Redundancy Pay :

Will I receive a redundancy payment?
What are the payments?
When will my redundancy payment become due?
What a week's pay means
Do I need to make a claim for a payment?
Is statutory redundancy pay taxable?

Will I receive a redundancy payment:

Yes. You will be entitled to a redundancy payment if: -

Directors may be employees if they work under a contract of employment. They are unlikely to qualify if they have a controlling interest in the company.

You will also need to have been actually dismissed- i.e. not resigned. You may be invited to take voluntary redundancy, but this should still qualify as a dismissal by reason of redundancy.

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What are the payments?

Many employers unfortunately will only pay the statutory minimum redundancy pay, whilst others are more generous, for example, one month’s gross salary for every year worked. Generally, blue-chip companies and financial institutions are found to be more generous with their payments.

It is also the case, that even where an employer may only pay the statutory minimum, they will enhance the redundancy payment by making a goodwill lump sum without reference to a specific formula. This is sometimes the case where the dismissal based on a purported redundancy is on shaky grounds.

An employer may make an enhanced payment to take into account any shortcomings in the actual redundancy procedure and to ward of any potential tribunal claim. In turn the employee may be asked to sign a compromise agreement which will prevent you form bringing any subsequent unfair dismissal claim. A specialist employment law solicitor is best placed to negotiate a severance package for you after taking into account the strength of your claim.

Here at Redundancy Help we have an Employment Law Specialist who can look at your compromise agreement and give you advice. Click here for further details

If you are being paid only the statutory amount, this will be governed by:

The amount of redundancy pay is calculated as:

• Half a week’s pay for each full year of service where age during year less than 22
  
  
• One week’s pay for each full year of service where age during year is 22 or above, but less than 41.
  
  
• One and a half weeks’ pay for each full year of service where age during year is 41+

Redundancy Payments Offices - A helpline is available to answer any of your queries, no matter where in England, Scotland or Wales your firm is based. The number to ring is 0845 145 0004.

To help you work out your statutory payment, you can use the Ready Reckoner for calculating the number of weeks' pay due. Don't forget, the week's pay is subject to a maximum of £380.00 as of October 01st 2009.

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When will I receive my Redundancy pay?

If the company you were working for is paying the redundancy, then it should be paid on the last day that you work or as soon as is possible.

If there is to be any long delay with the payment, then that needs to be discussed and agreed with the employee. If the employee feels that they have to wait too long, then they can take the employer to an Employment Tribunal.

What is my “calculations” date?

This is the date that you were given notice of your redundancy. The minimum notice by law is usually one weeks notice per year of employment up to a maximum of twelve weeks.

The calculations date should fall into the following:

The amount of a week's pay to be taken into account is the amount you are entitled to under the terms of your contract of employment on the 'calculation date'.

Your employer must give you a lump-sum payment if:

To qualify:

What about my pension?

Pensions may not be offset against statutory redundancy payments made to employees dismissed on or after 1 October 2006.

When will my Redundancy payments become due:

Your employer must give you a lump-sum payment if:

• You are made redundant
• You have at least two years continuous service since the age of 18
• Directors may be employees if they work under a contract of employment

To qualify:

• You will receive payment only if you are an employee working under a contract of employment
• You will not qualify if you are self-employed or member of a partnership
• Directors will not qualify if they have a controlling interest in the company or if they deal only with company policy and go to board meetings in return for fees
• If you reach the age of 65 before the date of dismissal
• If you are a Merchant Seaman, former registered dock worker engaged in dock work or share fisherman
• if you are a Crown Servant, member of the Armed Forces or Police services
• If you are an apprentice who is not an employee at the end of their training
• If you are a domestic servant who is a member of the employer's immediate family

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What a 'Weeks Pay' Means:

What does a week’s pay refer to?

This refers to the amount of pay you receive under the terms of your contract for employment. The terms of your contract can be spoken, written or implied or a combination of all three. You should have received at the minimum a written statement of your main employment particulars within two months of the start of your employment.

If you were working normal hours and your pay did not change from week to week, your week's pay will be your basic weekly wage or salary. Any overtime earnings will not be included unless overtime was part of your normal weekly working routine.

Your pay is averaged out over a 12 week period before the “calculation date”. There is a maximum statutory limit which is reviewed each year in February. Employers can choose to pay more but at the minimum they need to pay at the rate the government has set.

I work shifts how do they work out my redundancy payment?

If your normal working hours varied from week to week because of shift work, and your earnings varied as a result, a similar calculation is done but the average hourly earnings are multiplied by the average weekly hours over the same 12 weeks.

If you had no fixed working hours, your week's pay will be your average weekly earnings in the 12 weeks before the calculation date.

My hours were always different each week what will that mean to my payment?

If your earnings changed from one week to another because of piecework or productivity bonus arrangements, your week's pay is worked out by multiplying the number of hours you normally worked in a week by your average hourly earnings over the 12 complete weeks of work before the calculation date. Only hours actually worked are taken into account. If the hours used in the calculation include hours outside normal working hours and paid at higher rates, the higher rate is ignored and the hours are worked out at the normal basic rate.

Do I need to have worked a certain amount of hours before I qualify for redundancy payment?

It doesn’t matter how many hours you work if you have worked continuously for the same employer for two years you are entitled to have a redundancy package.

If my employer asks me to do less hours during my notice period do I have to take a cut in wages?

No, you should be being paid the same weekly wage as you were receiving before the notice period was given.

For more in depth information click here:

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Do I need to make a claim for a payment?

There is no need for you to make a claim unless your employer fails to pay you or disputes your entitlement. If there is a failure to pay, you must make a written request to your employer or to an employment tribunal within six months of the date the job ended.

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Is statutory redundancy pay taxable?

You should not have to pay tax on redundancy payment up to £30,000 as a result of HM Revenue and Customs (formerly Inland Revenue) exemptions.

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