Redundancy with variable salary

Discussion in 'Employment & HR' started by pl1234, May 17, 2021.

  1. pl1234

    pl1234 UKBF Newcomer

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    If a staff member or director is on £12k per year for 20 years, and then goes onto say £48k for 6 months, and is then given redundancy notice, how would you calculate redundancy pay ? Is it calculated purely on finishing salary and if yes how many months does the person have to be on that salary ?

    Seems like it would be a common trick to raise salary prior to redundancy to give the person a higher payout, but I can't find any websites of gov materials

    I did find one site which said that it was calculated based on the start date of the statutory notice period, so it seems entirely legal that an employee, even a director, could be paid 4x their salary for that 3 month period in order to achieve a higher payout ?? as long as the pay rise was granted before the start of the statutory period.

    Are there any laws to stop people, particularly directors, from doing this ?

    thanks
     
    Posted: May 17, 2021 By: pl1234 Member since: Jul 22, 2020
    #1
  2. Newchodge

    Newchodge UKBF Legend

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    It is based on the salary at the point of the redundancy decision. Why should there be any laws about it? Only a director can increase their own salary and the cost falls only on the company.
     
    Posted: May 17, 2021 By: Newchodge Member since: Nov 8, 2012
    #2
  3. WaveJumper

    WaveJumper UKBF Legend

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    Posted: May 17, 2021 By: WaveJumper Member since: Aug 26, 2013
    #3
  4. Newchodge

    Newchodge UKBF Legend

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    Posted: May 17, 2021 By: Newchodge Member since: Nov 8, 2012
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  5. pl1234

    pl1234 UKBF Newcomer

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    Thanks for the replies.

    I was also interested in what may happen if the company dissolved, then would directors be entitled to claim redundancy from the government ? That was what made me think there would be laws/restrictions on the practice
     
    Posted: May 17, 2021 By: pl1234 Member since: Jul 22, 2020
    #5
  6. IanSuth

    IanSuth UKBF Big Shot

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    in 2009 this happened to me - we did a pre pack whilst i was a director - I wasnt actually expecting any redundancy but the IP's told us that as i was PAYE i was due it and the fill all the forms out.

    However they had mucked up and an ex employee (who had retired but came back to try and help us out avoiding going bust) put in a successful claim for redundancy against the new firm which actually meant I got TUPE (to the newCo of which i was not a director but had to get a court release to stay as a manager in) and the redundancy I just got this year was thus based on the entire of my time not just back to 2009

    Interestingly the comment you made about bumping up salary just prior to redundancy reminds me of a mates fathers story - he worked as a draughtsman on railway signalling, as they were all on BR final salary schemes it was common practice that a few months before retirement people got a promotion with a higher salary just so they would get a larger pension, when things changed with the splitting up of the railway and better HR governance there were a lot of grumpy people who didnt get the same done to them before they retired
     
    Posted: May 17, 2021 By: IanSuth Member since: Apr 1, 2021
    #6
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