Redundancy pay calculation
Discussion
My wife's job has been put at risk and she has been offered a significant promotion to a new role but its clear that the company will continue to restructure and outsource her department so it may well only be a short stay of execution.
She has been with the company for 7 years so will qualify for a redundancy payment
Is there a minimum amount of time she will need to be in her new role for her new salary to be used in the calculations??
She has been with the company for 7 years so will qualify for a redundancy payment
Is there a minimum amount of time she will need to be in her new role for her new salary to be used in the calculations??
liner33 said:
My wife's job has been put at risk and she has been offered a significant promotion to a new role but its clear that the company will continue to restructure and outsource her department so it may well only be a short stay of execution.
She has been with the company for 7 years so will qualify for a redundancy payment
Is there a minimum amount of time she will need to be in her new role for her new salary to be used in the calculations??
AFAIK there is no qualifying period, the vast majority of companies use final salary to base the calculation on, and certainly I have never heard of anyone using some kind of average of all the previous salaries you may have been paid. She has been with the company for 7 years so will qualify for a redundancy payment
Is there a minimum amount of time she will need to be in her new role for her new salary to be used in the calculations??
However Redundancy is quite an individual thing, companies will even offer different terms to different groups of employees, depending on notice periods, and level of role.
I would be more concerned to ensure her new role is with the same legal entity as her current position, so that her length of service is preserved.
Remember up to £30,000 redundancy payments are tax free.
Note that for statutory redunancy pay, weekly earnings is capped at £464 a week - so unless your wife earns less than £24128 pa the pay rise would be ignored in the statutory calculation in any case.
The regs don't state a qualifying period for the new salary - the calculation is based on the salary at the point of redundancy.
However, the company may well pay above the statutory minimum...
The regs don't state a qualifying period for the new salary - the calculation is based on the salary at the point of redundancy.
However, the company may well pay above the statutory minimum...
A correction to a post above.
You do pay tax on a redundancy payment if it is more than £30,000.
If the payment is less than £30,000 but more than the statutory amount, you may have to pay tax, depending on the circumstances. This is because some payments you are given when you are made redundant, aren't treated as redundancy payments. It all depends how any payments made, ie statutory redundancy pay and any other pay such a pay in lieu of notice, when the job is redundant are described.
The situation is complicated and, ideally, you should get tax advice.
R.
You do pay tax on a redundancy payment if it is more than £30,000.
If the payment is less than £30,000 but more than the statutory amount, you may have to pay tax, depending on the circumstances. This is because some payments you are given when you are made redundant, aren't treated as redundancy payments. It all depends how any payments made, ie statutory redundancy pay and any other pay such a pay in lieu of notice, when the job is redundant are described.
The situation is complicated and, ideally, you should get tax advice.
R.
liner33 said:
Cheers guys , I thought they had to use the final salary but wasn't sure , she earns what PH considers to be a good salary so I expect there may well be tax implications and possible some kind of enhanced scheme since she is senior management but we will see
Noet that for any payment above the statutory minimum the company can choose any basis for the calculation (although I believe they have to tell you what it is...) so it doesn't have to be based on Salary and years of service - that's just a convention admitedly most companies adopt.Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff