FREQUENTLY ASKED QUESTIONS AND ANSWERS

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1 FREQUENTLY ASKED QUESTIONS AND ANSWERS Please see below a set of questions and answers that may help to answer some of your queries in relation to redundancy payments, pension entitlements and additional compensatory benefit. It should be noted that the benefits estimate has been based on a termination date of 30 September This date is not an actual date of termination but has been used because we need to use a date for the purpose of calculating the benefits estimate. It should be appreciated that the figures provided are no more than an estimate. Furthermore any subsequent changes to the terms of your employment for example, a change to your contractual weekly hours, could affect any payment. REDUNDANCY 1. How do you calculate redundancy pay? Redundancy payments are based on a multiple of your weekly pay, age and length of service (up to a maximum of 30 weeks).e.g. 10 weeks X 100 per week or 10 X 500 per week. Please refer to enclosed Redundancy Payments Table; along the top of the payments table find your length of service in years, now find your age down the side of the payments table, now find where these two columns meet in the middle of the table, the number detailed in the box is the multiple of your weekly pay. Where documents refer to average weekly pay please refer to the definition described in Q3. 2. Do we pay tax on our redundancy payment or any other discretionary payments I may receive? Termination payments over 30,000 are taxable. This means if the total of any redundancy, compensation and, if applicable, payment in lieu of notice exceeds 30,000, the termination payment will be subject to the payment of Income Tax. If your termination payments are paid along with your final pay, any excess will be taxed in line with your highest rate of tax and the taxable pay and tax paid included in your P45 figures. If your termination payment is paid after your final pay and a P45 has already been issued, any excess will be taxed at the prevailing basic rate of Income Tax. No further P45 will be issued but we will advise HM Revenue & Customs (HMRC) of the payment and provide you with a payslip for your records. If you normally pay tax at the higher rate or the excess termination payment takes you into a higher tax bracket you may need to pay additional tax to HMRC but not until you receive an assessment from HMRC. 3. How is average salary calculated? If pay varies from week to week, weekly pay is based on the average of the last 12 weeks pay prior to the date the employee is given their notice. 1

2 All pensionable pay is taken into account for the purposes of calculating weekly pay this means for example sleep-ins, first aid payments etc. This is where variances in pay occur. Casual overtime above your contractual weekly hours is not pensionable and is therefore not taken into account for the purpose of calculating weekly pay for redundancy. If the pay doesn t vary, where you are on a fixed salary, then it is the weekly rate of pay at the date the employee is given their notice. 4. If I have been in receipt of an honorarium or acting up payment are redundancy payments based on the increased / additional pay? If the honorarium or acting up payment has been paid continuously for a period of 12 months or more this will be considered when calculating redundancy payments. 5. If I have less than 2 years continuous service can I still request release by way of redundancy and receive a redundancy payment? The Employment Rights Act (1996) Legislation requirements mean that staff who have less than 2 years continuous service with one employer are not entitled to a redundancy payment. 6. What happens if I have less than two years service with Staffordshire County Council but my continuous service date is over two years? You will be entitled to a payment based on your earliest continuous service start date of Local Government employment (assuming you have not received a Redundancy Payment previously which is based on some or all of this service, if this is the case then this service will not be taken into account in the calculation of any further redundancy payments). 7. Regarding redundancy payments, what do we get in the first two years? You would not be entitled to a payment until you had over 2 years continuous service however once you have achieved 2 years continuous services any redundancy payment would be calculated on your total length of service i.e. it would include your first 2 years of service. 8. What is the maximum amount of years service you calculate the redundancy payment on? The maximum is 20 years. 9. I have two jobs, I would like redundancy only from this position? Is my redundancy pay based on the time in this job or on my total length of service? It is based on your earliest continuous service start date of Local Government employment, regardless of which job you leave. However, the weekly rate of pay which is being made will be used to calculate your redundancy payment. 10. If I am not in the pension scheme, do I get a redundancy payment? Yes. 2

3 11. If I am released by way of redundancy, but am offered and start a new job within Local Government or an organisation covered by the Redundancy Payments (Local Government) Modifications Order, will I lose my redundancy payment? If you are offered further employment with an organisation covered by the Modifications Order before your date of leaving, to retain your entitlement to payment there should be a break in service of 4 weeks between the date of leaving the old job and starting the new job. If you are offered further employment after your date of leaving it is not necessary to have the 4 week gap. If you do not declare that you have been offered this new job and receive the payment this could be classified as fraud. If you are offered employment with an organisation not covered by the modifications order you will retain your payments regardless of when you are offered the job and you do not need to leave a break between employments. 12. What sort of organisations are on the Redundancy Payments (Local Government) Modifications Order? All councils in the UK, most of the housing trusts delivering former local authority housing, trusts like leisure trusts and organisations delivering local government services. The list is updated every year to add new organisations. This list is not exhaustive; a list of organisations covered by the Redundancy Payments (Local Government) Modifications Order can be found on the internet at: PENSIONS 13. Can I take my pension if I am released by way of redundancy? Your retirement benefits will be brought into payment if you are over 55 years of age. 14. What happens to my pension if I am aged under 55? Your pension will be deferred (frozen initially, but subject to Inflation Proofing subsequently). 15. What happens if I am in the Pension Scheme and over 55? You will be able to access your pension, provided you have at least 3 months membership of the Local Government Pension Scheme. 3

4 16. If I am released by way of redundancy and take my pension early, how will it affect my pension? You will receive the pension benefits that you have built up so far based on your length of service up to your date of leaving without any reduction because you are taking it early. ADDITIONAL COMPENSATORY PAYMENTS 17. If I am released by way of redundancy, will I receive any additional benefits? If you are redundant, Staffordshire County Council has the discretion to award additional benefits. This benefit is only available to active Local Government Pension scheme members and is based on your continuous service date, not the length of time in the pension scheme. This additional benefit can be taken in the form of a compensatory lump sum or you have the option of using your compensation payment to enhance membership / service within the pension scheme. 18. Would I be able to combine the discretionary compensatory Option A (Compensatory Lump Sum) and Option B (enhanced membership/service within the pension scheme)? No, you are only able to choose one option or the other. 19. Are there any restrictions that apply in accessing these compensatory options? A compensation payment may only be used to enhance service / membership counting for pension benefits up to the maximum service you would have accrued at age 65. If you elect for this option and the compensation payment exceeds the cost of this additional service the difference cannot be paid to you. GENERAL ISSUES 20. Will staff be able to discuss their concerns or queries? To discuss any HR queries that you may have contact Sandra Matthews, HR Adviser on; or sandra.matthews@staffordshire.gov.uk For general concerns or queries please contact your line manager. 21. How will I get a reference if I leave? We will ensure that an appropriate reference is given, please direct requests to your line manager or in their absence to HR. 4

5 22. If I am released by way of redundancy will I receive payment for outstanding accrued lieu time / bank holiday lieu time / annual leave? If you leave your job part way through a leave year you will only be entitled to annual leave in proportion to the amount of time in the leave year that you have worked for Staffordshire County Council - in accordance the Annual Leave Policy (available to access on the Staffordshire County Council intranet). You should, in agreement with your line manager, endeavour to take any lieu time and annual leave accrued and still outstanding before you leave the organisation. It is in exceptional circumstances (i.e. if you have not been able to take your accrued annual leave / lieu time because of excessive workload or other operational reasons) that payment could be made on termination of employment subject to management approval. 23. What if I have exceeded my pro-rated leave entitlement? This would be recovered in your final salary as an overpayment. 24. What notice period would I receive if I am released on the grounds of redundancy? Staffordshire County Council will adhere to our notice periods policy. However the statutory notice periods as stated within the Employment Act 1996, set out below, may exceed the County Council s notice periods. If this is the case the longest available notice period will be applied. Therefore, the notice period would vary between one calendar month and 12 weeks, depending on length of service and in line with Staffordshire County Council policy. Continuous Service Notice Period One month or more but for less than two At least one week s notice years Two years and for each further complete At least two week s notice and year of continuous employment for a one additional week per year up to a period of less than 12 years maximum of 11 weeks 12 years or more At least 12 weeks notice maximum 25. What happens to staff personal files? Staff personal files will be archived for the legally required length of time. 5

6 REDUNDANCY PAYMENT TABLE Length of Service (Years) Age * * * - It is possible that an individual could start to build up continuous service before age 16, but this is likely to be rare, and therefore we have started Table 2 from age * - The same figures should be used when calculating the redundancy payment for a person aged 61 and above. 6