There are a lot of half-truths and misunderstandings about redundancy in the UK. Who is eligible, when it can be claimed and what someone is entitled to are frequently misunderstood or misrepresented.
Join us as we debunk some of the most popular myths around redundancy.
If you’re in any doubt as to your eligibility then take our online quiz
Director’s aren’t allowed redundancy pay if the company is insolvent
This one depends.
The common myth is that a director is not entitled to redundancy in any circumstances. This isn’t always the case.
If a director is also an employee of the company; if they do regular duties on a daily basis and receive at least some salary through the company PAYE scheme rather than receiving only a dividend or other remuneration then they will be entitled to redundancy payments in the same way as any other employee.
A director’s salary is often not as straightforward as a regular employee with a standard written contract of employment. Our expert staff will be able to ascertain what a director is due as many vastly underestimate their entitlements through either a lack of knowledge or relying on accountants or other professionals to let them know what entitlements they are eligible for.
If a firm is insolvent you only have 30 working days to claim redundancy otherwise you lose it
Don’t worry – you have slightly longer to make a redundancy claim if you are eligible. The time limit for a statutory redundancy payment claim to be made is six months from the date of termination of employment or six years in the case of a contractual redundancy claim.
If a company goes bust there’s no point applying for redundancy as there’s no money left
This might be a worry if the payment was due to come from the company but it doesn’t.
An application is made to the Redundancy Payments Service (RPS) who are a part of The Insolvency Service. The first part of the submission will include your claims for redundancy, unpaid wages and holiday pay as appropriate. Any claim for loss of notice will be filled once your notice period has ended.
The RPS is responsible for the following owed payments:
- Redundancy pay
- Wages (including protective awards)
- Holiday pay
- Notice pay
- Basic award for unfair dismissal
- Unpaid pension contributions
The RPS initially requests six weeks to assess and evaluate your application. During this time we’ll respond to any requests for more information and keep you up-to-date on any developments or progress.
You have to be working at a company for five years before you can claim redundancy
The qualifying period for redundancy pay is two years but the amount due is related to your age.
If you’re 22 or under then you are entitled to half a weeks redundancy pay for every year of service. IE, if you worked for 2 full years then you will receive a week’s pay.
If you’re over 22 but under 41 then you are entitled to a week’s pay for every year of service. IE, if you worked for 2 years then you’ll receive 2 weeks pay; if you worked for 8 years then you’ll receive 8 weeks pay.
If you’re over 41 then you are entitled to one and a half weeks pay for every year of service. IE, if you worked for 2 full years then you’ll receive 3 weeks pay. If you worked for 10 years then you’ll receive 15 weeks pay.
Other entitlements such as payments in lieu of notice and unpaid wages and holiday pay are slightly more complicated but you can find out more here.
A company you hire to get redundancy will take half of it for themselves
This is entirely false for Redundancy Assist.
Our charges are fully transparent, clear and notifiable in advance. We charge 15% of the amount you receive from the RPS. That’s it.
Once the RPS has agreed to your entitlement, you will receive a notification letter from them and the payment will be made to your nominated account with five to seven business days of notification.
We hope we’ve been able to dispel some of the common myths and misconceptions around redundancy but if you have any questions about any aspect of the process, the costs and your or our responsibilities please contact us and we’ll be happy to talk you through your various options available to you.