Statutory or Voluntary Redundancy & Lay-off Rights

STATUTORY OR VOLUNTARY REDUNDANCY AND LAY-OFF RIGHTS AND ETHICS

(Based on author’s site www.geocities.com/rdndncy)


In the USA, the UK and the EU protection exist against unlawful redundancy in various laws.

Redundancy types, redundancy selection, redundancy payments or benefits depend on whether redundancy resulted from closure, relocation, transfer, or workforce reduction.

Redundancy may not be by simply letting workers go ~ often laws require some form of compensation or extended benefit to be paid to workers.

Redundancy protection is not identical - it varies ~ a general understanding of redundancy laws in western countries may be useful to employees:-

In the USA, at workplaces where there is not a recognized labour union, in redundancy situations the redundant employees' company pension has been protected since the Employee Retirement and Income Security Act 1974, and so are the company medical insurance benefits of redundant workers for at least 18 months since the Federal Consolidated Budget Reconciliation Act 1985.

In Europe, e.g., in the Netherlands where it is unlawful to terminate workers not on fixed term contracts without formal permission from the Labour Office or from a Court of Law, there is especially calculated compensation in all types of redundancies for all workers who are made redundant - and, e.g., Ireland has redundancy payments, and in Italy and in the UK there is fixed statutory redundancy pay for staff redundancies.

Fair Redundancy is practised by many countries: Australia and New Zealand have laws about redundancy, the states of the European Union have them, and in America, e.g., Canada has them - as does also the United States.

In the United States, for example, and in Europe there have been varying legal requirements to give redundancy notice (e.g., in Germany the Redundancy Notification Act, in the Netherlands the Redundancy Act, in France the Work Code, in the United Kingdom the Trade Union & Labour Relations Consolidation) Act, and in the United States the Federal Worker Adjustment & Retraining Notification Act); and, where applicable (in Europe by Collective Redundancy Consultation, in the USA under the National Labor Relations Act) employers are expected, in mass redundancies, to discuss with Works Councils or with trades unions, e.g., collective severance pay and other benefits for redundant workers.

In the European Union, under the Acquired Rights Directive 1977, in the case of transfer of business also the employees' contracts of employment transfer to the new employer (but not the equipment supplied by the previous employer: Schmidt -v- Spar & others 1994) ~ and although economically essential variations are nor barred in redundancy law, if the employee's contract is varied detrimentally to the employee the changes are not valid - even if the employee is shown to have agreed to them.

Redundancy payments are, of course, intended to compensate the worker who, sometimes after many years of loyal service, due to no fault on the part of the worker, suffers job loss by redundancy - redundancy not being employment termination, e.g., for misconduct or incompetence.

The USA & the UK while share a Common Law system, the ‘employment at will doctrine’ of the former not being subscribed to by the European Union states, but the UK being also bound by European Law, perhaps British law is most appropriate for a basic understanding of the basis in most western countries, though they vary, of the redundancy laws...

Redundancy types recognised in English law are three, as follows:-

Statutory Redundancies - which are of two kinds:

>> 1. Cessation of Business: This is the most common type. It applies when the employer has closed, or is to close, down his business. That is redundancy and gives rise to eligibility for redundancy payment. It is also so and entitles to redundancy pay if the closure of business is partial and only a branch or a part of the business is closed where the employee worked, Gemmel -v- Dorngavil Brickwork Ltd 1967.

>> 2. Business Relocation: Moving the place of business is also quite common. The employer has closed, or is to close, down the business where the business is located, and even if the reason is that in that area there is no longer work, unless the employment contract by an express term includes an agreement requiring the worker to move to the new place of business, that is a redundancy situation, entitling the employee to compensation.

Surplus of Labour sometimes arises due to the requirement diminishing for the work of the employee’s service, or for work generally, where the employee works. Then, the courts' wide constriction applies as to the type of work that was the employee was employed to do.

In Hindle -v- Percival Boats Ltd 1968 a worker employed to build wooden boats was not redundant when the demand for wooden boats was replaced by demand for fibreglass boats which he could not build; for, the type of the work that he was employed to do was neither wooden nor any other specific material from boats to build but simply to build boats - the introduction of new technology did not change that, and it was a matter of whether the employer reasonably and fairly acted in relation to letting the employee go.

Redundancy Situations can arise also when a fixed term employment contracts end and are not renewed: in Nottinghamshire County Council -v- Lee 1979 the employee on a one year fixed contract who had been told at the time that there would be no work for him after then was still eligible for redundancy payment since that was because the work had ceased to exit.

(Redundancy Ethics vary: Redundancy is normally on the basis of, where the workforce is to be reduced, on a last come first go basis. But, sometimes there is what is known as ‘bumping’ involved - the employee whose work has ceased to exist is given the work of, and replaces, another whose work has not ceased to exit and who himself, instead, is made redundant ~ this perhaps has to do with the greater likelihood of the latter's finding employment and sooner, and possible arguments as to the morality and ethics aside, it was so in Murray -v- Foyle Meet Ltd 1999.)

Under a European Union Directive employers must inform the employees of their business economics and allow employees say in business decisions –if e.g., they employ, in 2007 one hundred, from 2008 fifty or more employees. Additionally, there must be Redundancy Consultation for 30 days if the number of employees to be made redundant is 20 or more, or for 90 days if 100 or more.

The redundancy pay is calculated at the rate, for every year worked since the age of 17 and including any years after the retirement age if the employee has not retired, up to a maximum of 20 years, of, age 22 half, up to age 40 one, older one-and-a-half week’s pay. There is a limit on the amount that can be taken into account as the weekly wage which is annually retail index linked. Except in exceptional cases, redundancy payments are not subject to income tax.

To qualify for redundancy an employee must have been with the employer for at least 2 years.

If the employee does not qualify for redundancy, it is treated as ordinary dismissal, and employment termination involves, if the employee has been with the employer for at least one month, a notice period or monies in lieu, of at least 1 week or as agreed in the employment contract up to a maximum of 12 weeks.

In redundancy situations employees must given reasonable time off on full pay to attend to reasonable necessities, e.g., re-training, etc.

Voluntary Redundancy is different than forced redundancies - such employment termination less involve redundancy disputes, but it is as follows.

Cases of Constructive Dismissal are rare in relation to redundancy, but Redundancy Situations may arise also in such circumstances as Death or Dissolution or Liquidation of the owner of a business - or if upon the appointment of a receiver the business closes down. Then usually the employee will have resigned or will have been dismissed or the Employment Contract will have ended by mutual consent. Usually, as consideration, the employee whose employment has been terminated receives a lump sum of money. That is not a statutory, but a voluntary redundancy, and the worker, then, is not eligible for statutory redundancy pay, and unless there has been involved also transfer of business, that is so even if the worker later claims that it was to his detriment.

In redundancy situations, in the case of some occupations Exemptions apply - e.g., in the case of the employees of the National Health Service; and, of course, redundancy does not apply in the case of private household employees and they not qualify for redundancy payment form the household employer.

Wrongful Lay-offs, though, can give rise to a redundancy situation.

When there is shortage of work and the personnel are laid off or put on short time work, there are Guarantee Payments set by law which must be paid to the employees, and workers can sue for at the Employment Tribunals.

If there is a Layoff situation and the worker is on short time working, and if the employee has been laid off either 4 consecutive weeks, or for any 6 weeks out of 13, then that can be a wrongful lay off, and that worker, if so chooses to do, may give Notice to the employer of intention to treat that layoff situation as a redundancy situation. Then such an employee becomes a redundant employee and qualifies for statutory redundancy payment.

Redundancy situations can be avoided by an employer by an offer of suitable alternative employment which in Employment Law makes ineligible an employee for redundancy pay who refuses it unreasonably.

The Legal Test as to the suitability of the alternative employment is an objective one by the standard of the reasonable man; and, as to the reasonableness of a refusal it is subjective taking account of employee's domestic circumstances, inconvenience of travel, disruption of children's education, loss of friends - and reputation as in the employment case of Clayton - v- Oliver 1930.

Laws change – these are basic guidelines.

The author has a website at: http://www.geocities.com.com/eoa_uk