Redundancy pay is a concept born out of the idea that people who lose their job need some sort of payment to maintain their lives while searching for another job. Statutory redundancy pay, specifically, is a pay scale set down by law that requires employers to pay a former employee who has lost their job for a variety of reasons.
Who can claim statutory redundancy pay?
Not everyone can claim this type of pay when they lose their job; in fact, it is separated into two very specific categories of claimants: whether you’ve worked for your employer for at least two calendar years continuously since your 16th birthday, and whether you are an employee by the legal definition.
Self-employed people, contractors, and short-term workers typically are not entitled to statutory pay, as it is just designed for full employees who have been with a company for some consistent period of time.
How much is statutory redundancy pay?
The amount paid to an employee is dependent on a number of factors, including how long they have been with their employer, their age, their weekly pay when their job ended, and more. In addition, employees have the right to various pay scales based exclusively on their ages relative to their time with the company.
For workers who have been with companies for more than 20 years, interestingly enough, statutory pay is not available. There are other small variations regarding the rates of statutory pay for various employees and what they are entitled to by law when leaving a company and making sure they are eligible for statutory pay.
What about taxes?
You do not pay taxes on statutory redundancy payments. However, you will pay tax if the entire payment period totals more than 30,000 pounds in gross, and for that, you will need an accountant or other tax attorney for advice on how to proceed.
Those cases are extremely rare, though, and for the vast majority of people who receive statutory pay, no tax is required. This allows the seeker to find another job and move on in their career without fear of tax retribution on their limited income.
Finally, if your employer has failed to or refuses to pay statutory payments to you, you should ask your employer in writing and keep a copy for your records. You must write this request within six months of the time your employment ends, or else you are ineligible for statutory pay after that period. In addition, for employers who fail to pay statutory payments, there may be cause for unfair dismissal or discrimination lawsuits to see that you are treated fairly and equitably.
Statutory pay is an important part of the legal system and a necessity for people who have just been dismissed from a job. Know your rights as far as statutory pay!