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Redundancy Payout – Who is Entitled to Termination Pay?

Redundancy Payout

As per the Memorandum and Articles of Association, an employee is entitled to payment of termination pay. However, many wonder whether they are actually entitled to get such a hefty sum of money if they are given an unfair dismissal. In some cases, companies will attempt to avoid making the payment because it would mean further legal action and expense. However, there is a way to reduce the amount of money an employee is due when getting terminations. In fact, if an employee has a good case, they may be entitled to claim back up to one third of their previous salary, in other words, who is entitled to termination pay.

This is because in certain circumstances an employee has been employed for a reasonably long period of time with the company, even going over the age of forty five years. When the employment contract ends, an employee should be entitled to at least two thirds of their normal weekly wage if they have been employed with the same organization for a period of at least five years. If they have been with the same company for more than five years, they are entitled to a full week’s pay at the very least severance pay.

The question of who is entitled to termination pay becomes important if an employee feels that they have been unfairly made redundant or had their roles redone due to reasons outside the control of the company. In this case, they will be able to make a claim for payment. It is important to remember that all companies are not required to have an employment solicitor at their disposal during the claims process, so if you wish to go through a claims company, this must be done in advance, to ensure that all legal procedures are met.

Who is Entitled to Termination Pay?

If your company is planning to cut staff as part of the process of trying to reduce costs, it is extremely important that you take your time in deciding who is eligible to receive redundancy pay. All employees deserve to know the level of their redundancy pay before being sent packing. However, you must also consider any other employees who could be affected by the decision you make. You do not want to include anyone who has been a loyal customer to you in the redundancy process simply because they are eligible to receive a larger redundancy payment. Similarly, you do not want to include anyone who has been a close colleague to you in the redundancy process simply because they are better qualified for a promotion or job with another employer.

There are different regulations regarding the entitlement to payment of dismissal pay in certain industries. For example, all hospitality trade employers are obliged to give their employees who have been working for them for more than two years, a statutory redundancy payout of up to two years’ pay. Where the employee has worked for the company for more than two years, but is not entitled to any statutory redundancy payment, their entitlement is subject to negotiation between the employer and the employee. If the employer does agree to this, they must inform the employee in writing and document this agreement. This ensures that the employee can make an application for a payout if they wish to do so.

Another way of approaching the issue of knowing who is entitled to termination pay is to ask the employee themselves. An understanding can sometimes be made between the employer and employee about the timeframe of the payout, and whether it will be an automatic procedure. This would be particularly useful where the employee has a serious illness which will prevent them from returning to work in the near future, or where they may not have regular hours available to work due to being ill or having a physical disability. In these situations, it may be possible for the employee to receive a small cash payout.

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