UK Redundancy Payments

Jan 31, 2023
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United Kingdom
Hi all first time poster her looking for some advice.

We have unfortunately had to make an employee redundant for which we are in the process of formalising it.

We have agreed a redundancy amount of circa 10k which will be paid within the tax free allowance of 30k.

We also operate an employee bonus scheme which is considered in April 2023 and paid in June 2023.

For employees who tender their resignation prior to year end 31 March the scheme makes it clear that an employee is not eligible to participate in a bonus award, at the firms discretion they may choose to still make a bonus award.

However, the scheme is silent in terms of what would happen should an employee be made redundant prior to 31 March.

This employee will be given formal notice of redundancy within the next 7 days and is expected to work up until the 3 month notice period expires, taking us through to April 2023.

So the question i would like some advice on is

  1. Whether an additional payment on top of the 10k redundancy, say 4k could be added to the redundancy payment?
  2. Should it be paid as a bonus and be taxed and NI?"

The actual additional award would not go through the current bonus award process, which assesses 360 feedback and individual and departmental goals.

From a firm perspective we want to help the employee as much as we can, but, not be in a position where we are facilitating tax evasion

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