Redundancy Payments
February 2009
The notes that follow highlight a few but not all of the considerations that affect redundancy pay outs:
Q. Do I pay tax or National Insurance on my redundancy payment?
A. No - as long as the amount does not exceed £30,000 and it is a genuine redundancy payment.
Q. Where can I get impartial advice on my rights if I am made redundant?
A. Try ACAS on 08457 474747 or their web site www.acas.co.uk, you could also try Citizens Advice www.adviceguide.org.uk or find their number in your local phone directory.
Q. What happens if I receive a company car or other goods in lieu of a redundancy payment?
A. Anything you receive other than money is converted to a cash equivalent - if the purpose of the transfer of assets is given to compensate you for your redundancy this cash equivalent forms part of your £30,000 tax free sum.
Q. What happens if my employer cannot afford to pay me the statutory redundancy that I am due?
A. The Redundancy Payments Office will make the payments you are due - ACAS or Citizens Advice should be able to advise you on the application process.
Q. If I receive a terminal bonus or payment for doing extra work leading up to redundancy, is this tax free?
A. No - only genuine payments for redundancy are included in the £30,000 tax free sum.
Q. Do I qualify for statutory redundancy if I have worked for an employer for one year?
A. No - you must have completed 2 years service since age 18.
If you have concerns about redundancy as an employer or employee we would be happy to discuss the issues with you.
