Redundancy Question

[HorisLefta]

Good morning

I have just been advised that my company is closing and we are all being made redundant. I started with the company on May 9th 2011 and my last day of work is 8th May 2013. I've been advised that I am not entitled to any redundancy money as I am one day short of the entitlement period:mad2:. Does anyone have any advice on this?

 

Many thanks

[Sidewinder]

Assuming those dates to be correct, sadly you will be just shy of the redundancy entitlement period. What is the notice period that your contract entitles you to - statutory 1 week, or does the contract entitle you to more?

 

I have moved your thread into the Employment forum

[HorisLefta]

Hi - thanks for your reply. My notice period is three months

[Sidewinder]

Thanks - sorry but a further question which I should have asked is whether your contract entitles the employer to make a payment in lieu of notice - a PILON clause?

 

Obviously you will be paid for your three months notice period as per contract, even though you will only be working for one month of that, but as far as I am aware, whether the notice period counts towards length of service, therefore taking you past the threshold to qualify for a further two weeks wages by way of redundancy depends on whether PILON is permitted by contract. If not, then the employer may have to take the effective date of termination as the day on which your notice expires, therefor you will have completed two years service.

[HorisLefta]

There is nothing in my contract with reference to PILON. It just says that I am entitled to three months written notice and any unused holiday entitlement (as per the employees handbook), which I have never seen a copy of !

[becky2585]

If your last day is in May then I presume that means you are currently working your notice? If so you are one day short. It would be worth a couple of weeks' gross pay if not though. Pretty rotten of them to time it the way they have, though...

[Sidewinder]

In which case, I would say that your effective date of termination would be the date on which your three months notice expires. Where the employer requires you to leave earlier than this, the absence of a PILON clause creates a breach of contract, for which damages are payable. In this case, the breach of contract leads to a shortening of your length of service, and therefore a loss of a statutory redundancy payment in addition to the remainder of the notice period also being payable.

 

The other potentially advantageous point is that where there is no PILON clause, any pay in lieu of notice would generally be payable tax free (subject to certain thresholds), as damages are not subject to income tax or National Insurance.

 

Worth putting this in writing and challenging the assertion that you are not entitled to a redundancy payment.

[HorisLefta]

Yes it is pretty rotten and we are only a small company - 30 employees in total - being closed down by our multi national owners. We are currently in consultation so my notice period starts on 9th May

[Sidewinder]

If your last day is in May then I presume that means you are currently working your notice? If so you are one day short. It would be worth a couple of weeks' gross pay if not though. Pretty rotten of them to time it the way they have, though...

 

Ah - the cavalry has arrived! Becky - is my understanding of this correct?

[becky2585]

Yes it is pretty rotten and we are only a small company - 30 employees in total - being closed down by our multi national owners. We are currently in consultation so my notice period starts on 9th May

 

If that's the case then you're entitled to pay in lieu of notice plus your statutory redundancy if you've hit two years by that point!

[HorisLefta]

Hi - have just checked again and there is definitely no PILON clause on my contract - will have to check tomorrow to see if there is one in the employee handbook, but have never seen one so will have to ask for it!

Can I just test my understanding - basically as they are not giving me the opportunity to work my notice, therefore adding to my period of employment, and as there is no PILON clause in my contact my notice period counts towards my total time?

[becky2585]

Just had a look at this point.

 

Section 145(2)(b) ERA 1996 seems to imply that, provided they pay you correct notice, you can't add on statutory notice to take you over two years. However, if they pay you no notice, then you could. Unfortunately therefore it sounds like your employer could be correct, but only if your employment terminates on or before 8 May.

[HorisLefta]

Just had a look at this point.

 

Section 145(2)(b) ERA 1996 seems to imply that, provided they pay you correct notice, you can't add on statutory notice to take you over two years. However, if they pay you no notice, then you could. Unfortunately therefore it sounds like your employer could be correct, but only if your employment terminates on or before 8 May.

 

Thanks for this - I think I will challenge them based on the PILON clause anyway - at least now it sounds as if I know a little of what I am talking about! We are currently in consultation so I have the chance next week during our individual meetings to bring it up

[Sidewinder]

Just had a look at this point.

 

Section 145(2)(b) ERA 1996 seems to imply that, provided they pay you correct notice, you can't add on statutory notice to take you over two years. However, if they pay you no notice, then you could. Unfortunately therefore it sounds like your employer could be correct, but only if your employment terminates on or before 8 May.

 

But if the contractual notice is three months, and the employer only gives one month (as they seem to have here), then surely S.145(2)(a) ERA applies and the termination must occur on the expiry of the notice period? If the employer has not given the notice permitted by contract then surely damages are payable for the breach, which would include rights which would have accrued had the correct notice been given?

 

Perhaps I am reading or interpreting it the wrong way!!

[HorisLefta]

But if the contractual notice is three months, and the employer only gives one month (as they seem to have here), then surely S.145(2)(a) ERA applies and the termination must occur on the expiry of the notice period? If the employer has not given the notice permitted by contract then surely damages are payable for the breach, which would include rights which would have accrued had the correct notice been given?

 

Perhaps I am reading or interpreting it the wrong way!!

 

Sorry - maybe I have confused things. Just to clarify. We are currently under consultation (advised April 4th) and our office will close on May 8th - up to that date we are paid normally. My letter from the company states I will be paid my three month notic period (in lieu of notice, although there is no PILON clause in my contract). if I were to work my notice it would take me up to 8th August

[Sidewinder]

But you can't be made redundant or given notice until the consultation process is complete? So, if the consultation is a foregone conclusion and the workplace is closing, you must have already been put on notice that you will be redundant and therefore already working notice?

[HorisLefta]

It's been presented as a "proposal" at the moment to close our office on 8th May and my letter tells me I will receive 3 months payment in lieu from then. I also questioned holiday pay and was advised I would get any accrued holiday up to the end of my notice period

[steampowered]

I think this is two years continuous service. You worked the day of 9 May 2011, so at the end of 9 May 2011 you had completed one day's work. We also count the day of 8 May 2013 since you will work that day. If we said a year's service ends on 9 May each year then you would have worked 366 days in the first year. Accordingly, I think you have exactly two year's service on 8 May 2013.

 

A very similar point was litigated in the case of Pacitti Jones v O'Brien in the Employment Appeal Tribunal. In this case the employee started work on 8 April 2002 and her notice period expired on 7 April 2003. There was a dispute about whether the employee had one year's of service needed to make an unfair dismissal claim. The Tribunal decided that the employee had been continuously employed for a period of "not less than one year" as required by Section 108 of the Employment Rights Act 1996 and was able to proceed with her claim. I cannot find an example of a case in which the point was specifically litigated in relation to the two year limit for redundancy, so I accept I could be wrong. However I think the result is very likely to be the same, the language of Section 155 of the Act concerning redundancy is very similar to the language for unfair dismissal, and also the definition of "continuous employment" is the same for both sections.

 

For this reason, I think you will be entitled to a statutory redundancy payment. No doubt your employer has timed this to avoid making the payment, or so they think, so I imagine they will try and dispute it. If I was in your position I would not mention this until you have finished work. I would then write a letter to the employer asking for a redundancy payment and explaining the case above. I would then start ET proceedings if the payment was not made.