Redundancy Payments

If you have been employed by a company for at least 2 years and are made redundant you are entitled to redundancy payments, if less than 2 years you should get what’s called notice pay which at the present law is one weeks pay for every year you have worked to a max of 12 weeks.

The amount of redundancy payments you can receive depends on many factors like number of  years employed which is based on a maximum of 20 years, age and also amount you were earning which is a maximum of £350 a week.

A general rule is that you can claim half a weeks pay for every year of being employed if you were under 22 and if you are aged 22-41 years old you should get one weeks pay for every year worked. If you happen to be over 41 which most seeking redundancy payments are then you should be entitled to 1 and half weeks salary for every year you had been employed by the company.

Sometimes your employers may not be able to afford to make your redundancy payments short term because of lack of funds, if this is the case then you would need to approach the Redundancy Payments Office who may issue payment from National Insurance Fund. If it happens that the company has gone bankrupt the office would pay you and try and recover any payment later from the organisation involved.

You will receive up to £30,000 in redundancy payments which is all tax free and any amount would include a car if you were entitled to it, laptop or any other items that you were allowed to keep as part of your job. Any payments in lieu, notice period payments could be taxable depending on certain factors. You can also claim any holiday pay left over but that is also subject to redundancy payments tax.

If an employer makes you redundant there are procedures that need to be followed and it is important that you know your rights if that was ever to happen. Hopefully the rules are adhered to as the last thing you want to do is to go to an employment tribunal as this can take time and can cause friction between you both and you hope to leave on good terms as you may need a reference for a new job in the future. As a backup you could always take out a redundancy insurance policy to make sure you are covered so even if you was laid off from your job after 1 months service you would still get an income.

Once you receive your redundancy payments you can use it for any purpose you wish. Maybe you want to clear any debts you have, have a dream holiday, buy a new car or clear your mortgage, but just be careful because unless you are near retirement age or have already found a job you never know when you may work again.