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Changes to Redundancy Rules.


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I was made aware today of a number of changes to the Island's legislation concerning redundancy.

 

For some reason, these have been published as part of the consultation document on new Equality Bill and they are buried on page 43.

 

http://www.gov.im/lib/docs/co/consultations/equality_bill/equalitybillpublicconsultation.pdf

 

Since redundancy payments were introduced in the Isle of Man in 1990, there has been a rebate scheme in operation for smaller employers of between 30% and 60% of the payment amount from the NI fund. These payments are likely to be abolished as they were in the UK many years ago.

 

How people view this change will probably split based on the individuals' politics, but it will certainly have an impact on small businesses trying to keep their staff in line with demand. It could, for instance, induce companies to bring forward possible future redundancies that might otherwise have been avoided in order to take advantage of the rebate while it still exists. There are other changes that in certain circumstances will substantially increase the cost of making redundancies to a small company and possibly leave some in the position of insolvency. It seems quite an upheaval for a very modest saving that appears to average about £100k per year.

 

However it is cut and sliced, it is another privatisation of costs from government to business. An obscure and somewhat technical one perhaps, but an additional burden nonetheless. Small business owners should be aware of this and if you have comments you should send them in to DED.

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I have to point out the maxim that applies to redundancy and that is that it is the post that is redundant, not the person.   If someone is not performing you have to go through an agreed procedur

It's all part of the illusion we have created for ourselves in the past 50 years that we can wrap ourselves in cotton wool and the big bad world will leave us alone.

HR is a horrible epithet. Personnel Dept. much more descriptive and sensible. I see it as another of those crafty terms introduced for the self-aggrandisment of those concerned in the profession to he

If redundancy is still one weeks wage per year of service, with a max of £480 per week, then redundancy doesn't cost very much at all. The huge saving on salary for the business will soon outweigh redundancy costs. That is of course unless there is a big redundancy package in the contract. It is right that businesses pay this cost, I wonder why it was decided that the government would chip in in the first place.

Edited by TurricanII
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Considering there was nothing at all prior to 1990, I guess that would have been sugaring the pill as well as following UK practice. Abolition is also following UK practice. There are other possible changes that will make it more expensive. Also you only quote the cost of redundancy for one person. Obviously, the situation could involve far more than that. As for it not costing very much at all, people have gone to the wall and lost their assets for far less.

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But the redundancy payment is proportional to the salaray, so the more redundancy you have to pay means you will be saving a massive amount on wages. If the business employs someone on 24k for five Years and has to pay them 2400 then that is only 400 more than their next salary payment. Very small hit. The same principal applies to one or 100 redundancies. If the business can't sustain it then it has been stripped of reserves or is about to go bust anyway. If the business was crazy enough to offer up the three YEARS salaray as a redundancy payment then it is managed by idoits like the government.

 

http://www.iomtoday.co.im/news/isle-of-man-news/plans-to-reduce-public-sector-redundancy-pay-in-the-isle-of-man-1-5252282

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Wooley there are no proposed changes to redundancy payments contained in that section. It is referring to specific cases where an employer becomes insolvent and can no longer afford to pay employees or make redundancy payments. In these case the employees are normally added to the list of creditors and may never receive the money owing to them from the business.

 

The Government has a scheme in place whereby employees in this situation can apply to the Government to receive the payments that are owed from the business. The change that they are proposing is to base such payments on a weeks pay (capped at the current rate of £480 per week) as this is presently uncapped.

 

I am not aware of any scheme whereby employers can claw back the cost of "normal" redundancies from the Government.

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Why should govt underwrite redundancy payments at all?

Because it's a social benefit introduced by the government? Having done so, they now want to duck out of the consequences.

 

Some predictable responses that I am sure would be mirrored by the wider population most of whom, no doubt, have never been in the excruciating position of having to make people redundant. It is conceivable that the proprietor of a failing business having to make staff redundant could find the partial rebate makes the difference between keeping his house and losing it. Final straw and all that.

 

Turricanll: A business could be in financial difficulties for much more noble reasons than having been stripped of reserves, although I am aware that this happens. It may have used those reserves to try to mantain the employment of its people in the teeth of adverse trading conditions. The latitude for this going forward will be reduced. Of course, you are spot on with your comment about the nonsense deals in the public sector. Remember that in the grand scheme, we are paying for that too because government has no money of its own. Only ours.

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Wooley there are no proposed changes to redundancy payments contained in that section. It is referring to specific cases where an employer becomes insolvent and can no longer afford to pay employees or make redundancy payments. In these case the employees are normally added to the list of creditors and may never receive the money owing to them from the business.

 

The Government has a scheme in place whereby employees in this situation can apply to the Government to receive the payments that are owed from the business. The change that they are proposing is to base such payments on a weeks pay (capped at the current rate of £480 per week) as this is presently uncapped.

 

I am not aware of any scheme whereby employers can claw back the cost of "normal" redundancies from the Government.

Sorry Manxman. You are wrong on that. Look at page 43 on the link.

Edited by woolley
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Wooley - I can see the confusion now. I looked at page 43 as per the page numbering in the document. You looked at page 43 as per the page number in PDF. You are actually referring to page 41 of the document section 7.0

Ah right. I see. But at least you can now see that the rebate scheme I am referring to does actually exist.

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I STILL can't see that redundancy should be paid at all. A notice period agreed by both parties in advance, fine. Even payment in lieu of notice plus any accrued holiday entitlement, again fine, but a payment based on period of employment - why? Employees will have even getting paid for what they have been doing on a regular basis so why some additional freebie when thy are no longer needed or being cost effective. It makes no sense.

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