Has anyone had their redundancy paid as ‘drawndown’?

[MrsWicket]

The company I work for have confirmed there will be redundancies made once we have completed TUPE over to them. They are proposing that anyone made redundant with be paid in instalments until drawndown is completed. How does that work in reality? What if you get another job and are still being paid your redundancy - won’t that have tax implications?

You don't pay any tax on redundancy payments so there won't be any tax implications

Why would they pay you in instalments? Surely they should pay everything in one go. How many instalments are they talking about? Seems odd.

I believe that they want to pay what your statuary min redundancy would be in one lump sum (I think the max amount is £16000), and then the rest in instalments - but we haven’t been told how many. I know you get the first £30k tax free but not sure how that would work if they were the paid the rest over, for example, 6 months? Obviously finding a job would be top priority for most people, so not sure how that would work - your new salary + your redundancy payment. Is that considered one lump sum? So confusing

Why would they pay you in instalments?

It happens sometimes. Given the economic impact of the virus they may be trying to conserve cash as much as possible in an attempt to ensure the business survives without needing more redundancies.

Provided the redundancy payment is less than £30k in total there are no tax implications.

They'll want to pay in instalments because they don't have the funds to pay it all at once, or paying it all at once would damage their liquidity/cash flow.

Personally I'd insist on money up front in case they really are on the brink - you won't get your money if they go enter a formal insolvency process.

Personally I'd insist on money up front in case they really are on the brink - you won't get your money if they go enter a formal insolvency process

If the employer is insolvent and unable to make redundancy payments the government will pay statutory redundancy pay. However, if the employer has offered more than the statutory minimum the employee will miss out on that.

Employees should also consider the possibility that insisting on their money up front may push the employer into insolvency. If they accept instalments and the employer survives, the employee will get the full amount of their redundancy pay even if it is more than the statutory minimum.

@Isleepinahedgefund

They'll want to pay in instalments because they don't have the funds to pay it all at once, or paying it all at once would damage their liquidity/cash flow.

Personally I'd insist on money up front in case they really are on the brink - you won't get your money if they go enter a formal insolvency process.

You can “insist” all you like. Realistically if the employer wants to pay in instalments, once you’d done anything about trying to force them to pay it sooner you’d probably have received it all anyway.

@WhatIsLife20

You don't pay any tax on redundancy payments so there won't be any tax implications

not strictly true, you will pay tax if the redundancy payment is over £30K