ATL

Redundancy

This page sets out general advice on redundancy, including information on challenging redundancies and statutory pay.

Specific advice is also given by sector: maintained, independent schools and colleges, support staff.

General advice

According to the definition in Section 139 of the Employment Rights Act 1996, redundancy arises where an employee is dismissed either:

• because the employer has ceased (or intends to cease) to carry on business

• because the employer's requirements for employees to carry out work of a particular kind in the place where he or she is employed have ceased or diminished (or are expected to do so).

If, for example, the governors decide that a certain subject should no longer be taught as part of the curriculum, this could give rise to a redundancy. Similarly, if school/college duties are re-organised in such a way that the same amount of work can be carried out by fewer teachers/lecturers, a post might be declared redundant.

Challenging redundancies

Provided they have worked (whether full or part-time), for one full year for their employer, employees who have been declared redundant are entitled to challenge their redundancy in an employment tribunal, claiming unfair dismissal. There is a strict time limit on any claim: three months (minus one day) from the date the dismissal takes effect.

To satisfy an Employment Tribunal that a redundancy was indeed fair, the employers would have to demonstrate that a genuine redundancy situation existed and also that they had acted reasonably.

Acting reasonably

The law expects employers generally to adopt 'fair industrial practice' by observing five key principles:

• warn the workforce of the possibility of redundancies as early as possible

• consult recognised unions at the earliest possible opportunity

• establish objective criteria for any selection of staff for redundancy

• apply these criteria objectively so that fair selections are made

• take reasonable steps to find alternative employment for displaced staff.

These principles will normally underpin any proper redundancy procedure. The Advisory, Conciliation and Arbitration Service (ACAS) has published a helpful booklet, Redundancy handling, which offers advice to employers on observing the requirements.

Redundancy payments

Employees who are dismissed by reason of redundancy are normally entitled to a redundancy payment, provided they have two years continuous service. The payment is due whether the redundancy is compulsory or voluntary, provided a formal dismissal takes place.

Statutory redundancy payments are based on three factors:

• age at the date of departure

• length of continuous service (counted in complete years), subject to a maximum of 20 years

• final gross 'weekly pay' (calculated as at the date when the statutory minimum period of notice was due to have been given. This is one week's notice per completed year of employment up to a maximum of 12 weeks notice).

The government sets a statutory maximum for the calculation of 'a week's pay'. This figure is normally reviewed each year. The figure was increased to £350 from £330 on 1 February 2009.

Employees (mostly part-timers) whose gross weekly pay is less than this will receive a statutory redundancy payment based on multiples of their actual weekly salary.

Those who earn more than £350 per week (gross) will have the statutory maximum for a week's pay applied to them - unless their employer decides to enhance the payment. For more details about how this is applied in schools, see the ATL publication Redundancy in schools.

The statutory redundancy payment is calculated for each complete year of service between ages:

• 18 and 21 at 0.5 of a week's pay

• 22 and 40 at 1 week's pay

• 41 and 65 at 1.5 of a week's pay.

No more than 20 years' service can be used in the calculation, which means that the maximum statutory redundancy payment is currently 20 x 1.5 x £350 = £10,500.

Abatements and exclusions

An employer can legitimately refuse to make a redundancy payment for the following reasons:

• if an employee facing redundancy unreasonably refuses an offer of suitable alternative employment

• if the employee facing redundancy is over normal retirement age (generally 65 in the public sector)

• if the employee is working in the public sector and is re-employed in the public sector within four clear weeks (plus one day)

• if a fixed-term contract with an employer expires and is not renewed, and there is a genuine diminution in the overall need for employees.

Other payments, such as compensation for early retirement, can reduce the amount payable. For details, see the ATL publications Redundancy in maintained schools and Redundancy in further education and the pension factsheet Taking a drop in salary.

Premature retirement

Maintained sector teaching staff who are 50 years or over when their redundancy takes effect are eligible for premature retirement. However, this does not mean that they are entitled to claim premature retirement.

When they reach the age of 60 they are entitled to receive their pension, but for those between the ages of 50 and 60, premature retirement (with or without enhancement) is a discretionary matter for employers to decide, rather than an automatic right.

New pension regulations introduced with effect from 1 September 1997 provide that, when a worker in England and Wales is granted premature retirement before the age of 60 (whether on grounds of redundancy or 'efficient exercise'), the employer must pay a proportion of their pension for life.

The proportion to be met by employers tapers from 42 percent for those retiring at the age of 50 to six percent for those retiring at the age of 59. Needless to say, this is a significant disincentive to employers to offer premature retirement.

No such changes to the pension regulations have been implemented in Northern Ireland.

Advice for staff in the maintained sector

When staff move from one maintained establishment to another, whether by redeployment, transfer or voluntary application, service is counted as continuous for redundancy payment purposes.

However, when a teacher is made redundant by one of these employers but then takes up a post with another within four clear weeks (plus one day), he or she will not normally receive a redundancy payment because the previous service is carried forward into the new employment for redundancy purposes.

In most cases, a teacher who is made redundant will automatically receive the appropriate payment from her/his employer. If, however, there is any dispute, a claim should be made in writing to the employer within six months of departure.

Failure to observe this deadline could lead to the claim being judged out of time.

ATL and the employers organisation for FE institutions (the Association of Colleges) have agreed national guidelines on redundancy procedures.

Advice for those in independent schools and colleges

Few independent schools have formal redundancy procedures, but they need to follow some basic principles set out above.

Independent schools must pay statutory redundancy pay; the calculation for this is set out above. Only actual service with the school is used (not all teaching service).

Many independent schools reward loyal service by using actual pay, rather than the statutory maximum. No more than 20 years' service can be used in the calculation. Termination payments of £30,000 or less are not normally taxed.

You will not lose your redundancy pay if you start work at another school, provided you do not start work, without permission, before your last day of service.

To challenge selection for redundancy, you should appeal - normally to a panel of governors. They should conduct a full rehearing rather than merely review the original decision. Governors often uphold the first decision, but you must exhaust internal procedures before claiming unfair dismissal.

Advice for support staff

Support staff in maintained schools have generally the same legal rights in a redundancy situation as teachers. However, support staff do not have the customary standard notice periods as teachers.

They have only the basic statutory right to receive a week's notice for every year of continuous service up to 12 weeks, although many local authorities and schools give an entitlement to receive a minimum of one month's notice from the beginning of employment. This notice can be given at any time.

Whilst schools can make support staff redundant at any point during the school year, it is usually the practice that they take place at the end of a term, usually the summer one, as school budgets are completed on the basis of a school year and support staff requirements addressed accordingly.

As support staff are often employed on a term-time only basis, and their salaries are consequently calculated and averaged out over 12 months, schools have to be mindful of those calculations when making redundancies to ensure the correct salary entitlement is received.

Need further advice?

Your first point of contact is your ATL rep in your school or college. Your local ATL branch is also available to help with queries, or you can contact ATL's member advisors on tel: 020 7930 6441 or email us. Please have your membership number to hand when telephoning and include it with any correspondence - this will help us to answer your query more quickly.