I think i understand - You are mid-way through the 5 year fixed term contract, and your employer wants to terminate this contract and as compensation has offered you a cash amount.

Provided your contract of employment does NOT state you will receive an enhanced payment then all monies under £30,000 are tax free.

There are two layers of redundancy. First is the statutory amount (law) which is:
• 0.5 week’s pay for each full year of service where age during year less than 22
• 1.0 week’s pay for each full year of service where age during year is 22 or above, but less than 41
• 1.5 weeks’ pay for each full year of service where age during year is 41+

On top of this most good employers will give you an additional amount - this is up to the goodwill of the company.

The question over if you work for an additional 4 months and will lose your redundancy is up to your company.

If you return to work for the same company within 6 months, you will be liable for the tax to the inland revenue on the redundancy payment. Most companies have a policy not to employ someone within a set time from redundancy.

It’s important to understand the difference between tax liability and company policy here. There is no law that says you cannot be re-employed at any time.

If you return to work for the same company with an agency then I think its likely you would also be liable for the tax on your enhanced redundancy payment!

Smala01

p.s. of course you should seek advice from a professional before acting on any information from an open forum such as this :)

Hey,

In general, the first £30K of redundancy is tax free, anything above this is taxable. I think if you continue working it may be then become taxable, but am not sure. My place recently closed, and half a dozen people who were made redundant have returned to complete final admin.

When many of the untilities privatised, and then laid off a lot of staff, they re-hired many of the same people on contract.

Your employer should be able to tell you all this. I would expect that if you have to pay tax then they will too? If you dont, they wont?

Failing that, the government websites will probably explain it

It is actually a 5 years continuous service and there is no more funding, so I called fixed term

Can you explain to us why if you are on a fixed term contract you are being offered redundency?

Smala01

Could please someone clarify the following as I am desperate for an answer? I am coming to the end of a fixed term contract and I’ve received a letter that offers me a severance and redundancy payment. My questions are:

• Is severance and redundancy payment taxable?

• There is a possibility some more money to come in and continue working on a part time basis for another 4-6 months (but nothing is certain). Do I loose my redundancy/severance package at the end of this period? If no, will the payment be less because I will be a part timer?

• I've heard that after my redundancy I cannot come and work for them for 6 months, otherwise I will have to pay back the redundancy and have a continuous service. I’ve started working with an agency already. Will I be able to work back to the same company (in case there is more funding) through an agency and thus avoiding all the hassle?

All this is so confusing so any help will be much appreciated.