I have a situation where an employee worked for 11 years on a salary of £28k. She then halved her pay for 2 months due to cashflow problems and was then made redundant.
I am unsure what salary to use for the redundancy calc. It seems a bit unfair to process on her lower salary seeing as she only took the cut to try and help out. She wasn't given a new contract, she just had a chat with her manager about it and then received less pay.
I'm not an expert on this, but this link www.citizensadvice.org.uk/work/leaving-a-job/redundancy/redundancy-pay/ if you scroll down to the temporary drop in wages bit, seems to suggest that if it wasn't a contractual change and was only a temporary drop in wages then the redundancy should be based on their original salary.
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All thoughts are my own and should not be used as professional advice.
Hi Trisha
With the greatest respect, I dont think it is you who should be deciding.
Your client should decide, although you should guide them towards the law. She hasnt helped herself by formally, even if verbally, agreeing such a reduction. Did she also reduce her hours? Or maintain her hours and just effectively take a pay drop? How does this fit with NMW?
Would have been better to continue the payroll at the usual level, then agreeing to partial advances. But then they are where they are! I think think one is more of a moral issue but one which could easily end up in court if they do not do the right thing, especially if any reduction meant her missing the NMW for the hours then still being worked.
What do they want to pay?
I would say get the company to get on to ACAS straight away and get some formal, written advice on this to ensure it doesnt bit them on the behind with a nasty and expensive court case.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
