Redundancy payments: what to expect from Scottish financial services firms

As the announcements from the likes of RBS and Standard Life last month show, redundancies remain a sad fact of life in the Scottish financial sector.

It's therefore essential to know what you're entitled to in terms of redundancy payment and, more importantly, what most financial services firms in Scotland are handing out.

As this RBS employee's Facebook faux pas and the leaked reports Standard Life's redundancy pay demonstrate, most financial services firms are being decidedly more generous than the statutory minimum (which kicks in after two years' service).

In actual fact, Standard Life's offering is pretty much the norm in the financial sector.

"Generally, in the financial sector, severance pay can be a month's pay per year of service," says Tony Hadden, partner in the employment practice at law firm Brodies in Edinburgh. "Most of this is generous inherited arrangements from days when unions agreed these conditions with large financial services institutions. There's quite significant comfort to the workforce as a result."

Another thing to remember is that if more than 99 people are set for the chop, the company legally has to enter a 90-day consultation period. You'll get paid for this as well as your notice period, which you may not be required to serve.

"In some cases, such as if your business area is to close down or if an employer has concerns about data security, employees may not be required to serve a notice period, but rather will be paid in lieu," says Eilidh Wiseman, partner in the employment practice at Dundas & Wilson. "This can be anything up to six months - especially at the senior end - and can be quite a significant sum of money in addition to the redundancy payment."

There's also another issue facing financial services employees in Scotland - redeployment. Most firms make the effort to transfer people to other business areas rather than enforce redundancies.

While being shunted to another area of the business means you're still gainfully employed, it also means potentially performing a job you're not particularly enamoured with.

"A lot of the disputes we're seeing are from people who have been redeployed to another business area, and are therefore missing out on redundancy payments," says Hadden. "People are either concerned that the generous payments will be phased out in the future, being moved to an unattractive new position, or are simply confident of finding a new job if they accept redundancy."