The recession is biting hard. Every working day 4000 people are made redundant. Around 1000 of them are aged 50 or more. The number of redundancies has more than doubled in a year and is now at its highest rate since records began in 1995. As jobs become scarce, redundancy can now be the start of a long period out of work. Especially if you are over 50.
Redundancy is a form of dismissal. So it has to be done fairly and in accordance with the law. An employer can call for volunteers if, for example, there are twelve of you doing essentially similar work and the employer decides to make do with eight. If an employer cannot get sufficient volunteers – or does not ask for them – then the selection process for those who are to be made redundant has to be fair. The choice can relate to your performance in the job and your abilities. But it cannot be made on the basis of your age. So it would not be lawful to make only those over – or under – a certain age redundant. Nor can it be done on grounds of your race, sex, disability, religion, or sexual orientation or take account of your family circumstances, your membership of a union or your stance on health and safety matters.
If you feel that you have been selected for redundancy in an unfair way then you can complain and if you get nowhere you can take your case to an employment tribunal. It is unlikely you will get your job back but you may get compensation which can ease the blow.
However, if you have worked for your employer for less than a year you have very few rights and can be dismissed without reason. Though even then the dismissal must not discriminate against you on grounds such as age or disability.
Redundancy pay
If you are made redundant then you will normally get redundancy pay. Your
contract will set out how much you will get. If there is nothing in the contract
then you are entitled to the statutory minimum if you have worked for your
employer for at least two years.
The minimum redundancy payment is one week’s pay for each year you have worked for that employer between the ages of 22 and 40. For each year aged 41 or more it is one and a half weeks’ pay and for each week when you were aged under 22 it is half a week’s pay. However, there are two limits on the pay and the time that is counted. First, if you earn more than £350 a week then the calculation is done assuming that your pay is only £350 a week. It doesn’t matter if you earn £360 a week or £2000 a week your redundancy pay will still be worked out as if you earned £350. Second, the maximum number of years that can be counted is twenty. So you have worked for your employer all your working life from 18 to 58 and you are made redundant that still counts as 20 years. It is the last 20 that are counted so in that case you would get one week’s pay for the two years when you were aged 39 and 40 and one and half week’s pay for each of the years from 41 to 58. So the total is 29 weeks and that will be multiplied by your current weekly pay up to the £350 maximum. The most anyone can get from the statutory scheme is 30 weeks’ pay at £350 which is £10,500.
Of course your contract may give you more. A month’s pay for each year’s work is quite common, especially in professional jobs. And if your employer is keen to get rid of your job (or perhaps you) then it is often possible to negotiate better terms. You may also be able to negotiate an enhanced pension, including an early start perhaps as young as 50 (though from April 2010 that will rise to 55). The first £30,000 of a redundancy payment is tax-free. The rest is taxed as income. Your ex-employer will deduct any tax due before the money is paid. If you are given pay in lieu of notice, holiday pay or any other compensation you are entitled to on leaving then that will also be taxable. If you are made redundant it is very important to get a formal notice of dismissal – even if you volunteered for it – to ensure that the Revenue treats the redundancy pay as tax-free.
If your employer goes bust or fails to pay your redundancy money then you will get the statutory minimum from the Government.
Before October 2006 people over 65 could be dismissed without reason and had no rights to redundancy pay. Since then that upper limit has gone and employers must be very careful to dismiss older workers properly. It is still lawful to make people retire at a pre-determined age as long as that is at least 65 and certain other conditions are fulfilled. People must be given six months notice before reaching that age and be given the chance to ask to work longer which the employer must consider. The lawfulness of these rules is still being tested in the courts.
Benefits
Once you lose your job you should consider signing on as a jobseeker at the
local Jobcentre Plus, which nowadays may not be that near. You will be expected
to be actively seeking work and sign up for a jobseeker’s agreement. At the end
of six months you can sign up for New Deal 50 Plus which is designed to help
older people get into work more quickly.
If you have paid enough National Insurance Contributions you can then get Jobseeker’s Allowance for six months. The basic amount is £64.30 a week. There is also a means-tested version of the allowance which can be paid for longer and can include extra for a dependent partner and housing costs – including mortgage interest after 13 weeks unemployment. It is reduced if you – or a partner – have any other income or any savings above £6000.
If you have children your tax credits should increase. Make sure you tell the Revenue about your changed circumstances.
If you are actively seeking work you can get your National Insurance contributions credited even if you do not get Jobseeker’s Allowance. Men over 60 currently get contributions credited anyway. Anyone who reaches pension age on 6 April 2010 or later will only need 30 years’ contributions to get a full pension.
If you experience a period of unemployment you may be due a tax rebate. Tax is deducted from pay on the assumption you will work all tax year. If you do not then too much tax may have been deducted and you can claim it back. Contact your tax office.
Once you reach 60 you will almost certainly be better off claiming pension credit rather than jobseeker’s allowance. It is also means-tested but is twice as much as JSA at £130 a week if you are single and £198.45 for a couple. The savings limits are more generous and you do not have to be looking for work.
Women may be able to claim their state pension at 60. At 60 men and women can get free travel on buses and sometimes on other public transport systems.
Looking for work
Trying to find a job in your fifties has always been hard. Even though it is
now unlawful to reject you on grounds of age, there is no doubt that many
employers do still pick younger people over older ones at interviews. If you
feel you have been discriminated against on grounds of age (or sex, race,
disability, religion or sexual orientation) then you could consider a complaint
to an employment tribunal. You may get compensation.
Further information
www.direct.gov.uk – put redundancy or jobseeker in the search box.
May 2009