Statutory redundancy pay

By Tolley in association with Sue El Hachmi of Osborne Clarke LLP
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The following Employment Tax guidance note by Tolley in association with Sue El Hachmi of Osborne Clarke LLP provides comprehensive and up to date tax information covering:

  • Statutory redundancy pay
  • Employment law obligations
  • What if the employer is insolvent?
  • Limited exemption for statutory redundancy payments
  • Reporting

Redundancy payments fall into two categories: statutory payments and non-statutory payments (see the Non-statutory redundancy pay guidance note).

Statutory redundancy is the amount which must be paid by the employer to the employee under employment law and will be a fixed amount for each year of service. Statutory redundancy pay is usually exempt from tax.

Employment law obligations

An employee is entitled to a statutory redundancy payment if he is made redundant after being continuously employed by the employer for at least two years.

ERA 1996, ss 135, 139, 155

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