Friday 7 August 2015

Redundancy Q and A 2

Staffing numbers and voluntary severance QA – Issue 2

Q. Why has the wording changed from Voluntary Redundancy to Voluntary Severance? What are the implications of that change please?

Sodexo has made staff a voluntary severance offer, not a voluntary redundancy offer. Voluntary severance means that employees will exit the business by mutual agreement in return for a financial settlement. The financial settlement Sodexo has offered staff is:

  • Two weeks’ actual pay for each year of completed service, up to a maximum of 30 weeks; and
  • If you are in an age group that qualifies for early retirement (individuals between the ages of 55-64) you will have the option of either taking the payment set out above as a lump sum, or you can take early retirement. Early retirement will enable you to access your (unreduced) pension with immediate effect. Unreduced does not mean the benefits that you would have received at your normal retirement age, it just means that there is no reduction for early payment.
The cost of the EVR terms is extremely high and if a voluntary redundancy scheme was offered to staff on the EVR terms, the business would be severely limited in the number of applications it could accept. In some CRCs it is possible that no applications at all would be accepted. As a result the CRC would be forced to reach the proposed staffing reductions through a compulsory redundancy process. This is something that we wanted to avoid as far as possible. Sodexo has therefore developed an alternative voluntary severance package.

Q. Is an expression of interest in voluntary severance legally binding?

No. An expression of interest in the voluntary severance offer is not legally binding.

If we were to take the severance package and wished to leave asap is there any additional funding for payment for early severance and how soon could people leave?

There is no additional funding for payment of early severance. CRC CEOs will make the decision as to when employees could take their voluntary severance payment on a case-by-case basis. There may be certain circumstances where an individual would be allowed to leave without serving their full notice period. This will require the approval of the CRC CEO and will depend on a number of factors including operational stability. If granted the employee would receive Payment In Lieu Of Notice.

Q. What is the national agreement on redundancy payment? Is our agreement that says 4.5 weeks per year a local agreement or national and would this be honoured?

You can read the National Agreement in full here.

Sodexo bid for six CRC contracts on the understanding that the EVR terms would be subject to negotiation with the relevant employee representatives following the sale. The Sodexo bid and proposed future operating model has been developed on this basis.

The cost of the EVR terms is extremely high and if a voluntary redundancy scheme was offered to staff on the EVR terms, the business would be severely limited in the number of applications it could accept. In some CRCs it is possible that no applications at all would be accepted. As a result the CRC would be forced to reach the proposed staffing reductions through a compulsory redundancy process. This is something that we wanted to avoid as far as possible. Sodexo has therefore developed an alternative voluntary severance package.

Q. Could we leave early if we secure a new job role?

Voluntary Severance exit dates and requests for early departure will be reviewed by each CRC CEO on a case-by-case basis.

Q. Will staff who agree to Voluntary Severance be eligible to apply for state benefits?

The indication we have received from the Job Centre Plus is that staff that apply for voluntary severance and are accepted would be eligible for state benefits as the severance was agreed in order to reach required staffing reductions. However, since everyone’s individual circumstances are different we would recommend you discuss this with your local job centre.

Q. Will staff who agree to Voluntary Severance be able thereafter (if they wish) to complete agency work either for NSCRC or for NPS?

We do not envision there being any restrictions on staff that apply for voluntary severance and are accepted being able to complete agency work for CRCs, NPS, or any other employer.

Q. Will staff who are subject to Compulsory Redundancy be eligible to apply for state benefits?

Your entitlement to state benefits would depend upon your personal circumstances. We would encourage you to discuss your individual circumstances with your local job centre.

Q. Will staff who are subject to Compulsory Redundancy be able thereafter (if they wish) to complete agency work either for NSCRC or for NPS?

We do not envision there being any restrictions on staff that apply for compulsory redundancy and are accepted being able to complete agency work for CRCs, NPS, or any other employer.

Q. Are there any other significant differences between Voluntary Severance and Compulsory Redundancy of which staff should be aware?

We hope to reach our proposed staffing levels by seeking volunteers to exit the business by mutual agreement through this voluntary severance process. If this is not possible we may need to consider alternative arrangements, and this is likely to include compulsory redundancy.

The details of our voluntary severance offer have been made available to staff and the decision whether or not to apply it is a personal choice. If you have further questions about your own personal circumstances in relation to this package we would encourage you to speak with your local HR contact or trade union representative.

Q. Why Voluntary Redundancy (Enhanced or not) is no longer mentioned in any correspondence? The cost of the EVR terms is extremely high and if a voluntary redundancy scheme was offered to staff on the EVR terms, the business would be severely limited in the number of applications it could accept. In some CRCs it is possible that no applications at all would be accepted. As a result the CRC would be forced to reach the proposed staffing reductions through a compulsory redundancy process. This is something that we wanted to avoid as far as possible. Sodexo has therefore developed an alternative voluntary severance package.

We are approaching our workforce planning in phases and hope to reach our required reduction in staffing numbers through this voluntary severance process. If this is not possible, we may need to consider alternative arrangements, and this is likely to include compulsory redundancy as outlined in the National Agreement.

Q. We have today had the presentation from our Chief Executive concerning the Sodexo Voluntary Severance Package. This includes information to the effect that for people in the age group 55-64 they will have the option of either the voluntary severance lump sum OR take early retirement with an unreduced pension. I am actually over 65 years of age and three years ago reduced my working week to 3 days and collected my pension - as an alternative to redundancy. I have continued to pay into the pension scheme (on my reduced salary) and my question is now:

What may I be entitled to under the Voluntary scheme? I am not in the age category 55-64 so would like to know what I may receive (lump sum/ pension/ neither/ both or any other combination) in order to know whether to register interest for Voluntary Severance or not. 
Employees over the age of 64 will not qualify for the early retirement package as they are over the standard retirement age. They will however be entitled to the lump sum payment. The lump sum payment will be calculated on the basis of the number of days per week an employee works. For further information on pension options please contact the Greater Manchester Pension Fund.

Q. Is the VS payment tax free?

We anticipate that the first £30,000 of your voluntary severance compensation can be paid tax free, subject to there being no previous in-year tax free payments.

Q. I spoke to LGPS today and they advised that as far as they are concerned there is no ‘severance’ – it would be classed as redundancy and your pension would therefore be made without penalty (i.e. no early retirement reduction), this also seems to be the view of the union.

We have made staff a voluntary severance offer, not a redundancy offer. We have spoken with LGPS and they have confirmed the below in writing:

  • Where an employee aged between 55 and their normal pension age and a member of an LGPS scheme has requested early retirement, and where the employer has given their consent and made payment of pension strain, that employee can access their pension benefits on an unreduced basis from the effective date of the early retirement. 
  • Where an employee is a member of an LGPS scheme and has chosen to voluntarily leave their employment, and the employer has not agreed to pay any pension strain payment by the employer, the employee can: 
o Wait until their normal retirement age to access their full accrued pension benefits.

§ OR

o At any point from age 55 to their Normal Pension Age, opt to take their pension early on a reduced basis (http://www.gmpf.org.uk/retiring/choice/factors.htm).

  • Where an employee aged 55 or over and a member of an LGPS scheme is made redundant, they are entitled to access their unreduced pension from the effective date of their redundancy.
  • There are no early retirement options for staff over their normal pension age. If the member has already reached their Normal Pension Age and wishes to retire they are entitled to access their unreduced pension immediately from the effective date of retirement.
  • Whenever a member of an LGPS scheme first takes their pension, any lump sum which that member might be entitled to from the pension fund is separate from, and unaffected by, any lump sum payment they may receive from an employer as part of a severance or redundancy package.
  • The GMPF has confirmed that the bullet points detailed above are within the LGPS guidelines.
Q. Will the pension estimates be available to staff so that they can make an informed decision? this is for those over 55 who need to make an either/or choice regarding pension/severance. As without the figures for the pension I cannot make an informed decision. Is ‘pension strain’ the same figure as the reduction in pension or is this something different?

Each CRC has requested pension estimates and we should be in a position to provide employees with these shortly. Pension strain refers to the additional strain on the fund pension benefits becoming payable earlier than assumed, pension benefits being paid for longer and employer and employee contributions being paid for a shorter period than was
assumed. The cost of providing these additional benefits is calculated and recharged in full to the employer.

Q. If you apply for severance and the pension with penalties, will they take the pension lump sum off the severance figure?

The pension lump sum is paid by the pension fund and separate from the severance figure.

Q. If you take the severance but do not take your pension at the same time Would you be allowed to leave your pension or must you take it?

Employees may opt to take their voluntary severance lump sum payment and leave their pension until retirement age if they so wish.

Q. If you leave it – can you apply to LGPS to take it in say 6/12/18 months?

Employees may opt to take their voluntary severance lump sum and leave their pension until a later date. However, if they opt to take their pension before their normal retirement age they would receive a reduced pension payment.

Q. If you are made compulsorily redundant, my understanding is that at that point you could take your pension without penalty. Is this correct?

Under the voluntary severance offer if you are in an age group that qualifies for early retirement (individuals between the ages of 55-64) you will have the option of either taking the voluntary severance offer as a lump sum payment (two weeks’ actual pay for each year of completed service, up to a maximum of 30 weeks) or you can take early retirement. Early retirement will enable you to access your (unreduced) pension with immediate effect. Unreduced does not mean the benefits that you would have received at your normal retirement age, it just means that there is no reduction for early payment.

We hope to achieve our required staffing reductions through this voluntary severance process. However, should a compulsory redundancy situation occur and an employee aged between 55-64 is selected from the pool of at risk employees, they would then be entitled to both a statutory redundancy payment and an unreduced pension.

When making the decision whether or not to apply for voluntary severance you may wish to consider the following:
  • Currently all employees of the CRC can apply for voluntary severance, not only those in staff groups who are at risk of redundancy. 
  • If sufficient numbers of voluntary severance applications are approved there may not be the need to make compulsory redundancies. 
Selection for compulsory redundancy will be made on agreed and published local criteria, which may include cost.
  • An employee in an at risk group who is eligible for both the statutory compulsory redundancy payment and the unreduced pension may not be the person selected for redundancy from the at risk pool. 
Q. If you are made compulsorily redundant would you be allowed to leave your pension or must you take it?

Employees may opt to take their compulsory redundancy payment and leave their pension until retirement age if they so wish.

Q. If you leave it – can you apply to the LGPS to take it in say 6/12/18 months?

Employees may opt to take their compulsory redundancy payment and leave their pension until a later date.

Q. Will the pension lump sum be taken off the redundancy figure?

The pension lump sum is paid by the pension fund and separate from the severance figure

Q. Can we please be given the process via which any compulsory redundancies will be upon? Also QA says: "While we hope to accept as many applications as possible all applications for voluntary severance will be assessed on a case-by-case basis against our published criteria". Where is the published criteria?

The process for determining voluntary severance applications and, if necessary, selecting compulsory redundancies will be in accordance with local policies. Please contact your local HR team for details of these criteria.

Q. Who I need to contact to find out what my Early Retirement figures?

Each CRC has requested pension estimates and we should be in a position to provide employees with these shortly. Please contact your local HR team for more information.

Q. Please could you let me know if my temporary contracts or permanent contract counts for the purposes of voluntary severance?

The value of the voluntary severance package that you would be entitled to receive depends upon your personal circumstances and the dates of your temporary and permanent contracts. Please contact your local HR team to discuss your specific circumstances.

Q. I joined NSPT on November 9th 2010 after I had been at Suffolk County Council since May 2006.I brought my time spent at SCC across to NSPT as continuous service so to date I have 9 full years Continuous Service. Will my Continuous Service all the way back to May 2006 be part of any calculation in Voluntary Redundancy application?

I reduced my working hours from a 1.0 contract to 0.4 in March 2015.Would any Voluntary Redundancy package offered to me honour the fact that I was 1.0 right up until March of this year and be calculated accordingly?

Yes. Your completed years of continuous service will be included in your voluntary severance calculations and will determine the number of weeks’ pay you will receive (up to a cap of 30 weeks). If your application for voluntary severance is accepted, the value of your voluntary severance package will be calculated by multiplying this number of weeks by your average salary over the past 12 months prior to your agreed exit date.

Q. Would the settlement be pro-rata according to my fulltime/part-timework history, all the way back to May 2006?

You will receive two weeks’ actual pay for each year of completed service (up to a cap of 30 weeks). The value of your voluntary severance package will be calculated by multiplying this number of weeks by your average salary over the past 12 months prior to your agreed exit date.

3 comments:

  1. Answer: 'Sodexo bid for six CRC contracts on the understanding that the EVR terms would be subject to negotiation with the relevant employee representatives following the sale. The Sodexo bid and proposed future operating model has been developed on this basis'

    Whose understanding? What negotiation? Sodexo are ruthless. The unions should do a Q&A because this is a gift to Sodexo.

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    Replies
    1. I have not read all the Q & As but I think Netnipper is very right to highlight that sentence.

      That is like agreeing a price and contracting to buy a house at one price and when it comes to paying just before the settlement date, saying we only agreed the price to get rid of the other bidders - we are not going to pay the amount we agreed but we will do a deal at this lesser price which will be better for you as you will be sure to get the money and will not have to restart the sale.

      I thought that is why we have Courts to enforce contracts and on this occasion it is the government who should be doing the enforcing especially as they still have a controlling interest in the CRCs.

      Union members need to be given clear advice about this by their Unions who I hope will use the Courts to hold the employers to the contract if they still insist on reducing staff in significant numbers,.

      It is very regrettable (but probably not accidental) that this has come up whilst parliament is in recess, because members of parliament - Lords and Commons - could be expected to challenge the MOJ ministers on these issues and the ridiculous time limit of the severance offer.

      I see severance as an invitation to resign on slightly better terms that if you resigned at a time you chose AND additionally if one accepts severance one is expected to agree not to publicly divulge the personal terms of the deal and other things about your previous work.

      I have not read comments about the consequences of confidentiality agreements - maybe Sodexo will not enforce them as they can hardly expect others to stick to contracts when they refuse to themselves!

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  2. 'Sodexo bid for six CRC contracts on the understanding that the EVR terms would be subject to negotiation with the relevant employee representatives following the sale. The Sodexo bid and proposed future operating model has been developed on this basis'.

    Interesting - this is the THIRD version offered by Sodexo. The first was that they had planned to clear out staff via compulsory redundancies post 7 month moratorium; the second that voluntary severance was necessary because they couldn't afford EVR based upon their costed bid; now its because terms & conditions were contingent upon post-sale negotiations, which they imply have happened - hence the operating model.

    Sly, slippery, dishonest, disreputable, untrustworthy, greedy, etc etc etc.

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