In order for the government to keep afloat in these times of crisis as well as for companies to stay strong, the threat of early retirement and redundancy hangs heavy on employees and citizens of the UK. If you’re one of the people who’s getting axed, the question is if you should take the cash being offered and what does this imply for your pension and tax. Also, you do have to know about your rights if you’re part of the employment cut.
With regard to the money offered you when you’re being forced to retire, you should have the pay until the end of the notice period that was given in your employment contract. This is regardless of you leaving earlier. There are even stipulations that include being on a gardening leave with some companies. This means that you can’t work for any other company during this time and in this period, you should still receive pay from your old employer.
When you’re given a redundancy payment, the first £30,000 of it is tax free and free from National Insurance. Any income that was given you in the tax year will be added to the redundancy payment and if it goes past the £30,000 mark, you have to pay 40% tax. One wayto avoid tax is to ask your company to have some part of your redundancy amount into your pension.
With regard to your rights as an employee, if you’ve worked for the same organization for two years, legal payment minimums are set depending on your pay, the duration you state in the firm and your age. Redundancy can either be voluntary or compulsory and with a voluntary redundancy, the payouts are more attractive. In redundancy, the company you work for should really be undergoing a redundancy. It’s not enough to feign redundancy just to get you out of the organization.
