The redundancy process can be difficult to navigate but this simple guide will explain everything you need to know about redundancy and severance pay in the United Kingdom.
Who is Entitled to Redundancy Pay?
If you’re facing redundancy, you may be entitled to a severance or redundancy package from your employer. This will usually include a lump sum payment based on your length of service and salary.
In the UK, there is no legal right to receive severance pay, but many employers will offer it as part of their redundancy packages.
How Much Redundancy Pay Are You Entitled to?
When you’re made redundant, you might be entitled to redundancy pay. The amount you get depends on your age, how long you’ve been working for your employer, and your weekly income. You can only qualify for statutory redundancy pay if you’ve worked for your employer for at least 2 years.
If you’re under 22 years old, you’ll get half a week’s pay for each year of employment. If you’re 22 or over, you’ll get one week’s income for each year of employment.
What Are the Tax Implications of Redundancy Pay?
If you’re made redundant, you may be entitled to redundancy pay. This is a sum of money that’s paid to you by your employer, and it’s usually based on your length of service and salary.
Termination payment includes statutory redundancy pay, holiday pay, unpaid wages, and company benefits. Statutory redundancy pay under £30,000 is not taxable, however, you’re liable to pay tax and National Insurance on earnings which include unpaid wages, holiday pay, bonuses, etc.
How Can You Claim Redundancy Pay?
To claim redundancy pay, you must have been employed by your employer for at least two years. If you’re unsure whether you’re eligible, you can check with your employer or an employment tribunal.
If you’re made redundant, you should also get a letter from your employer telling you how much redundancy pay you’re entitled to. Your employer must provide the written statement within 14 days.
You can claim an employment tribunal if you think you’ve been mistreated.
What Are the Time Limits for Claiming Redundancy Pay?
The English law on redundancy and severance pay can be complex, and several time limits apply to claims. If you’re facing redundancy, you must be aware of these time limits to claim if you’re entitled to redundancy pay. There are some circumstances where you may be able to make a late claim. For example, if the same employer has employed you for less than two years, you may be able to claim within four weeks of being made redundant.
The Bottom Line
So, what should you do if you’re made redundant? The first step is determining whether you’re entitled to redundancy pay.
If you are, your employer will usually give you a lump sum payment and pay out your notice period.
See also: (Employment Law changes in the United Kingdom) for more information regarding employment law in the United Kingdom.