Pensions and Redundancy Pay Essay Example | Topics and Well Written Essays - 1000 words

Pensions and Redundancy Pay - Essay Example The agenda of these consultations will include ways of avoiding redundancies or reducing the numbers affected, as well as disclosure of "the reasons for the redundanciesthe numbers and descriptions of those affectedthe proposed method of selecting those to be made redundanthow any redundancy payments better than the legal minimum will be worked out" (Trades Union Congress). Note that because in the first phase of redundancies 100 or more employees are likely to be made redundant over a period of 90 days or less, consultation must last at least 90 days. In the second phase of redundancies, if "20 to 99 employees to be made redundant over a period of 90 days or less, consultation must last at least 30 days" (Trades Union Congress). Concerning the company pension plan, the company will maintain pension plan commitments as previously defined. This is important for staff being made redundant and also for staff who remain with the company who see their pension rights being maintained. To achieve new lower staff levels, any staff over retirement age will be asked to retire. The company should however be aware of recommendations to "give a right to employees to request postponing retirement beyond 65 and a duty for the employer to consider these requests" (Confederation of British Industry). The company will propose that for redundancy pay the legal minimum is the preferred solution because it allows remaining jobs to be preserved. Also and for the reasons already mentioned, a "last-in, first-out" policy will be applied. Besides being consistent with the loyalty demonstrated by long-serving employees, the financial impact to the company will be minimised if redundancies are made to employees who joined the company more recently and who are typically younger. In particular, notice periods will be shorter and any negative effects on remaining staff minimised. Redundancy pay will be calculated to take account of length of service and current rate of pay and according to the legal minimum. This will be done with the financial department. The legal minimum for an employee who is made redundant will depend on the length of service, age and current pay of the employee concerned. The calculation is as follows: for employees over 41, for each complete year of employment after their 41st birthday, but before the age of 65, one and a half week's pay for employees aged 22-40, for each complete year of employment after their 22nd birthday, but before the age of 41, one week's pay for employees aged 18-21: for each complete year of employment while they were either 18, 19, 20 or 21, half a week's pay. These rules apply for employees with over two years of service with the company within a maximum of 20 years of service and pay levels up to a current weekly limit of 310 (Department for Business Enterprise & Regulatory Reform - BERR). The company should note that some organisations choose to offer more redundancy pay (World Bank) and should be prepared to justify its position in this case. Employees should note that no income tax is payable on a statutory redundancy payment. Pensions maintained with the company as deferrable pensions will be paid as an annuity rather than as a lump sum