Statutory redundancy pay

By Tolley in association with Sue El Hachmi of Osborne Clarke LLP

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

The statutory redundancy payment is calculated by reference to the employee’s age, length of service and