, employers workplace is closing down, the employer
will no longer be required to follow this should also consult on the reasons for
three step procedure. the closure. Agreement does not have to
be reached as a result of the consultation
But they still have to meet you but the employer must consult “in good
individually to discuss your redundancy faith”, that is, with a view to reaching
and to consult with you about alternative agreement. Some information must be
jobs. You have the right to be disclosed to the representative body
accompanied by a colleague or a trade including:
union official. If this does not happen,
then your dismissal may be legally unfair ■ the reasons for the redundancies
and you may be entitled to ■ the numbers and descriptions of those
compensation. affected
You should always seek advice before ■ the proposed method of selecting
taking a complaint to an employment those to be made redundant, e.g. ‘last
tribunal. If you are a trade union member, in, first out’ (the method must not be
your union rep should be able to help. discriminatory, for example by selecting
Otherwise contact the ACAS helpline or jobs that are predominantly done by
your local Citizens Advice Bureau (see women)
page 23).
7
■ how any redundancy payments better If the tribunal finds that a complaint is
than the legal minimum will be worked justified it can make a protective award,
out. which will require the employer to pay
the employees their normal pay for the
Consultation cannot just take place one
period covered by the protective award
afternoon when the managing director
(that is, the 30 days or 90 days
has a slot in their diary. There are
consultation period depending on how
minimum periods during which
many redundancies are happening).
representatives must be consulted:
In addition to consulting recognised trade
■ If 20 to 99 employees are to be made
unions or employee representatives,
redundant, consultation must last at
employers should also consult each
least 30 days.
individual employee who has been
■ If 100 or more employees are to be selected for redundancy. This individual
made redundant at one establishment consultation usually takes place as part
over a period of 90 days or less, of the statutory dismissal procedure
consultation must last at least 90 days. described on page 4. Redundancy
dismissals may be unfair where an
This consultation can make a difference.
employer has consulted with a trade
It at least makes management pause for
union or employee representatives but
thought. At best, workforces have been
not also talked to the individual.
able to suggest ways of avoiding
compulsory redundancy altogether. Selecting people for redundancy
For example, in some workplaces all staff When a number of staff are being selected
have volunteered to work fewer hours in for redundancy, your employer must
the knowledge that trading conditions ensure that the basis for selection is fair
may improve in the future. In other and does not discriminate, otherwise you
workplaces the consultations have led to could take an unfair dismissal case to an
fairer ways of choosing redundancy, employment tribunal.
perhaps by improving redundancy
People being made redundant cannot
payments to the point where there are
therefore be selected on grounds of sex,
enough volunteers.
race, disability, age unless objectively
Individual notices of redundancy must justified, sexual orientation, transgender
not be issued until there has been status, religion or belief, pregnancy or
sufficient consultation in line with these trade union membership. Often
requirements. A complaint that an employers ask for volunteers and offer
employer has failed to consult properly or early retirement before considering
that redundancy notices have been compulsory redundancy.
issued before consultation ends can be
An employer can take these into account:
made to an employment tribunal by the
trade union or the employee ■ skill and capability (sometimes this can
representatives. lead to the particularly stressful process
8
of people having to re-apply for What if your employer offers you
their jobs) another job?
■ attendance record If your employer offers you an alternative
job, you will need to think carefully. If you
■ conduct record turn it down you may no longer be legally
■ any agreed existing procedure redundant, and would be in the same
position as if you had just resigned.
■ type of work needed to be done by
those remaining. You will lose your redundancy rights if:
Employees are entitled to know what ■ your employer (or an associated
factors have been used in the selection employer, or an employer taking over
process. Your trade union may have the business) offers you a new job
agreed a redundancy procedure with your before your current contract expires
employer, so check with them that this and it starts within four weeks, and
has been followed. ■ your employer makes the offer in
Alternative employment and work hours writing and
If your employer is considering making ■ the job is suitable for you.
you redundant they have some
You can turn down a job that is clearly
responsibilities to help you find other
unsuitable, but you can also try it out to
work. They should consider whether
see if it suits you. Again there are rules
employees who are likely to be affected
about this:
by redundancy can be offered suitable
alternative employment within the same ■ You can agree to try the replacement
organisation or in an associated company. job out for a four-week trial period.
(This period can be extended if you are
If your employer wishes to change the being retrained, but there must be an
terms of your contract – for example by agreement in writing.)
changing your working hours or patterns
of attendance, by purporting to lay you ■ If at the end of the trial period you are
off or put you on short-time working for a still in the job, then you lose any rights
period of time, or by changing your pay or to a redundancy payment. In law you
other terms and conditions of your have accepted the new job.
employment – the change will only be ■ If you reject the new job before the end
lawful if you or your union agree to it. An of the trial period because it turns out
unauthorised, one-sided variation is a to be unsuitable, or for good personal
breach of your contract of employment. reasons, your redundancy will be
Even if your contract does allow lay-off or considered to have started the day your
short-time working when there is a old job ended.
shortage of work, you may be able to However, if you say the new job is
force your employer to make you unsuitable but your employer says it is,
redundant and pay you a redundancy your employer may refuse you your
payment instead.
redundancy rights. So you should take could only be settled in an employment
advice before you walk away from an tribunal. But anything that is clearly a
alternative job offer. sensible and realistic attempt to find
work or appropriate training is likely to
If your employer says you have left a
be fine.
suitable job and is refusing you
redundancy pay, you will need to make a You should be paid your normal pay for any
claim in an employment tribunal and time off, but there is an upper limit on how
show them why the job was unsuitable. much your employer has to pay of two-
If the tribunal finds that you have refused fifths of a week’s pay. Of course many
a suitable offer of alternative employers are more generous and will pay
employment you will lose your right to a you in full for any time off searching for a
redundancy payment. job. Indeed this is one thing you might
want to ask for when you first discuss
Time off to look for work or for training redundancy with your employer.
If you are made redundant you will
You can make a complaint to an
usually have a right to reasonable paid
employment tribunal if you have been
time off during your normal working
refused reasonable time off to look for
hours to look for another job or to make
work or to make arrangements for
arrangements for training.
training. The tribunal can award you the
To qualify for this you must have worked pay you would have received if your
continuously for your employer for two employer had permitted you time off or
years or longer on the date when your the balance of the pay which is due to
notice expires. you. You should seek advice from your
union, ACAS or an advice centre before
The law says that you are entitled to
making a complaint to an employment
reasonable time off. It is not easy to
tribunal.
define this and if there were a dispute it
Redundancy
pay
The law sets out minimum redundancy How much will I get?
pay, but not everybody is entitled to it. To
The legal minimum you should get
be entitled to the legal minimum you
depends on:
must have:
■ how long you have worked
■ worked continuously for at least two
continuously for your employer
years for your employer and
■ be an employee. (The difference
between an employee and a worker is a
complex legal point, explained in more
detail in Your Job and the Law, which
you can get from the TUC’s Know Your
Rights line on 0870 600 4 882. Most
people are employees, but you may be
a worker if you do not have a contract
of employment and have a looser
relationship with your employer –
many agency workers are not
employees, for example.)
What about notice?
If you are made redundant you are
entitled to a minimum period of notice.
For every year you have worked for your
employer, you should get one week’s
notice, up to a maximum of 12 weeks. If
your employer makes, or lets, you leave
before this period you should still be paid
for the full notice period.
Your contract of employment may be
more generous.
11
(maternity, paternity and parental leave Allowance (JSA – the unemployment
count as part of continuous benefit that most redundant people
employment) will claim). As we will explain later, if
you have sufficient National Insurance
■ how old you are, and
contributions, then the first six months
■ how much you are paid. of JSA is not means-tested, but after six
months any redundancy pay that you
This is how the minimum is calculated:
still have will be counted as part of
■ For each complete year of employment your savings in the means test that
after your 41st birthday you should get kicks in after six months.
one and half week’s pay.
The small print
■ For each complete year of employment
The basic principles for working our
after your 22nd birthday but before you
redundancy pay are easily put. But in
turn 41 you should get one week’s pay.
practice it can be complicated.
■ For each complete year of employment
1. The first issue is working out how
while you were either 18, 19, 20 or 21
many years of service you have. The
you should get half a week’s pay.
period starts on your first day with your
But you can only count: current employer and ends at what is
called the “relevant date”. This is the
■ up to 20 years’ service
day on which your redundancy notice
■ your pay up to the fairly modest weekly expires, even if your employer has let
limit of £330 (2008-9 figure). you work, or made you work, in the
meantime. (See page 10 to find out
This is uprated each year in line with the
how to work out your notice.)
Retail Price Index. The most anyone can
get is £9,900 (2008-9 figure). This is 30 Redundancy pay is calculated in
weeks at £330 a week. calendar years but with no fractions of
a year. If you have worked for 10 years
There is a useful online calculator on the
and 11 months, then it is counted as 10
TUC’s worksmart site:
years. The period must be of
www.worksmart.org.uk
continuous employment. Days on strike
Employers can of course be more do not count but do not break the
generous, though see below for why you continuity of the employment. Periods
should be careful about signing away any of maternity, paternity or parental leave
rights in return. do count and do not break the
continuity of employment. Other
There are two bits of good news:
absences may sometimes count
■ You do not have to pay tax on towards a period of continuous
redundancy payments less than £30,000. employment, even where the contract
was broken, for example, by a
■ A redundancy payment does not affect
temporary stoppage of work.
your right to claim Jobseeker’s
12
2. The second issue that can be continuously for your employer for
complicated is working out your weekly more than two years
pay. For those on a salary, this will be
■ you are a domestic servant working
straightforward, but not everyone is
in a private household and you are a
paid the same each week. There can
member of the employer’s
also be arguments about which week
immediate family
to take and which part of your wage
packet counts. ■ you are a Crown servant or employee
in a public office
The weeks’ wage is taken to be what
your contract of employment said you ■ you are a member of the armed
should have been paid in the week your forces.
employer gave you notice, for that
week’s work. (If for some reason your What if your employer offers you
employer did not give you formal more?
notice then it is the week in which they
should have given you notice.) Some employers will offer better terms
and some will include these in your
If your pay varies each week, perhaps contract of employment. Your employer
because you are paid on a piece-work may offer a ‘severance’ payment, which is
basis, the amount is averaged over the a lump sum offered as compensation for
12 weeks immediately before the ending your employment. This must be
calculation date. Overtime and other above the legal minimum if your job is
bonuses only count if they are being made redundant. In return for this,
guaranteed in your contract of you may be asked to sign a legal
employment. document (known as a COT3 or a
3. There are also some other exceptions. compromise agreement) saying that you
The main ones that stop you getting accept the sum and will not take any
redundancy pay are if: legal action against the employer in
relation to the dismissal. If you have any
■ you are an apprentice whose doubts about this you should seek advice
service ends at the end of your from your union, from ACAS or from an
apprenticeship contract advice centre.
■ you are on a fixed term contract and
you signed a waiver which removed What if you are nearing retirement?
your rights to redundancy payments
before 1 October 2002. However if There is no longer an upper age limit for
your contract has expired or has been rights to statutory redundancy pay or
renewed since 1 October 2002, then unfair dismissal protection. There is,
the waiver will not be effective and however, still a default retirement age of
you will be entitled to statutory 65, meaning that your employer can still
redundancy pay if you have worked require you to retire at age 65, if they give
you six months’ notice of retirement and
13
correctly follow the statutory procedure. request and meet with you to discuss it.
If they do retire you in this way they do For more information on the right to
not have to give you redundancy pay. request to work beyond retirement, see
www.worksmart.org.uk.
If your employer forces you to retire
before the age of 65 this will be unlawful
unless your employer can objectively What if your employer is broke?
justify having a lower retirement age. If If your employer cannot pay because of
your employer asks you to retire early serious financial problems, the
because they need to reduce the size of Government, in the form of the
the workforce, you should be entitled to Department for Business Enterprise and
at least statutory redundancy pay. Regulatory Reform (BERR), will pay you
In addition, all employees have the right directly. They will only ever pay the
to request to work beyond 65 or any statutory minimum amount – even if
other retirement age that applies to your your contract of employment promised
workplace. Employers must consider your you more. In order to get payment from
BERR, you must first have submitted a
14
claim to the employer in the normal way, How to get the money
as described below.
It is up to your employer to give you your
If your employer is insolvent, the redundancy pay when you leave. You
payment is made by BERR. (They will should not have to ask for it. But if you
attempt to recover this from the assets of are not paid, then you should make a
the business.) written request to your employer. If
nothing then happens, or if you suspect
If you lose out in these circumstances
your former employer will try to avoid
because your contract of employment
paying you, then you should refer the
promised you more than the legal
matter to an employment tribunal.
minimum, you have a claim against the
assets of the company. You will need to You need to do this within six calendar
lodge a claim with the administrators if months of the date your employment
they are going through insolvency, but at ended. If you do not claim within six
best you are only likely to get some of months you may lose the right to a
what you are due, possibly after a long payment. (The tribunal does have
wait, and at worst nothing. discretion to extend this period by a
further six months but they rarely do so
You can download a useful leaflet from
without a very good reason and you
the government Insolvency Services at
should never rely on this.)
http://bit.ly/insolvency (pdf). The BERR
redundancy payments helpline number is
0845 145 0004.
When
you
leave
Make sure your employer gives you: If your redundancy pay is given to you
entirely as a result of a contractual
■ your P45 form
obligation, then all of it may be liable to
■ written details of your redundancy tax. A common instance is when your
package, and contract of employment says you are
entitled to three months’ notice but your
■ a good reference.
employer lets you leave immediately and
gives you your three months’ pay in one
Tax lump sum. The tax office will still treat
The first £30,000 of redundancy pay is this as if you were paid for those three
tax-free, but the rest may be taxed. months and deduct tax and National
Insurance as usual.
16
If you have to pay tax, it counts against retirement. You may want to consult an
your tax bill in the year you receive the independent financial advisor (IFA). These
money, not the year you were made are professionals skilled in giving
redundant. If it is paid in instalments, independent advice to people about
then the £30,000 exemption can be money. They should always provide a free
carried forward. initial consultation. After that they will
make their money either from
You may be able to reduce any tax
commission they receive on any
liability by paying some of your
investments you make, or by charging
redundancy pay into a pension.
you a fee but passing on the commission
payments to you instead, or some
What to do with your money? combination of the two.
Many redundancy payments are relatively You are almost certainly best advised to
modest and will only help tide you over consult an IFA rather than your bank.
until you get another job. But with long Most banks (though not all) will only try
service or a redundancy payment greater and sell you their own savings and
than the legal minimum, you may get a pensions products. Some of these may be
tidy sum. A redundancy cheque may be good value, but they will not have the
one of the biggest amounts of money wide range available to an IFA. If you
you receive in one go. It can be tempting want to find an IFA, your union may
to spend it all! recommend one or you may be offered
But unless you know you have another access to one by your employer as part of
job to go to, then think carefully. A redundancy arrangements. There are also
priority should be paying off any debt details at the end of this leaflet if you
that you have. Servicing debt is want to find one. Some IFAs specialise in
expensive, and you can quickly get into advising on ethical investment, while
real difficulties if you find that you some others specialise in the particular
cannot keep up payments while you are needs of the gay and lesbian community.
unemployed. If you have any left over Typical advice would be to first put your
then you may need it simply to help meet redundancy payment into a high interest
everyday living costs. savings account while you consider what
If you have got a more substantial sum to do. Many newspapers and websites
then you may want to use the money to carry tables that show the accounts
take time out from working while you paying the best rates. These may only be
study or retrain for a new career. You may available via the internet or by post, rather
want to use the money to set up in than your high street. Now we know that
business. The Business Link Helpline 0845 banks can fail, it makes sense to spread
600 9 006 has helpful advice. Or you may savings between a number of different
decide that you are now retired. banks. www.moneysavingexpert.com has
good advice on both the best accounts
You should take advice if you have cash and on keeping your savings secure.
that you want to save or put towards
17
But what you should do will really
depend on your own circumstances. That
is why you should take independent
advice if you get a sizable redundancy
payment.
What happens to your pension?
If you have a job where your employer
runs a pension scheme and you are a
member, it is important to think about
what will happen to your pension.
Pension issues are never simple, and you
should take advice before taking big
decisions about your pension. All we can
do here is provide an overview of some of
the issues.
There are two broad types of pension
that are provided by employers:
■ Defined benefit (DB) schemes. These
pay a pension that depends on how
long you have worked for your
employer, what you earn and the rules
of the scheme. There is a pensions
promise. Although the pensions
scheme will be backed by investments,
your pension will not depend on how
The next step should be to look at your
well these investments perform. They
debts, such as credit cards, personal loans
are called defined benefit schemes
and your mortgage. Consider paying
because the pension you get (the
these off, as the interest you pay is likely
benefit) is based on the pensions
to cost you more than you would get
promise and is up to the employer to
from any interest on your savings.
put in any additional contributions if
After that, if there is any money left over, there is not enough cash in the scheme
you will want to save it in a way that to pay the promised benefit. Many DB
helps your long-term security. You are schemes in the private sector have
likely to be advised to keep some in an closed to new members in recent years.
emergency fund that you can get at
■ Defined contribution (DC) schemes.
easily, with the rest in longer term
These pay a pension that depends on
savings.
how much you and your employer
18
contribute and how well the ■ You may be offered a refund of your
investments bought with these contributions if you have only been a
contributions perform. All you can member of the scheme for a short
know in advance is the size of the period.
contributions, which is why they are
■ You may be offered a transfer to a ‘buy-
called defined contributions schemes.
out’ policy. You have a lump sum
While DB schemes often provide better invested in a new personal pension
pensions, they are more complex to deal where your eventual pension will
with when you are made redundant. depend on how well the investments do.
Defined benefit schemes Members should be told as soon as
possible:
If you are old enough, your employer or
the rules of your DB pension scheme may ■ what the value of their deferred
allow you to retire early with a reduced pension will be
pension. In some cases as part of a
■ the value of a transfer payment to
redundancy package you may be offered
another pension scheme
a deal more generous than normally on
offer for those taking early retirement ■ their entitlement to a refund of
from your pension scheme. You may still contributions, if any
be entitled to redundancy pay as well –
■ the value of an early retirement
you should not confuse this with the
pension and lump sum.
lump sum offered by most pension
schemes on retirement. If your employer goes bust this could
leave a DB pension scheme without
If you are not old enough to take early
enough money to honour the pensions
retirement you should be offered some or
promise. But thanks to union
all of the following options:
campaigning, a new Pensions Protection
■ You should be allowed to take your Fund has been established that will make
pension and transfer it to a scheme run up at least some of any pension under
by a new employer (though you will be threat. The older you are the better you
lucky to find a new job with a DB will be protected.
pension that accepts such transfers
outside the public sector) or invest it in Defined contribution schemes
your own private pension scheme. It is much simpler if you are a member of
a DC scheme. This is because it is
■ You should be allowed to keep the
basically a simple savings scheme – you
pension with the employer who is
are building up what is often called your
making you redundant. When you
pension pot – into which you and your
retire you will still receive a pension
employer have made contributions. You
from this scheme. This is known as a
effectively own this and can easily
deferred pension.
transfer it into another similar pension
scheme, or may be able to keep it with
19
the pensions company with which your Jobseeker’s Allowance
employer scheme was organised. It is Jobseeker’s Allowance (JSA) is the main
best to take advice from an independent benefit for people of working age who
financial adviser (IFA) to find out your are looking for another job. Some of the
options and discuss where and whether most important rules are:
you want to move your pension. All such
schemes have charges, and it may be that ■ You have to be available for and
these change if you no longer work for actively seeking work – you have to
the employer who set up the scheme, ‘sign on’, and attend fortnightly
and this may be a reason to move. meetings to discuss what you have
done to get a job.
Don’t forget that if you are made
redundant and you are due to receive a ■ You have to be capable of work.
payment under an occupational pension ■ You may get less JSA if you receive an
scheme within 90 weeks of the dismissal, occupational or personal pension.
your redundancy payment may be
reduced. Deciding the best thing to do ■ Redundancy and other payments
with your pension is often very difficult, from your employer can affect when
and is another area where a good IFA you start getting JSA, and how much
would be able to help. you get.
There is much more information about There are two types of JSA:
pensions from the TUC at ■ Contribution-based JSA is paid for six
www.worksmart.co.uk/pensions months if you have enough National
Insurance contributions. The test is not
Benefits straightforward but if you have worked
If you are made redundant, then you are for more than two years and earned
likely to be eligible for Jobseeker’s more than £90 a week you will qualify.
Allowance. Other benefits such as If you do not meet these conditions
Employment and Support Allowance or you may still get it, but you will need to
Income Support are available, but only a take advice. Contributions-based JSA is
few who are made redundant – such as not means tested and the status of
the sick, disabled people or lone parents – your spouse/partner is not taken into
will be eligible for these, so we do not account, but part-time earnings or a
cover them here. You can find out more pension will reduce how much you get.
online or from your union, a Citizens It is not generous. The 2008/2009 rate is
Advice Bureau, an unemployed workers’ £60.50 for those aged 25 or over, and
centre or another advice agency about £47.96 for those 24 or younger.
these other benefits. The TUC’s
worksmart site www.worksmart.org.uk ■ Income-based JSA is paid to those who
also has some basic information about have run out of contribution-based JSA
what benefits you may be entitle to after six months or do not qualify for
claim. contribution-based JSA. It can also be
20
paid on top of contribution-based JSA
to those who have extra costs because
of dependants, disability or housing
costs. It is means-tested – and both
income and savings are taken into
account. You’ll get less if you have
savings over £6,000. If you have savings
over £16,000 you probably won’t
qualify.
If you are one of a couple who live
together (and you do not have a
dependent child) both you and your
partner usually have to meet the job-
seeking conditions to get income-based
JSA. This means you will both have to sign
on and look for work. If your partner or
civil partner works 24 hours or more a
week on average, you can’t usually get
income-based JSA. If they work less than
24 hours, it may affect how much you get.
The single person’s rate for income-based
JSA is the same as the rate for
contribution-based JSA. A couple get
£94.95 a week.
You can claim JSA by calling 0800 055
6688 (8am–6pm Monday to Friday). A
textphone service is available if you have
a speech or hearing impairment on 0800 Your Jobseeker’s Agreement will include
023 4888. the hours of the day, days of the week
Jobcentre Plus (a government agency) and other details about work you are
will take your details and arrange an going to look for, how you will look for it,
appointment with an adviser to talk what you will do to improve your chances
about why you are unemployed and what of getting a job and how Jobcentre Plus
sort of job you are looking for. If you left will help you. If the adviser thinks the
your last job voluntarily or were fired for limitations you want to put on the jobs
misconduct you may not be able to claim you will look for are unreasonable they
JSA. They will also explain the JSA rules, can insist on changing them, but usually
and normally you will discuss your they try to draft conditions you will
Jobseeker’s Agreement. accept. You must sign your Jobseeker’s
Agreement to get JSA.
21
If you are getting JSA, you may be able to your home, you may qualify for Housing
get other benefits or help with other Benefit and/or Council Tax Benefit. The
costs. If you are on income-based JSA, you amount you get will depend on your rent,
will be able to get maximum Housing your income and savings, and your
Benefit (to help with rent) and maximum personal and family circumstances.
Council Tax Benefit (which reduces your
Council Tax bill). You will also be entitled Debt
to other help, for example, free
prescriptions, free school meals for your If you become unemployed you are likely
children, and help with the costs of a to suffer a big drop in income. It is easy to
newborn baby. If you are on contribution- get into debt, but hard to pay it back
based JSA, you may be entitled to some of when you are unemployed.
these benefits and help, depending on There is not enough space in this leaflet
your income. to go into detail about what to do about
debt, but it is important that you take
Help with housing costs stock of debts and work out what to do
about them if you lose your job. They will
You won’t get any help to pay your
not go away, and will quickly mount up if
mortgage for the first 13 weeks after you
you do not keep up your payments.
have been made redundant.
The TUC’s worksmart site
After that, JSA, Employment and Support
www.worksmart.org.uk contains some
Allowance and Income Support can all
basic advice about what to do if you find
give you help to pay the interest on your
yourself in debt.
mortgage, but not the capital.
Some people take out mortgage payment
Tax and benefits
protection insurance with their
mortgage, which covers them against JSA counts as taxable income, and you are
redundancy. Your policy should explain liable to pay income tax (but not NI
how you go about claiming. You may contributions) on part of it. The tax is not
have to provide evidence that you are deducted from your JSA immediately.
looking for work, probably by claiming When you get a job – or at the end of the
JSA. If you only took out the policy tax year, if that comes first – the
recently, then you may be asked for a Jobcentre Plus office adds together your
letter from your former employer JSA and your wages since the end of the
confirming that you did not know you last tax year, and works out your tax
would be made redundant. position.
Housing Benefit and Council Tax Benefit
are administered by local authorities. If Training and retraining
you are entitled to means-tested JSA, Your employer may offer to provide you
Income Support or have a low income and with training that will help you get a new
are liable for rent and/or council tax for job as part of the redundancy package.
22
There are both commercial and The TUC’s training and skills organisation
government services that may be made unionlearn (www.unionlearn.org.uk) and
available. If you are losing your job as part union learning representatives can help
of a big number of redundancies or major people access education and training
closure it is likely that you will be offered opportunities.
advice by Jobcentre Plus, the Regional
Unionlearn has joined forces with the
Development Agency or some other body.
Careers Advice Service to provide a
This could include direct help with
completely free independent learning
finding a new job, help with job search
and careers advice line. The unionlearn
skills and access to training. Otherwise
Learning and Careers Advice line has a
you can approach your local Job Centre,
dedicated phone number, 08000 92 9190,
Careers Advisory Service or Learndirect –
and is open seven days a week from 8am
the government-sponsored gateway to
to 10pm.
education and learning.
Contacts
The TUC’s Know Your Rights line Advice agencies
This offers a wide range of employment The Citizens Advice service website
rights information leaflets. It can also www.citizensadvice.org.uk, a phone book
advise you on which union you should or your local library will be able to tell you
join. Call 0870 600 4 882. Calls are where your nearest Citizens Advice
charged at the national rate. Bureau is. Your local library will also have
advice on other local agencies which may
ACAS is a government-sponsored body be able to help you.
that can provide information and advice
for employees and employers. Helpline Tax and benefits
numbers:
HMRC (formerly the Inland Revenue) is on
■ Monday–Friday, 8am–6pm,
0800 597 5976 or you can use their
tel 08457 47 47 47
website www.hmrc.gov.uk to find your
■ Monday–Friday, 8am–6pm, (for
local office. The Jobcentre Plus benefits
Minicom users) tel 08456 06 16 00
claim line is 0800 055 6688 (Monday to
■ www.acas.org.uk
Friday, 8am–6pm). A textphone service is
Discrimination available if you have a speech or hearing
impairment on 0800 023 4888. Your local
If you think your employer may be
office will be in the phone book and the
discriminating unfairly in selecting who
website is www.jobcentreplus.gov.uk
should be made redundant, the Equality
and Human Rights Commission may be Job searching and retraining
able to help:
For help in finding a new job or training
■ 0845 604 6610 (England)
options www.jobcentreplus.gov.uk
■ 0845 604 5510 (Scotland)
provides a gateway to all government
■ 0845 604 8810 (Wales)
services. These are also available at local
■ www.equalityhumanrights.com
offices.
The Employment Tribunal Service
Independent financial advice
If you need information about making a
You can find an IFA at
claim to an employment tribunal you
www.unbiased.co.uk.
should call the Employment Tribunal
Service enquiry line on 0845 959775.
Unions today
Your friend
at
work
Many of the rights described in this Many employers value their relationship
leaflet have been won by union with a union as they recognise that staff
campaigning. And when redundancies morale and commitment are improved
are threatened, members will find unions when staff are treated well, have their
can provide invaluable help and views taken into account and enjoy job
assistance. Unions understand your legal security. And in return staff take more
rights, and are often able to negotiate a pride in their work and are more ready to
deal that is much better than the legal embrace the changes modern firms often
minimum. Every day unions help need to make to compete.
thousands of people at work by solving
problems and, where necessary, taking Unions take on the bad employers,
action in courts and tribunals. and work with the good to make
Jess Hurd/reportdigital.co.uk; Print: Newnorth. 6K 03/09
Design: Kevin Brown at park44.com; Photography: Alamy, Grant Lynch, iStock,
them better.
But unions are not just there for when
To find out more about joining a union
something goes wrong. They help
call the TUC Know Your Rights Line on
negotiate better pay and conditions.
0870 600 4 882.
Union workplaces are safer, and more
likely to help employees progress their
career with better training and
development programmes. Unions
themselves provide training and services
such as legal advice.
Trades Union Congress
Congress House
Great Russell Street
London WC1B 3LS
www.tuc.org.uk
March 2009
