Typically employers are paying Severance Compensation as follows:

•  The employer will on its own behalf, and on behalf of all its associated companies, without any admission of liability whatsoever pay the employee £[anything up to 12/18 months salary] as compensation for loss of employment and in respect of the employee claims, less such deductions for tax and employee National Insurance contributions as are required by law.  This compensation is inclusive of a statutory redundancy payment of £[minimum statutory payment]calculated as follows:  £380 gross weeks’ pay x [number of years] complete years’ service x [x] age multiplier.
•  In addition, the employer shall pay the employee the sum of £[contractual notice period] in lieu of  the employee’s contractual notice period, less normal deductions for tax and National Insurance contributions.

If you require further information please contact us at enquiries@rtcooperssolicitors.com or visit one of the following pages on employment law:

•  http://www.rtcoopers.com/practice_employment.php
•  http://www.rtcoopers.com/faq-redundancyemployee.php
•  http://www.employmentlawyersinlondon.com/video.php
•   http://www.employmentlawyersinlondon.com

© RT COOPERS, 2010. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

The correct advice is that the first £30,000 of an employee’s Termination Payment will be paid without deduction of income tax in accordance with section 403 of the Income Tax (Earnings and Pensions) Act 2003. If an employee’s Settlement or Termination Payment is over £30,000, then your employer will make deductions of income tax at the basic rate of 20% in respect of the balance of the Termination Payment over £30,000.

RT Coopers Solicitors can advise you in this regard. Contact enquiries@rtcooperssolicitors.com for a meeting or more specialist advice. We will give you an indication of our costs.