What is the true cost of redundancy?

With the government announcement yesterday that non-essential shops will be allowed to reopen on Monday 15 June 2020; a topical question for employers and employees alike is whether the staffing levels that existed before the Covid-19 outbreak, will still be required when a new normal is in place.

In light of this , we have had many clients that are employers asking how much they would be required to pay in the event that they may need to make redundancies in their respective businesses. The basic HMRC advice is detailed below; but please feel free to contact us if you would like any assistance.

You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for 2 years or more.

You’ll get:

• half a week’s pay for each full year you were under 22
• one week’s pay for each full year you were 22 or older, but under 41
• one and half week’s pay for each full year you were 41 or older

Length of service is capped at 20 years.

If you were made redundant on or after 6 April 2020, your weekly pay is capped at £538 and the maximum statutory redundancy pay you can get is £16,140. If you were made redundant before 6 April 2020, these amounts will be lower.

To calculate your redundancy pay; follow the HMRC link > Calculate your redundancy pay

Please note that redundancy pay (including any severance pay) under £30,000 is not taxable.

The links below provide more information should this be something you think may affect you or your business; HMRC and ACAS (The Advisory, Conciliation and Arbitration Service):

HMRC - https://www.gov.uk/redundancy-your-rights/redundancy-pay
ACAS - https://www.acas.org.uk/redundancy

If you have any specific questions in relation to redundancy please contact the TLA Payroll and HR Team by email or phone and we will discuss your query.