Redundancy

[Greenmantle]

Hi

I am aware that the maximum tax free redundancy is £30k.
Also statutory redundancy kicks in after 2 years employment.
What I would like to know are there any rules to prevent an employer from giving an employee a £30K redundancy after just 1 year of employment.

John

[xjay1337]

Greenmantle said:

Hi

I am aware that the maximum tax free redundancy is £30k.
Also statutory redundancy kicks in after 2 years employment.
What I would like to know are there any rules to prevent an employer from giving an employee a £30K redundancy after just 1 year of employment.

John

A company can give as much or as little redundancy as they like.
95% give the statutory minimum

After 2 years then you get 1 week pay for every full year of employment (I think there's a limit on this, about £480 per week) and of course your notice period.

However under 2 years there is no legal requirement to give you any redundancy pay other than your contracted notice!

[The Leaper]

If you're going to get more than your statutory redundancy pay for your period of service then anything paid over that SRP should be treated as pay in lieu of notice because any lump sum lay in lieu of notice, if worded appropriately, up to a limit of £30,000 is tax free. Your employer should be aware of this.

R.

[edc]

The Leaper said:

If you're going to get more than your statutory redundancy pay for your period of service then anything paid over that SRP should be treated as pay in lieu of notice because any lump sum lay in lieu of notice, if worded appropriately, up to a limit of £30,000 is tax free. Your employer should be aware of this.

R.

The wording isn't necessarily the key driver.

If PILON is contractual is is taxable under s62 ITEPA. Similarly if it is custom and practice to pay PILON then it is also taxable.

If there is no PILON contract clause and no customer and practice then it is breach of contract (if you cannot serve your notice) and can be paid tax free up to the limit.