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Redundancy

Redundancy Calculation

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My client will shortly be retiring, so is making his staff redundant.   I understand that the redundancy payment is based on "average" pay.   

1.   Over how many weeks/months should the average be taken?

2.   Should accrued holiday be included?

3.   At what rate should the calculation be made?

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By David Ex
17th May 2022 12:08
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By meadowsaw227
17th May 2022 12:59

People generally do not respond well to "orders"

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Replying to meadowsaw227:
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By David Ex
17th May 2022 13:04

meadowsaw227 wrote:

People generally do not respond well to "orders"

Absolutely agree; it happens a lot. However, when I mentioned it in responses a couple of times, I got a snotty PM from the site moderator.

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Replying to David Ex:
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By Leywood
17th May 2022 13:48

You are joking?

So the mods think that manners are a thing of the past? Wow. Just wow. They are getting desperate for traffic arent they.

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Replying to Leywood:
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By David Ex
17th May 2022 14:07

Leywood wrote:

You are joking?

So the mods think that manners are a thing of the past? Wow. Just wow. They are getting desperate for traffic arent they.

Yup! I’m the bad guy, apparently, for suggesting questioners should show some degree of courtesy.

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Replying to David Ex:
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By Leywood
17th May 2022 14:57

Utter ridiculousness.

Never give up! A please or a thank you cost nothing.

Some folk have clearly been dragged up by their parents and the lack of manners is one of the many reasons for declining standards in this country.

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By accountaholic
17th May 2022 13:30

1. - 12 weeks is the reference period for earnings history.
2. - accrued holiday pay will need to be paid but is separate to the redundancy calculation. Same for notice pay if being paid in lieu of working. Be careful with dates of all these as it can affect the statutory calculation if it takes the length of service into another year.
3. - The rate is based on average earnings, but is subject to an upper limit, and depends on the age of the employee throughout their employment. Follow David's link above to get the details and there's even a calculator in there.

Above is based on statutory entitlement. You would also need to check employment contracts in case there is any contractual entitlement which exceeds the statutory formula. On top of that your client may want to pay a voluntary element above the statutory minimum.

If there are large sums at stake I'd recommend employment law advice as there are many pitfalls if you're not sure what you're doing.

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Replying to accountaholic:
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By DJKL
17th May 2022 13:43

I would add that if a compromise agreement is envisaged then ensuring the employees take legal advice re same is a clever idea ,possibly with an employer contribution to their legal costs.

The other thing the employer ought to take legal advice about is if the trade/business/goodwill is being sold to/taken over by a third party, in such an event consideration of TUPE is imperative.

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Replying to accountaholic:
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By wingman22
18th May 2022 13:08

Depending on the number of employees a consultation period may be required.

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By Hugo Fair
17th May 2022 13:46

"My client will shortly be retiring, so is making his staff redundant"
Due to the abrupt style employed by OP, it seems almost cheeky to enquire why the two halves of that sentence are conjoined by a consequential 'so'?
Obviously it depends on the nature of the business (and the assets and the capabilities of staff etc), but there's often a far more attractive option for all if the business isn't just closed.
Accountaholic is right ... there are potential pitfalls ahead if you treat redundancy as a DiY exercise (and those pitfalls can masquerade as money-pits)!

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Replying to Hugo Fair:
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By Leywood
17th May 2022 13:50

Agree totally with this and Accountaholic's suggestion. You can guarantee the staff members concerned will know to the penny how much they should be getting, so the OP should only enter the bear pit if she dares or wishes to get an PII claim idc.

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