Redundancy blow for Longbridge workers

EVEN long-serving employees of MG-Rover may be left with only a small amount of redundancy pay following today's news of the thumbs-down from China.

Because the company is effectively bankrupt, it is likely workers will receive only the legal minimum.

The TUC, which speaks for Britain's trade unions, says that when an employer is insolvent, the payment is made by the Department of Trade and Industry (DTI). If workers lose out because their contracts promised more than the legal minimum, they will have to lodge a claim with the administrators.

Only workers who have at least two years' continuous service since the age of 18 will qualify for any money. The maximum number of years service that can be counted for statutory redundancy payments is 20 and there is a limit on the amount of a week's pay that can be taken into account in working out entitlement.

This figure was raised last month to £280. So the most any worker can expect is £8,400. A worker under the age of 40, with 10 years' service would receive a maximum of £2,800.

This is how the minimum is calculated, according to the DTI:

For each complete year of continuous service between the ages of 18 and 21, employees receive half a week's pay.

For each complete year of continuous service between the ages of 22 and 40, they receive one week's pay.

For each complete year of continuous service between the ages of 41 and 65 employees are entitled to 1? weeks' pay. However, where someone is aged over 64, the total amount of the payment will be reduced by one-twelfth for each complete month they are over 64. This means that employees aged 65 or over are not be entitled to any payment.

The DTI says employees may be entitled to payments of certain debts owed by insolvent employers - up to eight weeks' arrears of pay, up to six weeks' holiday pay, and up to 12 weeks' pay as compensation where an employer fails to give the proper period of notice of dismissal. In each case, the maximum payment for a week is £280.

Redundancy payments of up to £30,000 are tax free.