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Redundancy pay / National wage

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  • Redundancy pay / National wage

    Please can someone clarify a couple of things for me. My 64yo father in law is being made redundant after 22 years employment with the same company however I think they are trying to dodge paying the full statutory redundancy pay. He is salaried at £15600pa, works (8-5) 40hrs pw and 5 days pw, paid on 28th each month.

    The way I would work that out is £15600 / 52 = £300, £300 / 40 = £7.5 (the NLW / NMW) so his redundancy pay should be £300 x 30weeks = £9000???

    However, going by their paperwork they have given him they claim it is worked out as follows:

    £15600 / 12 = £1300, £1300 / 4.348 (weeks) = £298.98 x 30 = £8969.40.

    Please can someone just clarify which is the correct way to work it out

    If they are correct then the £298.98 figure is less than the minmum wage if I am correct (ok, only by about 3p per hour, but why should a huge company get away with it), what would be the best way to try and get them to back pay the underpayments from previous years as well as increase the redundancy pay?
    Last edited by sytra; 6th February 2018, 21:11:PM.
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  • #2
    tagging Ula mariefab
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    • #3
      Sorry to hear about your father-in-law.

      Firstly can I just check that he has indeed done a complete 22 years and when is the redundancy going to take effect?

      The calculation you have posted is correct based on a straight calculation of £15,600 divided by 52 weeks. However it appears this company has used the calculation of 52.1428 and they have then divided by 12 which equals 4.345 giving weekly rate of £299.19 x 30 weeks = £8975.70. However even if they have used this as the basis of the calculation their figures are still incorrect.

      I would suggest that your father in law asks the company why it is not using a calculation that is based on the NMW of £7.50 per hour

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      • #4
        Originally posted by Ula View Post
        Sorry to hear about your father-in-law.

        Firstly can I just check that he has indeed done a complete 22 years and when is the redundancy going to take effect?

        Hi, many thanks for your reply, yes he has completed nearly 23 years (23 yrs in May), he was given 12 weeks notice on monday 29th January but effectively starting today 5th Feb and last day of work is Monday 30th April.


        • #5
          It appears that they've worked it out like this:
          One year =365.25 days, /12 to get the average month =30.4375, /7 days in a week=4.348...

          However, that's not the way it should be done because it results in a shortfall.

          Happily the Government provides a calculator for this purpose:


          Answer 7 days at 'How often do you get paid' (because that's how his employer has calculated it)
          and put their figure of £298.98 at 'How much do you get paid before tax....'

          When you've finished it'll confirm the actual pay is £7.47*/hour making a weekly shortfall of £1.02.

          Print the result and give it to the employer.
          If they won't/don't make the required correction you might mention that HMRC enforces NMW/NLW matters and, in addition to making them pay the arrears, they impose penalties against and name and shame offending employers


          • #6
            We have been looking at his paperwork and have had a thought, as the minimum wage changes on 1st April do the company have to pay the new mw for the last 30 days of the notice period?
            Also would the stat redundency pay be different?

            The company claim they dont have to pay mw till Oct?¬*


            • #7
              No they don't.
              The new rate starts in the next pay period after the date of the increase.
              So, for monthly paid workers it'll start in May.

              I don't know where they've got the idea that they don't have to pay it until October from. It's wrong.


              • #8
                Lol, and so the saga continues, we printed of the Statutory Redundancy from GOV.UK and along with a letter my father in law took it in to his boss who promptly said all the figures are wrong but to keep him happy he would pass it onto the accountants / lawyer or whoever was dealing with it.

                Low and behold they have come back now saying all our figures are wrong and the government site just gives an idea it is not the correct figure,and that no one he has spoken to knows what they are on about. They are also saying their figures are correct as apparently everyone else has failed to take into account all the leap years he has worked there . we are just waiting for the written reply as we told them we wanted it in writing on company letter headed paper.

                He is losing the will to live with them now just says it is like banging his head against a wall trying to make them see reason, they have to be the worst company to work for, they just seem so dense with one brain cell between them and it is a guessing game who has it on which day!

                Can i name and shame them on here??


                • #9

                  They must be a very important firm if they feel that they can disregard the Government's own method of calculating the NMW.
                  Let's see if we can use their own methods against them.

                  Take a look at a few of your Dad's last payslips. Do they all have £1300 as gross wages? Because if they do, and the firm sticks to their idea of how to calculate his redundancy payment, they may have a much bigger NMW problem.


                  • #10
                    Hi mariefab thank you so much for taking the time to reply, we have had him check his payslips, APR 16 - MAR 17 all the payslips were £1248 gross, APR 17 - NOV 17 they were all £1300 however, DEC 17 and JAN 18 are both £1304.25 (we don't know why as they have never been different before). I have attached a pic of the letter they sent in response to his query.


                    • #11
                      But we do know why they changed the gross pay in December and January. They did it because they were planning redundancies and they hoped that using their method of calculating the redundancy pay would save them money.

                      It's sad really because they really didn't think it through and realise that they can't have it both ways.

                      Using their method the calculation should be, £1304.25 / 4.348 (weeks) = £299.9655 or 299.97(rounded up) x 30 =£8998.965 or £8999.10
                      So, saving about £1 rather than the £30.60 that they were hoping for. It really isn't worth the time and inconvenience that would be involved to make a complaint for £1.

                      I wouldn't tell them about their mistake yet because if it's brought to their attention they are likely try something else like change the gross pay again. Wait until he's been paid in March then tell them. It'll be too late for them to do anything by then.


                      • #12
                        P.S. They really need to teach whoever's doing this how to use a calculator; because their basic arithmetic is all over the place.

                        In their redundancy calculation confirmation letter; what is the point of multiplying the monthly payment by 3 only to divide it by 3 in the next line?
                        £3900 / (3 x 4.348) = 298.98 not 298.97
                        and 298.97 x 30 =£8969.10 not £8969.20

                        Also, when they changed his gross pay it should have been to £1304.40 (£7.50 x 40 x 4.348) not £1304.25.
                        Last edited by mariefab; 16th February 2018, 08:35:AM. Reason: addition




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