Is a 'Termination by notice' clause a redundancy clause?

Hello everybody,

Thanks for any advise you can give me on this. I'll try to explain what recently happened to me the best I can.

Recently, the company I work for stopped trading and closed down. It hasn't gone through any insolvency process as I could check. It just decided it was time to close down and pay creditors.

On Friday 7th January we were informed for the first time that the company would close in a short period of time -probably on Monday 10th January. As expected, the company closed that day. On Tuesday 11th January we were paid January's salary as a compensation for this unexpected event.

After this happening, I wondered if we have any right to claim redundancy payment. When I went to my contract I could read that

That statement is under the clause "Termination by Notice".

I asked one of the persons responsible for paying employees if we shouldn't be paid three months instead of one given that clause on our contracts. He replied saying that clause is actually not a "redundancy clause" since it doesn't mention the word redundancy at any moment. Because of that, we don't have any right to claim more than the statutory redundancy payment for those working for more than two years time and only one weeks time for those working for less than two years time.

So, my question would be if a 'Termination by notice' clause is equivalent to a redundancy clause. When reading it, it really looks like we should be paid three months.

So summarising:
1) The company closed down (no insolvency)
2) Our contracts have a 'Termination by notice' clause that says we can be paid three months salary
3) The company is paying one months salary
4) The company says the clause doesn't apply in this case because the company is not giving us notice. Instead, it's closing down and our job positions will no longer exist

I hope this information is useful to understand the situation.

Thanks to the community for any advise you can give me!

There's a really fast answer to this. "If it so chooses". It didn't choose. So you aren't entitled to it. Nothing at all to do with redudancy. But the daftest contractual clause I have ever seen, so they get points for that! Who on earth would choose to pay three months pay when they don't have to pay more than 4 weeks???

But you are entitled to redundancy pay if you qualify, on top of the 4 weeks notice. Which you have had by the way - paying the 4 weeks is the same thing as giving you 4 weeks notice and making you work - only you don't have to work!

Hello SarEl!

Thank you for your help. To be honest, now I read it, it seems clear as water but three hours ago I couldn't get it right. I guess it was so simple and yet so ... well, as you well said, why paying 100 when you can pay 10?

Then, so I know the next time I sign a contract, does a redundancy plan in my contract have to be explicitly mentioned as such? As, for example: "Clause 5. Redundancy payment".
Also, I would like to ask, is it common among British companies to offer a better deal with redundancies or normally they prefer to offer the legal minimum?
I quite strikes me that legally, terminating employment is so "cheap" here. As much as I love UK in pretty much everything it seems to have some dark points with this ...

Again, thanks a lot SarEl!

It is rare to have a redundancy clause in a contract. If anything, an employer may have a policy (which actually forms part of the contract, as all policies do). Some employers offer enhanced packages, but others stick to the legal minimum. Whilst I agree in general with you that it could be better, it is still better than the majority of countries around the world, and of course has to be seen in the context of the whole package of employment protections - whilst some countries may have better individual laws, few have a better package of laws, although the government is trying its best to change that!

Thanks again SarEl!

OK Admin - aren't you being a little over zealous here? I may be lousy as typing but bleeping me for a mising O in countries???? Harsh, very harsh....!

Slightly over zealous filter in action. Now fixed. :-)