redundancy terms

[stodgy88]

cant find anything in mtsf 2007 about how redundancy term are worked out --anyone help thanks

[dpb]

as i recall it

3 weeks pay for each year worked for first 10 years, then 4 weeks pay for each year worked above ten years, plus an additional 2 weeks pay for each year worked over the age of 40. up to a maximum of 104 weeks compensation.

pay is defined as basic pay plus pensionable allowances, including the whole of any night shift allowance.

part years service counted as whole year.

minimum payment is 6 months pay.

it gets more complicated if you are over 55 and opting for a pension. see the MTSF. its all in there.

[vanman]

As ever with the MTSF agreement - it's not as straightforward as that.

The terms were changed in 2007 to take into account new Age Discrimination Legislation.

For individuals between 50 and 60 in the pension scheme, the terms remain 6 months pay and immediate payment of an enhanced pension and lump sum (if applicable). Beware though that those individuals age between 50 and 54 can be denied the full terms if there are more applicants for VR than the number of redundancies as there is a cost ceiling applied in these cases. But only where there is an over-subscription of volunteers.

For those under 50 and over 60 the terms changed to the statuatory redundancy terms x 3.75.

The full details of all the changes made at that time are as follows:

Managing the Surplus Framework
Revisions to Ensure Compliance with Age Discrimination Regulations1.

1. Introduction

The following changes have been made to the Managing the Surplus Framework and Managing the Surplus Framework 2 agreements in order to ensure that the agreement is not in breach of the Age Discrimination Regulations that became law in 2006.

The existing agreement is only modified in the ways stated in this document, in all other ways, the agreement remains unaltered.

2. Selection Criteria

The existing selection criteria for VR that are contained in Appendix 5 of MtSF remain unaltered. The only fair method of selection that did not look at age and service as criteria is a completely random method of selection which would not reward loyalty or take into consideration the health and lifestyle factors that would make it fair.

3. Voluntary Redundancy Terms

Redundancy payment arrangements that mirror the statutory redundancy scale are deemed to be lawful under age discrimination legislation. Therefore, the voluntary redundancy terms contained in paragraph 2.1 of Appendix 6 of MtSF are replaced by a formula of statutory redundancy pay (uncapped) multiplied by 3.75.

The formula is:

0.5 week's pay for each full year of service where age during year less than 22
1.0 week's pay for each full year of service where age during year is 22 or above, but less than 41
1.5 weeks' pay for each full year of service where age during year is 41 +

Part years of service no longer count in calculating the redundancy pay.

The calculation is based on actual pensionable pay and is not limited to the prevailing maximum rate of weekly pay under statutory redundancy provisions.

A ready reckoner of voluntary redundancy pay that would be paid using this formula is attached at Appendix A.

4. People Aged 62 and Over

The element of paragraph 2.5 of Appendix 6 of MtSF and the entirety of paragraph 2.6 are removed. These relate to reducing compensation for people aged 62 and over. However, paragraph 1 (e) of Appendix 5 is interpreted that anyone who has entered the duty to consider process prior to normal retirement will be treated as having entered into a process that would, in any event, result in retirement and will not be eligible for voluntary redundancy with compensation.

5. Resourcing Process

Specific references giving priority to people aged 50 to 60 in the resourcing processes contained within MtSF are no longer valid. That means that the resourcing process remain the same, except there is no longer a change in priority for people aged 50 to 60 and those elements of the agreement are to be ignored.

6. Pay Protection

Appendix 2 of MtSF has been amended to such an extent that Appendix 2 of this agreement replaces it.

7. Effective Date of Agreement

Paragraphs 2 and 4 have immediate effect from signing this agreement. Paragraphs 3, 5 and 6 take effect from 1st June 2007.

Gareth Evans
Head of Industrial Relations Royal Mail Group Limited

Ray Ellis Assistant Secretary CWU
1st May 2007

The golden rule with anything relating to redundancies is to speak to your rep - do not just accept what the business tell you. It has been known to be wrong!!

[opgpat]

So the minimum payment of 6months pay no longer applies?

If that is the case and part years also no longer count then the redundancy pay for someone with say 2.8 years service has gone down from about 9grand to 2grand?!? how did they get away with that?

[madelin4]

Not worth the while then!!!

[dpb]

see attached ready reckoner

minimum looks like 25 weeks pay

you may need to zoom to it as its a bit compressed

[vanman]

So the minimum payment of 6months pay no longer applies?

If that is the case and part years also no longer count then the redundancy pay for someone with say 2.8 years service has gone down from about 9grand to 2grand?!? how did they get away with that?

"They" haven't got away with anything!

The minimum payment is still 26 weeks (up to a maximum of 104 weeks). Remember that these terms only apply if you are under 50 or over 60.

(Thanks to "dpb" for adding the ready reckoner - I couldn't work out how to add attachments)

For those between 50 and 60 and in the pension scheme - the terms are 6 months redundancy pay together with immediate payment of an enhanced (by up to 6 and 2/3rd years) pension and benefits. These terms may not be available to those aged 50-54 only if there are more volunteers for redundancy than the number of redundancies - in this case inferior TMA terms are offered.

As I said in my first posting - ALWAYS seek advice from your rep on anything to do with VR's.

[stodgy88]

enhanced pension and lump sum how are these worked out----.p.s thanks for original replys

As ever with the MTSF agreement - it's not as straightforward as that.

The terms were changed in 2007 to take into account new Age Discrimination Legislation.

For individuals between 50 and 60 in the pension scheme, the terms remain 6 months pay and immediate payment of an enhanced pension and lump sum (if applicable). Beware though that those individuals age between 50 and 54 can be denied the full terms if there are more applicants for VR than the number of redundancies as there is a cost ceiling applied in these cases. But only where there is an over-subscription of volunteers.

For those under 50 and over 60 the terms changed to the statuatory redundancy terms x 3.75.

The full details of all the changes made at that time are as follows:

Managing the Surplus Framework
Revisions to Ensure Compliance with Age Discrimination Regulations1.

1. Introduction

The following changes have been made to the Managing the Surplus Framework and Managing the Surplus Framework 2 agreements in order to ensure that the agreement is not in breach of the Age Discrimination Regulations that became law in 2006.

The existing agreement is only modified in the ways stated in this document, in all other ways, the agreement remains unaltered.

2. Selection Criteria

The existing selection criteria for VR that are contained in Appendix 5 of MtSF remain unaltered. The only fair method of selection that did not look at age and service as criteria is a completely random method of selection which would not reward loyalty or take into consideration the health and lifestyle factors that would make it fair.

3. Voluntary Redundancy Terms

Redundancy payment arrangements that mirror the statutory redundancy scale are deemed to be lawful under age discrimination legislation. Therefore, the voluntary redundancy terms contained in paragraph 2.1 of Appendix 6 of MtSF are replaced by a formula of statutory redundancy pay (uncapped) multiplied by 3.75.

The formula is:

0.5 week's pay for each full year of service where age during year less than 22
1.0 week's pay for each full year of service where age during year is 22 or above, but less than 41
1.5 weeks' pay for each full year of service where age during year is 41 +

Part years of service no longer count in calculating the redundancy pay.

The calculation is based on actual pensionable pay and is not limited to the prevailing maximum rate of weekly pay under statutory redundancy provisions.

A ready reckoner of voluntary redundancy pay that would be paid using this formula is attached at Appendix A.

4. People Aged 62 and Over

The element of paragraph 2.5 of Appendix 6 of MtSF and the entirety of paragraph 2.6 are removed. These relate to reducing compensation for people aged 62 and over. However, paragraph 1 (e) of Appendix 5 is interpreted that anyone who has entered the duty to consider process prior to normal retirement will be treated as having entered into a process that would, in any event, result in retirement and will not be eligible for voluntary redundancy with compensation.

5. Resourcing Process

Specific references giving priority to people aged 50 to 60 in the resourcing processes contained within MtSF are no longer valid. That means that the resourcing process remain the same, except there is no longer a change in priority for people aged 50 to 60 and those elements of the agreement are to be ignored.

6. Pay Protection

Appendix 2 of MtSF has been amended to such an extent that Appendix 2 of this agreement replaces it.

7. Effective Date of Agreement

Paragraphs 2 and 4 have immediate effect from signing this agreement. Paragraphs 3, 5 and 6 take effect from 1st June 2007.

Gareth Evans
Head of Industrial Relations Royal Mail Group Limited

Ray Ellis Assistant Secretary CWU
1st May 2007

The golden rule with anything relating to redundancies is to speak to your rep - do not just accept what the business tell you. It has been known to be wrong!!

[vanman]

Right - here goes:

An enhanced pension and lump sum is only paid if you are in the pension scheme (for at least 5 years) and it depends on which part of the scheme you're in. Basically under the pension scheme you get paid a pension based on the number of years in the scheme against your pensionable pay.

Under MTSF, if you are between the ages of 50 - 59 this service can be increased to that which you would have got had you retired age 60, but only up to a maximum of 6 2/3rd years - (also so long as it doesn't double it). For example someone age 57 who had 20 years service would have this service increased to 23 years. The pension (and lump sum if payable - depends on if you're in POSSS or POPS), would then be worked out on this higher figure.

Other examples would be:

Age 52 with 15 years - gets max of 6 and 2/3rd years added = 21 2/3rd years.
Age 52 with 6 years - only gets 6extra 6 years as it doubles it = 12 years
Age 54 with 20 years - gets 6 years = 26 years.
Age 56 with 10 years - gets 4 years = 14 years.

In effect this means you'd be paid a higher pension, earlier at no extra cost to you.

Because of this, the actual redundancy pay is set at 6 months pay. (normally)

The extract from MTSF is:

"2.4 EMPLOYEES AGED 50-59 WHO ARE MEMBERS OF THE PLANS

2.4.1 MEMBERS OF SECTIONS A/B OF THE PLAN (formerly POSSS)

Pension

Immediate payment of pension benefits based on Pensionable Pay and Reckonable Service5;

PLUS

enhancement of Reckonable Service by the lower of 6 2/3 years (pro-rata according to the hours worked in the case of part-time employees) or that which could have been attained if service had continued to 60, provided that in no case shall Reckonable Service be increased to more than double its length and subject to Inland Revenue limits and the Rules of the Plan.

Compensation

Either: a compensation payment equivalent to 6 months’ Pay;

Or: Statutory Redundancy Payment;

whichever is the greater.

2.4.2 MEMBERS OF SECTION C OF THE PLAN (formerly POPS)

LESS THAN FIVE YEARS’ PENSIONABLE SERVICE

Compensation as at 2.1 (normal terms) above and a deferred pension subject to the Rules of the Plan

FIVE YEARS’ OR MORE PENSIONABLE SERVICE

Pension

Immediate payment of pension benefits based on Pensionable Pay and Pensionable Service.

Plus

enhancement of Pensionable Service by the purchase by Royal Mail Group plc of the lower of 6 2/3 years (pro-rata according to the hours worked in the case of part-time employees) or that which could have been attained if service had continued to 60, provided that in no case shall Pensionable Service be increased to more than double its length and subject to Inland Revenue limits and the Rules of the Plan.

Compensation

Either: a compensation payment equivalent to 6 months’ pay);

Or: Statutory Redundancy Payment;

whichever is the greater.

2.4.3 MEMBERS OF THE SAVINGS PLAN

Compensation

Compensation as set out at 2.1 above.

Pension

A member aged over 50 leaving before normal retirement age can transfer his or her Personal Account to another pension scheme or leave their Personal Account in the Savings Plan until normal retirement age subject to the Rules of the Savings Plan. At any time from age 50, a member who has left Royal Mail Group employment may apply to use the value of the Personal Account to provide retirement benefits subject to the agreement of Royal Mail Group. For the avoidance of doubt, no contribution is made to the Savings Plan or any personal pension to provide additional benefits on redundancy."

The above terms should always apply to those aged 55 and over.

These term also apply for those aged 50-54 where the number of volunteers for redundancy is equal to or less than the number of VRs offered.

However, if there are more volunteers thhn VRs the above terms are not offered to the 50-54 group on cost grounds. Instead they can be offered inferior terms known as "Termination by Mutual Agreement" or TMA.

The details of this are:

An additional opportunity for 50-54 year olds in a surplus situation to leave on a mutual agreement basis: the MTSF “Criteria for Offering Voluntary Redundancy” imposes a two-year ceiling on the costs of voluntary redundancy. This effectively denies 50-54 year olds with more than five years membership of the Pension Plan, the opportunity to leave in situations of over-subscription. Although the parties have explored the potential for lifting this cap the costs remain prohibitively expensive. However, the parties are aware that some 50-54 year olds, in the position of being denied voluntary redundancy, might be interested in leaving on other terms if these were sufficiently attractive. To meet that need a form of Termination by Mutual Agreement (TMA) has been devised offering the following improved terms from those currently available: This is an additional proposition to those contained in the original MTSF agreement, and will only apply when a surplus of volunteers would otherwise preclude release of any 50-54 year olds.

EITHER:

Option A

A lump sum equivalent to three weeks pay per year of service for the first 10 years, and four weeks’ pay per year of service thereafter, plus an additional two weeks’ pay for each year aged between 40 and 50, subject to a maximum of 104 weeks pay plus:

Entitlement to an actuarially reduced pension or to defer their pension until age 60;

OR

Option B

Immediate payment of a non-enhanced and non-reduced pension, based on actual pensionable service, without any lump sum compensation.

In order for an employee to receive either of these options a standard compromise agreement (the content and format will be shared with CWU but responsibility for application rests with Royal Mail Group) will be required to be signed before the termination takes place.

(3) Opportunity for Termination by Mutual Agreement where placement is possible. This opportunity only applies where voluntary redundancy is not available, and will not be used as an alternative to voluntary redundancy. Royal Mail Group and the CWU recognise that some employees might be interested in leaving rather than being placed, and that the availability of TMA may help to accelerate change. In these circumstances only the following terms will be available for operational grades:

A taxable lump sum equivalent to 2 weeks pay per year of service for 1-10 years, plus three weeks pay for each year of service 11-20 years; plus 4 weeks for each year of service more than 20 years, subject to a maximum of 104 weeks pay

[Note: individuals between the ages of 50 and 60 are also entitled to an actuarially reduced pension or to defer their pension until age 60]

Terms will only be made available during the statutory consultation period set out at 3 (1) above.

Decisions relating to the extent to which these terms will be made available will be a matter for individual Business Units/Recovery Programmes in consultation with the CWU. However, all Business Units/Recovery Programmes will take into account the following key criteria:


The Golden Rule with MTSF - is seek advice from someone who knows the Agreement. Don't rely on "barrack room lawyers" or believe what management tell you. GET ADVICE!

[stodgy88]

thankyou brilliant that stodgy88

An enhanced pension and lump sum is only paid if you are in the pension scheme (for at least 5 years) and it depends on which part of the scheme you're in. Basically under the pension scheme you get paid a pension based on the number of years in the scheme against your pensionable pay.

Under MTSF, if you are between the ages of 50 - 59 this service can be increased to that which you would have got had you retired age 60, but only up to a maximum of 6 2/3rd years - (also so long as it doesn't double it). For example someone age 57 who had 20 years service would have this service increased to 23 years. The pension (and lump sum if payable - depends on if you're in POSSS or POPS), would then be worked out on this higher figure.

Other examples would be:

Age 52 with 15 years - gets max of 6 and 2/3rd years added = 21 2/3rd years.
Age 52 with 6 years - only gets 6extra 6 years as it doubles it = 12 years
Age 54 with 20 years - gets 6 years = 26 years.
Age 56 with 10 years - gets 4 years = 14 years.

In effect this means you'd be paid a higher pension, earlier at no extra cost to you.

Because of this, the actual redundancy pay is set at 6 months pay. (normally)

The extract from MTSF is:

"2.4 EMPLOYEES AGED 50-59 WHO ARE MEMBERS OF THE PLANS

2.4.1 MEMBERS OF SECTIONS A/B OF THE PLAN (formerly POSSS)

Pension

Immediate payment of pension benefits based on Pensionable Pay and Reckonable Service5;

PLUS

enhancement of Reckonable Service by the lower of 6 2/3 years (pro-rata according to the hours worked in the case of part-time employees) or that which could have been attained if service had continued to 60, provided that in no case shall Reckonable Service be increased to more than double its length and subject to Inland Revenue limits and the Rules of the Plan.

Compensation

Either: a compensation payment equivalent to 6 months’ Pay;

Or: Statutory Redundancy Payment;

whichever is the greater.

2.4.2 MEMBERS OF SECTION C OF THE PLAN (formerly POPS)

LESS THAN FIVE YEARS’ PENSIONABLE SERVICE

Compensation as at 2.1 (normal terms) above and a deferred pension subject to the Rules of the Plan

FIVE YEARS’ OR MORE PENSIONABLE SERVICE

Pension

Immediate payment of pension benefits based on Pensionable Pay and Pensionable Service.

Plus

enhancement of Pensionable Service by the purchase by Royal Mail Group plc of the lower of 6 2/3 years (pro-rata according to the hours worked in the case of part-time employees) or that which could have been attained if service had continued to 60, provided that in no case shall Pensionable Service be increased to more than double its length and subject to Inland Revenue limits and the Rules of the Plan.

Compensation

Either: a compensation payment equivalent to 6 months’ pay);

Or: Statutory Redundancy Payment;

whichever is the greater.

2.4.3 MEMBERS OF THE SAVINGS PLAN

Compensation

Compensation as set out at 2.1 above.

Pension

A member aged over 50 leaving before normal retirement age can transfer his or her Personal Account to another pension scheme or leave their Personal Account in the Savings Plan until normal retirement age subject to the Rules of the Savings Plan. At any time from age 50, a member who has left Royal Mail Group employment may apply to use the value of the Personal Account to provide retirement benefits subject to the agreement of Royal Mail Group. For the avoidance of doubt, no contribution is made to the Savings Plan or any personal pension to provide additional benefits on redundancy."

The above terms should always apply to those aged 55 and over.

These term also apply for those aged 50-54 where the number of volunteers for redundancy is equal to or less than the number of VRs offered.

However, if there are more volunteers thhn VRs the above terms are not offered to the 50-54 group on cost grounds. Instead they can be offered inferior terms known as "Termination by Mutual Agreement" or TMA.

The details of this are:

An additional opportunity for 50-54 year olds in a surplus situation to leave on a mutual agreement basis: the MTSF “Criteria for Offering Voluntary Redundancy” imposes a two-year ceiling on the costs of voluntary redundancy. This effectively denies 50-54 year olds with more than five years membership of the Pension Plan, the opportunity to leave in situations of over-subscription. Although the parties have explored the potential for lifting this cap the costs remain prohibitively expensive. However, the parties are aware that some 50-54 year olds, in the position of being denied voluntary redundancy, might be interested in leaving on other terms if these were sufficiently attractive. To meet that need a form of Termination by Mutual Agreement (TMA) has been devised offering the following improved terms from those currently available: This is an additional proposition to those contained in the original MTSF agreement, and will only apply when a surplus of volunteers would otherwise preclude release of any 50-54 year olds.

EITHER:

Option A

A lump sum equivalent to three weeks pay per year of service for the first 10 years, and four weeks’ pay per year of service thereafter, plus an additional two weeks’ pay for each year aged between 40 and 50, subject to a maximum of 104 weeks pay plus:

Entitlement to an actuarially reduced pension or to defer their pension until age 60;

OR

Option B

Immediate payment of a non-enhanced and non-reduced pension, based on actual pensionable service, without any lump sum compensation.

In order for an employee to receive either of these options a standard compromise agreement (the content and format will be shared with CWU but responsibility for application rests with Royal Mail Group) will be required to be signed before the termination takes place.

(3) Opportunity for Termination by Mutual Agreement where placement is possible. This opportunity only applies where voluntary redundancy is not available, and will not be used as an alternative to voluntary redundancy. Royal Mail Group and the CWU recognise that some employees might be interested in leaving rather than being placed, and that the availability of TMA may help to accelerate change. In these circumstances only the following terms will be available for operational grades:

A taxable lump sum equivalent to 2 weeks pay per year of service for 1-10 years, plus three weeks pay for each year of service 11-20 years; plus 4 weeks for each year of service more than 20 years, subject to a maximum of 104 weeks pay

[Note: individuals between the ages of 50 and 60 are also entitled to an actuarially reduced pension or to defer their pension until age 60]

Terms will only be made available during the statutory consultation period set out at 3 (1) above.

Decisions relating to the extent to which these terms will be made available will be a matter for individual Business Units/Recovery Programmes in consultation with the CWU. However, all Business Units/Recovery Programmes will take into account the following key criteria:


The Golden Rule with MTSF - is seek advice from someone who knows the Agreement. Don't rely on "barrack room lawyers" or believe what management tell you. GET ADVICE![/quote]

[stodgy88]

brilliant thankyou

[wranglered]

Let me add a word of warning and advice....

It appears the CWU have already conceded that MTSF will no longer apply from January 2010.

So if you have a chance of getting some cash this year, then make sure you take it....

From next year they will be binning us all with just the statutory payments to compensate...

[vanman]

That's news to me!

Where did you here this from?

[madelin4]

Let me add a word of warning and advice....

It appears the CWU have already conceded that MTSF will no longer apply from January 2010.

So if you have a chance of getting some cash this year, then make sure you take it....

From next year they will be binning us all with just the statutory payments to compensate...

Well that is something for all to think about.

[wranglered]

That's news to me!

Where did you here this from?

advisor to Dave Ward....