You may receive one or more of the following, depending on your statutory and contractual entitlements, and any agreements which the union may have negotiated locally:
- statutory redundancy pay
- a discretionary enhanced redundancy payment
- compensation for early retirement on grounds of redundancy
- notice pay.
Statutory redundancy payment
You will have an entitlement to statutory redundancy pay (which is the legal minimum entitlement) if:
- you are an employee (agency supply workers will not normally qualify for redundancy pay, but seek advice from the Adviceline in England or the Wales office), and
- you have two years’ continuous employment with your employer at the date of dismissal (successive employment with different local authorities may count as continuous employment)
- you have been dismissed by reason of redundancy.
The amount of statutory redundancy pay you are entitled to will depend on the length of your continuous service, your age and how much you are paid. The minimum statutory entitlement is calculated as follows:
For each year of service from age 41 or over 1.5 weeks’ pay
For each year of service from age 22 to 40 1 week’s pay
For each year of service below age 22 0.5 week’s pay
The maximum number of years of employment that can count is 20 years and a week's pay is normally limited to a statutory maximum, which changes each April. Use the government's redundancy pay calculator at Calculate your statutory redundancy pay - GOV.UK (www.gov.uk) to work out your statutory entitlement.
The formula used to calculate payment is:
Years of employment x multiplier x weeks pay (up to statutory limit).
What sort of service counts as continuous employment?
Normally service in a series of local authorities will count as continuous.
Any period of self-employment or employment in an independent school in the 20 years prior to your dismissal will not count for the purposes of calculating your period of continuous employment.
However, service in sixth form colleges, academies, community and technical colleges, FE colleges and non-education posts in local government and related sectors in the 20 years prior to your dismissal will be counted.
If you are made redundant while employed in an independent school, you will not be able to count previous service in local authority employment as continuous service, unless your contract of employment provides otherwise.
Contact the Adviceline or Wales office if you are not sure whether previous employment in local government or a related sector will count towards your period of continuous service.
If you are concurrently employed and one of your jobs is made redundant, you will need to consider:
- how your employer intends to assess your period of continuous service
- which salary will be used to calculate redundancy pay.
Claiming redundancy pay
There is no need for you to claim redundancy pay, as payment should be paid automatically. Employees under notice of redundancy should be given a written statement showing the date of termination and how the amount of redundancy payment was arrived at.
If you do not receive such a statement during your notice period and/or you do not receive redundancy pay soon after your employment comes to an end, contact the Adviceline or Wales office without delay.
If you are employed by an LA or you work in a maintained school, try to discover whether the LA operates an enhanced redundancy payment scheme and if it does, whether the scheme will apply to you.
What happens to your pensions
Provided you do not opt for agency supply work after redundancy, you should be able to start or continue in your membership of the Teachers’ Pension Scheme (TPS) if you get another teaching job.
If you opt for non-teaching employment with the local authority, you should be able to join or continue in the Local Government Pension Scheme (LGPS) instead.
You should take time to acquaint yourself with the terms and conditions of any pension scheme you become eligible to join. Most occupational schemes provide a membership guide/booklet which may be obtained either through your employer or the pension administrators.
You may be offered some or all of the following options if your new employment does not entitle you to membership of the TPS or LGPS:
- You may be able to transfer your TPS/LGPS pension to a scheme run by your new employer (this right is often time sensitive so take steps to discover your entitlements as soon as possible).
- You can keep your pension in the TPS/LGPS, although you will not be able to contribute to it. When you retire you will receive a pension from the scheme based on service accrued while you were in it. This is called a ‘deferred’ pension.
- Your contributions will be refunded automatically if you have been a member of the scheme for less than two years.
Claiming premature retirement compensation (PRC)
There is no automatic entitlement to an accrued pension without actuarial reduction if your employment has terminated on the grounds of redundancy before normal retirement age. If you are granted PRC you will be able to retire without your pensionable service being reduced for early payment. Your employer may also agree to enhance your service. However, PRC is not an entitlement, but a benefit exercised at your employer’s discretion. The minimum age to be able to claim premature retirement is 55.
Claiming redundancy pay and PRC at the same time
You have an entitlement to statutory redundancy pay, but not to an enhanced redundancy payment, i.e. payment which is more than the statutory entitlement. An enhanced redundancy payment will normally be available to you only as an alternative to PRC because both benefits are at your employer’s discretion, ie they are not statutory entitlements. If you chose enhanced redundancy pay over PRC, you will have to wait until normal retirement age to draw your full pension. Otherwise, your pension will be actuarially reduced.
To be eligible for enhanced redundancy pay, you must have two years’ qualifying service if you are younger than 50. If you are over 50, you will not be subject to a service qualification.
Notice pay
Your statutory entitlement is to a week’s paid notice for each complete year of service, up to a maximum of 12 weeks. So, if you have been employed for 16 years at the date of redundancy, you will be entitled by law to 12 weeks’ paid notice.
However, your statutory entitlement is separate from your contractual entitlement. Your contract of employment might well entitle you to longer notice. Therefore, always check the terms of your employment contract to ensure that you have been given the right amount of notice (refer to the Burgundy Book, the national agreement on teachers’ conditions of service in England and Wales, if it forms part of your contract). Remember that your contract of employment cannot offer you less notice than you are entitled to by statute.
If your contract allows for payment in lieu of notice and your employer offers you this, you do not have to work the whole notice period.
Be careful not to confuse consultation or warning letters with notice of dismissal. Notice only counts if it is clearly addressed to you and specifies when your employment will end. If you leave because you receive correspondence warning you that redundancies are coming, you may lose your right to redundancy pay.
The first £30,000 of redundancy pay will be tax-free, but any amounts in excess of that sum may be taxed. If you receive notice pay or arrears of wages (including holiday pay) as part of your redundancy settlement, they will be subject to tax.
You would normally work your notice period. However, if your contract makes provision for payment ‘in lieu of notice’ and your employer does not require you to work your full notice period, you will be entitled to notice pay.
Taking another job before notice period expires
Your right to redundancy pay may be lost if you are offered ‘suitable’ employment before your notice period expires, and the new post is due to start less than four weeks after your existing employment terminates.
If you want to leave before your notice period expires in order to take up another job, you can either negotiate a start date which will not jeopardise your redundancy entitlements or negotiate an earlier termination date.
The above applies only to employees, so you are unlikely to be affected if you opt for self-employment, e.g. you move from local authority employment to agency supply teaching. You will also be unaffected if:
- you receive a job offer after your employment ends.
- your new job starts more than four weeks after your employment ends.
- your new job does not count as continuous service.
- Who do I get my redundancy pay from if my employer becomes insolvent?
- If your employer fails to pay your statutory redundancy entitlement because their business becomes insolvent, you may apply for payment out of the National Insurance Fund. However, the fund cannot pay out unless your employer is formally insolvent.
- If your employer closes down your school/college, this may not be sufficient proof of insolvency but if this happens, contact the Adviceline or Wales office as soon as possible to ensure you do not lose out financially.
Benefits are available if you lose your job
You may be able to claim one or more of these benefits if you are no longer working:
- Jobseekers allowance/universal credit if you are looking for work.
- Employment & support allowance/universal credit if you are not fit for work.
- Income support/universal credit if you do not have to sign on.
- Housing benefit/universal credit for help with rent.
- Council tax benefit for help with council tax.
- Pension credit if you are aged 60 or over and do not want to claim JSB.
You may obtain specific advice about benefits from your nearest Citizens Advice office.
The four-week rule and redundancy payments
The four-week rule is a provision in the Employment Rights Act 1996 which sets out the circumstances in which the renewal of a contract or re-engagement following redundancy may invalidate entitlement to a redundancy payment.
The four-week rule will be triggered and, therefore entitlement to a redundancy payment may be lost, where:
- the same employer or another employer listed in the Redundancy Payment (Local Government) (Modification) Order 1999 (as amended) offers a redundant employee a ‘suitable’ job before their existing employment terminates, and
- the employee accepts the new job which starts within four weeks of the termination of their existing job.
Termination
In the case of a permanent contract, termination may take effect from the date stated in the notice of termination. In the case of a temporary contract, termination may take effect either from the date stated in a notice of termination or the pre-determined date of expiry of a fixed-term contract.
For the purposes of applying the four-week rule, the fact that inadequate notice has been given is ignored. The four weeks will start to run from the date on which employment under the contract ends and not from the date on which termination/dismissal would have taken effect if adequate notice had been given.
Special rules
There are special rules that apply to school and college staff. These rules are set out in the Redundancy Payments Modification Order. The effect of the order is to deem subsequent employment with a body named in it as continuing employment. Therefore, where an employee receives an offer of new employment from a Modification Order body there is no dismissal and no entitlement to redundancy pay unless:
- the offer of new employment with the Modification Order body is made after the old employment is terminated, or
- the new employment is due to start more than four weeks after the old employment is terminated.
Where the four-week rule has been triggered
If you have received an offer of suitable alternative employment before your old job terminates, and the new job is due to start within four weeks of the old one ending, you may negotiate either a new start date which begins more than four weeks after the termination of your old job or an earlier termination date. From a practical point of view, it would be sensible, where possible, to seek to negotiate an early termination date that coincides with a period of school closure (e.g. 1 August or 24 December).
Furthermore, you are entitled to a four-week trial period (not to be confused with the four-week rule) to assess the suitability of a new job, where it differs wholly or partly from your previous employment, without losing your entitlement to redundancy pay.
Where job is unsuitable after a trial period
If you believe your new job to be ‘unsuitable’ you may give your employer notice to terminate your contract during the trial period. If your employer agrees that the new job is unsuitable, you will be treated as having been dismissed on the date on which your employment under the previous contract ended. The reason for dismissal is then treated as the reason for which you were originally dismissed (i.e. redundancy) and your right to a redundancy payment will be preserved. Entitlement to redundancy pay will be lost only if the new job is suitable and you act unreasonably in refusing it.
From a practical point of view it may be sensible if you wish to undergo a trial period to inform your employer in writing about any doubts you have as to the suitability of the new job. This may avoid any conflict later on as to the reasonableness or otherwise of your refusal to continue in employment under the new contract.
Reasonable grounds for refusing suitable alternative employment
It will depend on the particular facts in each case, but matters which the courts have said may give rise to a reasonable refusal include a perceived loss of status; a longer travelling time to work; different skill requirements; and apparently reasonable hours which prevent you from meeting childcare obligations.
What if I want the new job on offer, but am unsure about its suitability?
As indicated above, you are entitled to a four-week trial period to assess the job’s suitability, but only if the terms and conditions of your new contract of employment differ from the previous contract.
The trial period will normally end four weeks after employment under the new contract begins, unless a longer trial has been agreed. In this context, four weeks means four consecutive calendar weeks.
Can I extend my trial period?
An agreement to extend the trial period can be negotiated, but it must:
- be made between you and your employer before you start work under the new contract
- be in writing
- specify the date on which the trial period ends, and
- specify the terms and conditions of employment which will apply to you after the end of the trial period.