It has been the bleakest week in retail since Woolworth closed in 2008, with nearly 30,000 jobs at risk. Administrators were appointed on Wednesday at the Bonmarché fashion chain, putting more than 1,500 posts in jeopardy, just two days after Arcadia went into administration threatening the livelihoods of 13,000 employees. Meanwhile, the administrators of Debenhams, appointed in April, announced plans to close the business, putting 12,000 jobs at risk, after failing to find a buyer.
They join tens of thousands of others who have already lost their jobs during the pandemic or fear they might as their employers struggle for survival, especially in retail and hospitality.
For employees wondering about their rights and possible redundancy compensation, here are some answers.
If my employer goes bust will I still get redundancy?
When a company has no money left to pay redundancy, employees have to claim statutory redundancy pay from the National Insurance Fund operated by the Redundancy Payments Service. To qualify for statutory redundancy, you must have worked for the employer for at least two years.
How much will I get?
The maximum weekly pay taken into account is £538. Those under 22 years get half a week’s pay for each full year of service. From 22 to 41 you get one week’s pay per year and above 41 one and a half weeks. This is calculated as the average pay over the 12 weeks before you leave the company. But those who earned less because they were furloughed should get redundancy based on their normal pay.
The maximum number of years that can be taken into account under the statutory scheme is 20 years. This means the maximum payout is £16,140 (£16,800 in Northern Ireland).
Does the administrator look after staff rights?
The administrator tries to keep a business going — whether that involves restructuring or selling assets. It takes responsibility for the rights of employees until the business is sold. If the business is sold, employee contractual rights are safeguarded under the Transfer of Undertakings Protection of Employment legislation.
Will I get holiday pay that is owed?
You should be paid up to six weeks of holiday pay and up to eight weeks of wages that are owed. Payment for statutory notice should also be paid up to a maximum of 12 weeks, depending on length of service.
Is it tax-free?
Anyone made redundant can receive up to £30,000 of their severance pay tax-free. Payments above this are taxed at a person's marginal tax rate, but only 20 per cent is deducted from the redundancy payment. Higher-rate taxpayers have to pay the remaining 20 or 25 per cent the following January.
Holiday pay and outstanding payments such as unpaid wages, overtime and commission will have tax and national insurance deducted.
Where can I get advice?
Free help is available from the Advisory, Conciliation and Arbitration Service at acas.org.uk or 0300 123 1100. Debt charities StepChange.org and Turn2Us.org.uk have lots of information on their websites.
What rights do I have if only part of my company is closed down?
Employers or administrators have to be objective when selecting employees for redundancy. Employees should be consulted on which skills and experience are needed by the business. Often, a selection pool will be established for those at risk of losing their jobs. Notice of redundancy can only be given when the consultation is finished and if some staff are kept on, those being made redundant can appeal.
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