Select Committee on Trade and Industry Appendices to the Minutes of Evidence


The following tables provide a comparison of the Statutory Separation Terms in the UK, Germany and Belgium with the Ford of Britain Re-structuring Terms


UK Legal Requirements German Legal RequirementsBelgium Legal Requirements FoB Terms for Dagenham
Employees who have at least two years continuous service are entitled to statutory redundancy pay.

Redundancy calculations are based on the last 20 years seervice before redundancy.

Maximum weekly pay for calculation of the separation amount is £230 per week.

½ weeks pay for each year of employment in which the employee was aged 18-21.

1 week's pay for each year of employment in which the employee was aged 22-40 inclusive.

1½ weeks pay for each year of employment in which the employee was aged 41 or over but had not reached age 65 or the Company's normal retirement age.
German law does not specify minimum levels of redundancy pay other than that covering the legal notice period (see below).

Levels of severance pay must be agreed with Works Council of the company concerned (see Social Plan below).

Collective agreements may stipulate separation terms in cases of individual or collective redundancy, or such terms may be negotiated as part of the social plan.

Minimum Ford Works Council "normal terms" for VR (to age 49) SVR (age 50-54) and SER (age 55+) as follows:

VR—1 month's base pay per year of service (min 5 and max 18 months).

SVR—unreduced pension, accrued to the date of termination, commencing at age 55. Separation allowance based on a sliding scale.

SER—unreduced accrued pension, commencing immediately after termination and a separation allowance based on a number (defined by age) of months net pay (70%) up to 12,600 DM plus 35% of the excess.
An employee involved in a collective dismissal is entitled to a special payment in addition to the payment for notice.

The special payment is a minimum of 50% of the difference between the former salary, which is capped, less social security contributions and tax deductions, and unemployment benefits. The payment is made for a four-month period subject to notice. If four months notice given to employee, above payment is for 3 months; if 7 months notice is given no payment is made.

When there is a closure affecting at least 75% of the workforce, employees receive a closure payment in addition to the pay in lieu of notice. The payment is based on the number of year's service (max 20 years). For employees over age 45 they receive a further payment for the number of years exceeding 45 (max 20 years).
Voluntary Program.

1 week's base pay plus supplement and shift premium for each year's service before age 41.

1½ week's base pay plus supplement and shift premium for each year's service from age 41.

Pay in lieu of notice (12 weeks base pay and supplement assuming at least 12 years service).

Special payment—depending on age at date when management confirm receipt of employees signed acceptance of redundancy terms and grade.

Program unique special supplementary payment of 39 weeks base pay, supplement and shift premium.

Non actuarial reduced pension for employees aged 50+.

Deferred separation whereby employees age 45-49 can separate with non actuarial reduced pension payable from age 50.


UK Legal RequirementsGerman Legal Requirements Belgium Legal RequirementsFoB Terms for Dagenham
Employers proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less must consult, in advance, appropriate representatives of employees affected by the proposed dismissals or who may be affected by measures taken in connection with those dismissals.

Consultation should be 90 days before the termination date when 100+ employees are involved.

Consultation should be at least 30 days before the termination date for numbers less than 100.

Notice (outlined above) must be given to the Department of Employment stating scope, reasons for redundancy, and method of selection and consultation process adopted.

Notice to employees to effect lawful termination (1-12 weeks according to length of service).
Employer must notify the Works Council in advance of the proposed dismissals, giving reasons(s), the numbers and the planned date(s) of termination, selection criteria and the proposed severance payment calculations.

Employer must inform the local Labour Exchange in writing, attaching a copy of the opinion of the Works Council.

Minimum Timetable for collective dismissal:

Step 1—Notify Works Council and open consultation (day 1).

Step 2—Notification to public authorities/written material passed to works council (day 15).

Step 3—End of normal period for objection by public authorities (day 46).

Step 4—End of period of consultation with works council (day 91).

Step 5—End of arbitration period if failure to agree on a social plan (day 121).

Step 6—issue individual notices of dismissals (day 123).

Employee notice periods vary 4 weeks to 7 months, according to the number of year's service.

However the process of arbitration is lengthy and can take up to 18 months to complete if objections are raised.
Consultation is required for dismissals by a business employing at least 20 people, when the dismissals are for economic and technical reasons and affecting at least 10% of the average number of workers employed over the year preceding the dismissals.

The employer must inform in writing the workers representatives and the regional office of the National Employment Office. The employer may not give the workers concerned notice of dismissal until 30 days have elapsed following the date of notification. The national Employment Office may extend this waiting period by a further 30 days, provided that it gives reasons for its decision and serves a week's notice to the employer.

Consultation with the Works Council and Labour Minister required although specific approval not necessary. Employee representatives must be informed and consulted on: reasons for redundancy, number of employees affected, intended selection criteria severance payments, etc.
See UK Statutory Terms.


UK Legal RequirementsGerman Legal Requirements Belgium Legal RequirementsFoB Terms for Dagenham
Redundancy is permissible if:

The employer has ceased or intends to cease to carry on the business for the purposes of which the employees were employed; or

Ceases to carry on the business in the place where the employees were so employed.

Selection for redundancy must be either in accordance with labour agreements (where they exist) and based on fair, objective, measurable criteria.

Minimum redundancy payments must apply as prescribed by law.
Redundancy is permissible if founded on compelling business or operational reasons.

A termination is socially unjustifiable if; the employee could continue working at another job in the same plant or in a different plant belonging to the same firm; it would be possible to continue the employment after suitable rehabilitation or vocational training; continued employment would be possible under altered conditions to which the employee has already given his consent.

For termination due to compelling business needs the employer has to select employees in line with social criteria such as length of service, age and family status. The level of performance must not be considered as a criterion.
Compelling technical or economic reasons. See UK Statutory terms.

Ford salaried and hourly agreements preclude mandatory redundancy actions as a result of efficiency improvements.

Ford redundancy agreement is contained in the labour contract governing selection for redundancy and minimum payments.


UK Legal RequirementsGerman Legal Requirements Belgium Legal RequirementsFoB Terms for Dagenham
Minimum redundancy payments must apply as prescribed by law. Workers who are collectively dismissed are entitled to compensation, often at levels similar to that for unfair dismissal, as specified by collective agreement or in the company social plan.

Social plans should be drawn up in conjunction with the Works Council in businesses with more than 20 employees.

Employer and Works Council should reach an agreement on the social plan. If agreement is not reached the matter is submitted to arbitration.

If arbitration fails then either party is entitled to invoke an arbitration tribunal, which in the last resort can decide the plan's content.
Requirement for a social plan where more than 10% of employees are affected. This is discussed with works council and contains details such as severance pay, timescales, methods of selection, etc. No requirement, but comprehensive social plan developed which includes:

As enhanced voluntary separation program (described above).

Professional outplacement consultancy support on a range of outplacement services eg employee counselling on redundancy/identification of skills/competencies/career options.

Establishment of on-site Dagenham Employment Centre for internal and external vacancies to maximise employment opportunities.

Relocation support for employees re-deployed to other Ford facilities.

Independent financial/self-employment/business start up advice.

Provision of an "Exit Pack" to provide a portfolio of employees' skills/expertise.

One year Training Contract—15 weeks full-time training over 12 months in a range of skills eg IT, literacy and numeracy skills.

Educational assistance/career break opportunities.

Priority rehire for employees who separate without a pension.

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Prepared 8 February 2001