How to negotiate redundancy
Redundancy is never good news but it doesn't have to result in financial ruin. Moneywise TV shows you how to negotiate a better deal from your employer.
It's a moment we all dread, being called into the manager's office to be dropped the bombshell of redundancy. It's never nice to hear, but knowing your rights and getting ready to negotiate can help to soften the blow.
If you've worked continuously for the same employer for two years or more, you're entitled to statutory redundancy pay.
The level of pay out depends on age, length of service and level of weekly pay – up to a limit of £380
If you have worked for the company for less than two years, you don't have a legal right to redundancy pay although good employers may still pay something.
In addition to the statutory pay out, employers may offer a redundancy package.
Public sector employees have generally faired better in redundancy, but could now face reduced payouts if the Government's bill to cap redundancy payments gets the go ahead.
Don't rush to accept or decline the first package on the table and remember payments are made tax-free. Ask to see the proposals in writing and if you're not happy with it, build up a case to negotiate a better deal. If you are a member of a trade union they will be able to offer support and advice. You may also want to seek advice from your own solicitor
Rejecting certain proposals, such as an alternative job offer, can affect your right to redundancy pay so it's important to find out your position before making a decision. Think about what you want from the redundancy. Are you simply after the biggest payout possible, or are other issues important such as help and training to find another job?
Consider what you want to happen to any benefits you currently have and put suggestions to your employer. Some employers will continue certain benefits, such as pension and private health insurance for up to a year, and may even throw in any company equipment you have been using, such as phone, laptop, even a company car.
You should be given a clear reason for the redundancy and if it feels unfair, it may increase your bargaining power or give you a case for unfair dismissal.
Redundancy can be a very stressful and emotional time but try to keep your cool and remain professional in negotiations. Employers will want to avoid the legal drama and expense of a case reaching the Employment Tribunal and you can use this in your favour to secure a redundancy package you're happy with.