Why do some companies pay more redundancy?

mrcheez

I hear of some companies paying 6 weeks salary for every year worked, and other companies paying the statutory minimum (e.g. 2 months pay after 5 years worked).

Why do some companies pay more than the statutory minimum? What do they get out of it if they no longer are involved with the person?

Second question: are these things usually decided on a per-contract basis, or general company policy?

GarIT

Because they would like to I guess.

Manach

If the redundancy is voluntary it would act as an incentive. Another reason might be to keep the worker's motivated to the end so as to ensure a smooth handover if it were an outsourcing operation.

CramCycle

You may have had it as part of your contract, it may be general company policy, it may be to stop the person kicking up a fuss.

Also statutory minimum would be more than 2 months for 5 years, should be at least 11 weeks right?

eeguy

It's good to keep ex employees on friendly terms. Stops them selling company secrets and working for the competition out of spite.

It can also be nice to keep a network of ex employees as you never know when youight need a favour.

mrcheez

Is there a way to know the redundancy available in a company before you join (or is it just pot luck if you get a generous amount)?
I've never seen it mentioned in any contract I've signed, beyond the usual "you will be given x weeks notice"

NOTE: it's not a factor in whether I join a place or not.. I'm just interested after hearing your man from the FAI say he got "6 weeks per year worked"

mrcheez

CramCycle wrote: »

Also statutory minimum would be more than 2 months for 5 years, should be at least 11 weeks right?

Nope

CIARAN_BOYLE

mrcheez wrote: »

Nope

statutory minimum is 2 weeks per year worked plus 1 additional week

Graham

mrcheez wrote: »

Is there a way to know the redundancy available in a company before you join (or is it just pot luck if you get a generous amount)?
I've never seen it mentioned in any contract I've signed, beyond the usual "you will be given x weeks notice"

You'd generally find multinationals have the more generous redundancy policy, much less likely with smaller local operations. Whenever I've seen redundancy programmes, everyone broadly gets the same terms.

Benefits of more generous redundancy packages (to the company):

Reputation protection/damage limitation.
Keep staff right up-to their redundancy date.
Keep staff motivated during an orderly wind-down/transfer of operations.
Reduce guilt amongst remaining staff (ex-colleagues are less likely to feel sorry for someone leaving with X months/years tax-free salary_.
More volunteers (for voluntary redundancy programmes).

One particular multi-national consumer electronics company I worked with closed one arm of their Irish operations. They offered ALL staff 6 weeks per year/part-year plus a bonus of 20% of their final year salary for performance upto the closing date of the operation. As upsetting as this was for many staff with up-to 15 years service, they'd almost all have no issue with working for the company again.

mrcheez

CIARAN_BOYLE wrote: »

statutory minimum is 2 weeks per year worked plus 1 additional week

Ah sorry I just checked again. I meant to say 3 1/2 years = 8 weeks.

Graham

mrcheez wrote: »

I'm just interested after hearing your man from the FAI say he got "6 weeks per year worked"

Was that really a redundancy payment, surely his job still exists. That sounds more like a golden-parachute agreement which is very different and would more than likely be part of the terms in that specific contract of employment.

mrcheez

Graham wrote: »

You'd generally find multinationals have the more generous redundancy policy, much less likely with smaller local operations. Whenever I've seen redundancy programmes, everyone broadly gets the same terms.

Benefits of more generous redundancy packages (to the company):

Reputation protection/damage limitation.
Keep staff right up-to their redundancy date.
Keep staff motivated during an orderly wind-down/transfer of operations.
Reduce guilt amongst remaining staff (ex-colleagues are less likely to feel sorry for someone leaving with X months/years tax-free salary_.
More volunteers (for voluntary redundancy programmes).

One particular multi-national consumer electronics company I worked with closed one arm of their Irish operations. They offered ALL staff 6 weeks per year/part-year plus a bonus of 20% of their final year salary for performance upto the closing date of the operation. As upsetting as this was for many staff with up-to 15 years service, they'd almost all have no issue with working for the company again.

Nice summary, thanks

CramCycle

mrcheez wrote: »

Nope

mrcheez wrote: »

Ah sorry I just checked again. I meant to say 3 1/2 years = 8 weeks.

So yes then

mrcheez

CramCycle wrote: »

So yes then

yip.. sorry I had the 2 months redundancy figure in my head but forgot it was for 3.5 years not 5

HardyEustace

CIARAN_BOYLE wrote: »

statutory minimum is 2 weeks per year worked plus 1 additional week

don't forget that's capped at 30,000.

Graham

HardyEustace wrote: »

don't forget that's capped at 30,000.

What's capped at 30,000?

Amirani

HardyEustace wrote: »

don't forget that's capped at 30,000.

That's just the tax-free cutoff.

HardyEustace

Graham wrote: »

What's capped at 30,000?

Your statutory redundancy payment

"The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:

Two weeks' pay for every year of service over the age of 16 and
One further week's pay
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year)."

reference: citizens advice bureau

RustyNut

mrcheez wrote: »

I hear of some companies paying 6 weeks salary for every year worked, and other companies paying the statutory minimum (e.g. 2 months pay after 5 years worked).

Why do some companies pay more than the statutory minimum? What do they get out of it if they no longer are involved with the person?

Second question: are these things usually decided on a per-contract basis, or general company policy?

It could be that it is a voluntary redundancy scheme and the company need to encourage people to take the package.

Graham

HardyEustace wrote: »

Your statutory redundancy payment

"The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:

Two weeks' pay for every year of service over the age of 16 and
One further week's pay
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year)."

reference: citizens advice bureau

That's the statutory part, there's nothing to stop an employer paying above the statutory minimums but as Amirani suggested anything above the minimums may be taxable.

Jim2007

mrcheez wrote: »

Why do some companies pay more than the statutory minimum? What do they get out of it if they no longer are involved with the person?

That is a good question and even more interesting if you look at Switzerland where we have no concept of redundancy - so long as a company meets the minimum notice period they are free to terminate you without reason regardless of how long you have worked there. And yet it is very seldom that you will here of a company not paying a golden boot.

The reason most companies over here give is that eventually they will want to recruit again and if they have a name of treating people badly then it will be very difficult to attract the best recruits. And this is certainly the case with one of the national telecom companies - people don't see it as a place to build a career and as a result a lot of grads in particular just work there for a while to earn money for a long holiday after college etc...

Youngblood.III

Strong union reps..and the company can afford it.

bee06

Youngblood.III wrote: »

Strong union reps..and the company can afford it.

I would say most multinationals who would often give generous redundancy packages wouldn't have unions. Mine certainly didn't.

In my case it was to keep us motivated to work to the end of our notice. The publicity element comes into it as well. A lot of multinationals might be making one area redundant but recruiting for another. It's a lot easier to recruit if you don't have soon to be employees or former employees complaining about their redundancy.

Eoin

Plus it might scare off suppliers & customers if they think there's not much cash available.