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All About Non-Statutory Redundancy Pay

By: Paul Geraghty - Updated: 21 Apr 2017 | comments*Discuss
 
All About Non-statutory Redundancy Pay

Statutory Redundancy Pay is what your employer has to give you by law if you are made redundant, provided you meet the qualifying conditions (normally two years of service). Non-Statutory Redundancy Pay, also often called contractual redundancy pay, is what your employer chooses to pay you above and beyond that.

Non-SRP replaces SRP altogether. You don’t get both at the same time. By law, non-SRP must be more generous than SRP, otherwise SRP applies. Why would employers choose to be more generous than required by the law? Usually, because it says they have to in your contract of employment.

Occasionally, a company will go beyond your contract entitlement and offer something even more generous. Why? There could be any number of reasons ranging from maintaining a reputation as a good employer, keeping up morale in the part of the workforce which remains or even getting departing employees to sign an agreement saying they won’t take legal action against their former employer.

How Does Non-Statutory Redundancy Pay Differ From Statutory Redundancy Pay?

You might think that Non-Statutory Redundancy Pay packages, since they are a private contractual matter, might exist in a wide variety of forms, some of which could be significantly different from the typical structure of Statutory Redundancy Pay. In fact, however, Non-statutory Redundancy Pay packages tend to follow the same basic outline as the SRP packages. Departing significantly from the statutory conditions would invite discrimination complaints.

Typically, Non-SRP packages accept the same basic qualifying criteria, such as the age banding, as the SRP arrangements, and will offer the enhancements simply as a multiple of the SRP entitlement. For example, a Non-SRP package may offer three weeks’ pay where the SRP entitlement is only one. Sometimes eligibility for Non-SRP is extended slightly compared to SRP. For example, it may apply to employees with only one year of service instead of two.

Non-Statutory Redundancy Pay and Taxes

Employees have strict rights and certain legal privileges in relation to Statutory Redundancy Pay. How do those carry over into the field of Non-Statutory Redundancy Pay? With SRP, you can receive payments of up to £30,000 free of tax. This same figure applies to non-SRP.

Note, however, that there are some circumstances where it does not. Occasionally, employers will negotiate an enhanced redundancy package, which involves additional payments, with their employees, usually through their trade union, and codify the new agreement as an alteration to the existing contract of employment. There have been cases where the tax authorities did not regard the resulting payment as meeting the definition of “not arising from the employment” as required by the statute which grants the tax exemption.

Non-Statutory Redundancy Pay and Employment Tribunals

Employees have the right to take disputes about the amount of SRP they will receive, or their eligibility for it, to an Employment Tribunal. But is this also true in relation to contractual redundancy payments? Yes, it is. Note, however, that the time limits are different in each case. Complaints about SRP payments must be made within six months of the time at which the payment should have been made. Complaints about contractual redundancy payments, however, must be made within three months as they are breach of contract issues. This is the general rule, but there are some exceptions to it.

Non-Statutory Redundancy Pay – Conclusion

Statutory Redundancy Pay tends to be rather meagre. Fortunately, some employers choose to do the right thing by their employees and offer enhanced contractual redundancy pay.

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I think I'm being made redundant, I'm in a 90 consultation period. I have worked for the same company for 18 years. How do I know if they are going to pay me the correct amount of redundancy. I have contact HR who have said it's government plus 25% yet when I joined my company the policy was different.
Kimmy - 17-Feb-17 @ 10:14 PM
Hi, I suspect I am to be made redundant soon and am on three months notice with my employer. Aside from my salary and car allowance I receive a discretionary bonus in December each year which amounts to approximately 15% of salary. I have received this discretionary bonus annually for more than 12 years When I am made redundant it will likely be on a statutory redundancy basis, I have been employed for 15 years. Do I have a case for enhanced redundancy which would include a pro rata bonus payment due to the custom and practice over the last 12 years? Thanks for any advice
abfatboy - 17-Jan-17 @ 4:01 PM
Does the amount of non SRP include the SRP I was offered or are these figures always separate?
shahin - 5-Nov-16 @ 12:11 PM
Hi, I work for a global IT company with 29 years, I have been identified as being at risk of redundancy, they are doing statutory redundancy this time, every year they have always offered enhanced packages (1 week for every year and 3 months notice paid in advance), Do I have a claim that they have always offered an enhanced package for involuntary and set a standard? Thanks
No Happy - 12-May-16 @ 7:36 PM
boxer123 - Your Question:
I was made redundant 5 weeks ago ,given 5 weeks pay in lieu because my job role was being moved to another branch that was to far to travel to,the job role hasn't moved and they have employed someone else to do my job ,can I put in for unfair dissmisal

Our Response:
I think in this case I'd give ACAS a call. As it would be more beneficial to speak to someone directly in order to ensure all the details and facts are correct before you see whether you have a case to answer.
RedundancyExpert - 4-Apr-16 @ 9:57 AM
I was made redundant 5 weeks ago ,given 5 weeks pay in lieu because my job role was being moved to another branch that was to far to travel to,the job role hasn't moved and they have employed someone else to do my job ,can I put in for unfair dissmisal
boxer123 - 3-Apr-16 @ 12:12 AM
Nubi72 - Your Question:
Yesterday, I was informed by my line-manager that my part-time position (18.5hrs) is to be made redundant. I am 43 years old and have worked for the organisation since July 2011. There is a restructure taking place witin the organisation, and it is felt by senior management that the need for full-time administative support is crucial to the successful operations of this region; and job-shares it is felt, do not work. I am the only person in my office being made redundant.My line manager over the past year both during PDRs and casually, has asked if I wished to go full-time. I declined - stating financially it would see me worse off. During my meeting yesterday, I was asked if there were any other positions I would be interested in.how would I know that. I've only just found out I won't have a job!! Or would I just prefer to have a clean break and leave the organisation "off the record".My full-time position has already been advertised with an addional £8K increase (my line manager informed me yesterday, that there would be no salary increase with the full-time role!). hmmm. Interviews will be taking place in 2 weeks time. I have not 'officically' entered into the consultantion process yet. The first I knew about the interviews was when I saw this blocked out in my mangaers diary, about 2 weeks ago. Nice!My line-manager asked what my 'ballpark' figure would be for a final payment which I informed her of. It feels like I'm being descriminated against for working part time - is there legal stance I can take with this to ensure I get a decent pay out?Thanks,

Our Response:
I think in this case you would really need to get some direct advice from ACAS due to the complicated nature of the issue. I can understand that your company may wish to make your position full-time, if it needs to expand. However, at the start of the consultation process your employer must provide you with written details of your consultation and what it entails. But advertising your job at the same time and for a higher salary may give you recourse to take matters further. If you think you shouldn't have been made redundant or you think that your employer didn’t follow the process correctly, you may be able to make a claim to an employment tribunal for unfair dismissal. Please see CAB link here. You can contact ACAS via the link here. I hope this helps.
RedundancyExpert - 5-Feb-16 @ 9:56 AM
Yesterday, I was informed by my line-manager that my part-time position (18.5hrs) is to be made redundant.I am 43 years old and have worked for the organisation since July 2011. There is a restructure taking place witin the organisation, and it is felt by senior management that the need for full-time administative support is crucial to the successful operations of this region; and job-shares it is felt, do not work. I am the only person in my office being made redundant. My line manager over the past year both during PDRs and casually, has asked if I wished to go full-time.I declined - stating financially it would see me worse off. During my meeting yesterday, I was asked if there were any other positions I would be interested in....how would I know that.... I've only just found out I won't have a job!!Or would I just prefer to have a clean break and leave the organisation "off the record". My full-time position has already been advertisedwith an addional £8K increase (my line manager informed me yesterday, that there would be no salary increase with the full-time role!)... hmmm.Interviews will be taking place in 2 weeks time.I have not 'officically' entered into the consultantion process yet.The first I knew about the interviews was when I saw this blocked out in my mangaers diary, about 2 weeks ago.Nice! My line-manager asked what my 'ballpark' figure would be for a final payment which I informed her of. It feels like I'm being descriminated against for working part time - is there legal stance I can take with this to ensure I get a decent pay out? Thanks,
Nubi72 - 4-Feb-16 @ 2:28 PM
Jules - Your Question:
Have been employed with KCC for 17yrs. as a Permanent Relief Social Worker Assistant. I have not been allocated hardly any work for four months and no body is prepared to say whether my services are no longer required or not.As a Permanent Relief Social Worker Assistant would I eligible for a redundancy payment?

Our Response:
I'm afraid you cannot 'apply' for a redundancy payment, unless redundancy is being offered. Also, you don't say what sort of contract you are on, if you are on a zero hours contract, then your employer is under no obligation to offer you work, as you are likewise under no obligation to accept it.However, it is important that your employer's correspondence with you is clear regarding your employment status, therefore your employer should respond to your request regarding whether your services are still required. If you wish to know how best to approach the situation, you could give ACAS a call. Before you do this, I suggest you look at your work contract and see what it specifies. I hope this helps.
RedundancyExpert - 15-Sep-15 @ 12:16 PM
Have been employed with KCC for 17yrs. as a Permanent Relief Social Worker Assistant. I have not been allocated hardly any work for four months and no body is prepared to say whether my services are no longer required or not. As a Permanent Relief Social Worker Assistantwould I eligible for a redundancy payment?
Jules - 14-Sep-15 @ 12:24 PM
paul - Your Question:
I work for a global company in market access and my annual salary is only part of a total value package which also includes a fixed once yearly 15% of salary payment, private healthcare and £500 per month car allowance. My employer provides me with an annual statement showing this and given that the difference in value between the two is around £30,000 I am keen to understand what the redundancy payment will be based on. If anybody can offer advice it would be much appreciated

Our Response:
You can calculate your statutory redundancy pay via the link here which bases its calculations on your age, salary and number of years in the job.
RedundancyExpert - 8-Sep-15 @ 11:50 AM
I work for a global company in market access and my annual salary is only part of a total value package which also includes a fixed once yearly 15% of salary payment, private healthcare and £500 per month car allowance. My employer provides me with an annual statement showing this and given that the difference in value between the two is around £30,000 I am keen to understand what the redundancy payment will be based on. If anybody can offer advice it would be much appreciated
paul - 7-Sep-15 @ 2:32 PM
Hello, I've worked for a telecommunications company for 9 years whereby the majority of my pay has been from commission. Recently my employers increased staffing levels through temporary staff to a point where we became quiet, even over Xmas.... Just recently we were given notice and informed that December, January and February would be used to determine our redundancy pay. Given the news,increased staffing and the company choosing the quietest time of year it's likely my earnings will not be a true reflection of my annual earnings. Please advise how best to challenge this, any help is truly appreciated Thanks, Brandon
Help needed - 11-Jan-15 @ 9:49 PM
Hi Can you please tell me that if I pay someone over and above the statutory redundancy pay - will it be taxable. e.g. if someone's official Statutory Redundancy Pay is £5k and the employer pays them £15k - will all this be tax free for the employee? i.e. all of £15k as it is under £30k(tax free amount) or will there be tax on £10k (15-5) Please let me know.
Nad - 24-May-13 @ 5:47 PM
Hi, I was made redundant in 2008 after 30 years with an American Airline based in UK. The station was closed and flights transferred to LHR. We were all very dissappointed to lose our jobs but also to only recieve statutory redundancy as there were several long serving employees and Managers. Since the Airline transferred to LHR is has recently merged with another Airline in 2011 and the employees losing their positions with this merger are being offered a non statutory package of a considerable amount. We have heard the reason behind this non statutory offer is due to the Airline they are merging with has offered good compensation to its employees. My question is, is this correct. Can a company with no change in their contract treat redundancy payouts so differently???Thank you in anticipation of your responseRegards Jill Pullen
Jill - 16-Sep-11 @ 8:05 AM
I am being made redundant and my employer has offered an enhanced package, it appears that some employees are being gived an enhanced and discretionary payment within their redundancy payment. They have used the formula that everyone who has been there between 2yrs - 3yr 11mnths gets one month + 1 week, between 6yrs - 6yrs 11mnths it's one month and 4 weeks. I have worked for my employer for 13 years (I am 51) and would get 1 mnth 11 weeks, age has obviously not been not been factored in. I have been told I will therefor get statutory redundancy. I thought a company had to offer SRP anyway and therefore the package they have on offer does not seem fair to those employees who are over 41. I have been given 2 statements one based on their formula and it works out less than SRP so of course statutory redundancy would look better. How can they give an enhancement to one set of employees and not to others?
Jules_0404 - 8-Jun-11 @ 9:01 PM
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