Redundancy looming? How to get the best package you can

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Redundancy is commonly regarded as one of life's most stressful events, right up there with bereavement, serious illness and divorce.

All too often, people facing the axe feel such an emotional knockback that they fail to take in the details of what's being proposed, let alone try and make the most of it.



But while, in theory, procedures and payouts are subject to strict rules, the companies making redundancies are often hardly more familiar with these than their staff, meaning there may be room for negotiation - or at least for delaying tactics.

First, it's possible to challenge whether or not you should be being made redundant at all. Companies have a duty to be even-handed, and if the only person to receive a redundancy notice is a pregnant woman, for example, there's a strong case for unfair dismissal.

But if all is legitimate, the first thing to do when you're presented with a redundancy package is check that you are being offered what you're entitled to, says Simon Steen of specialist lawyers Steen & Co Employment Solicitors."It's quite surprising quite how many companies fail to dot the 'i's and cross the 't's," he says.

First, anyone that's worked continuously for two years as an employee of a company is entitled to two years' statutory redundancy. This doesn't apply to contractors, casual workers or some jobs such as civil servants or police officers.

But, essentially, it gives workers the right to half a week's pay for each complete year of employment below the age of 22; a full week's pay for each year between the ages of 22 and 40; and a week and a half's pay for each year of work over the age of 41.

Alternatively, many companies set out conditions of redundancy in staff contracts, in what's known as contractual statutory redundancy pay. Even if there's no contract, indeed, it's possible to argue that something of the sort exists, on the basis of what's consistently been offered to other staff in the past - or "custom and practice", as it's known.

"There's not a great deal of scope for negotiation if the employer has an enhancement programme in place," says Alan Julyan, a partner with law firm Speechly Bircham. "They are more likely to hold the line firmly, because they don't want to create precedents."

It's important to remember that there are other factors on top of basic pay to be taken into account when calculating a redundancy package. There's holiday pay, for example, pay in lieu of notice, benefits such as company cars - and, perhaps most importantly, pension issues. Where a company isn't giving notice to staff, it's also possible to claim expected bonus and commission payments.

So far, so good. But if you're not happy with what you're being offered, is there anything you can do to improve matters?

First, as Steen points out, it's important to remember that staff facing redundancy are hardly in a good bargaining position. "Don't just ask for money, because that's not really an effective negotiating strategy," he says. Instead, there are several concessions that can be won by a canny employee that don't necessarily cost the employer much at all.

For a start, while most people might at first think it's best to take immediate redundancy with pay in lieu of notice, this can often be extremely costly. Higher-ranking staff, for example, might have share options that lapse on termination or have vesting dates around the time of the proposed redundancy. Missing out here can cost dearly. Equally, pension contributions can be linked to the tax year.

Next, it's a good idea to look at your employment package and see whether there's anything that you can ask to be extended into the future. Companies are often happy to maintain an employee's personal medical insurance, for example, as premiums will be paid annually; it's no skin off the employer's nose if the employee retains the insurance until the end of the year. Even keeping your company mobile phone number can be very useful.

If your company's closing down altogether, see if there's anything you can rescue from the ruins. "I had one client who was building stables, and when his company decided to go out of business, as part of his settlement he negotiated for his workshop," says Steen.

It can help to take early advice from a specialist solicitor, although Julyan stresses that this may not be cost-effective when the package being offered is low, and there's an enhanced redundancy scheme in place. But, he says, an hour's advice early on can help a person know which battles are worth fighting, and which aren't.

"Make as much use as you can of your position," he says, "because you have only one opportunity - these negotiations aren't long and protracted."

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