Redundancy Costs (video and transcript)
Costs of redundancy, so that you have this in mind is you need to do three weeks consultation. Which is a normal salary and you’re paying tax and national insurance on that. Plus, their notice period, which again, is their normal salary with tax and national insurance paid on it.
You can pay them in lieu of notice, that’s what PILON means, P-I-L-O-N, payment in lieu of notice. It used to be you could pay PILON tax-free you can’t do that anymore. I think it changed two years ago, certainly, it’s gone now. If you pay them PILON, you would have to pay out any holiday they haven’t taken and you’d have to come to an agreement on any time off in lieu that they were owed.
If you put them on gardening leave, then you can get them to take their holiday or at least in theory during their gardening leaf period and to have their time off in lieu during their gardening period. Then the cost on top of that is the statutory redundancy pay. Which is one week’s pay or the cap for every completed year of service, and it’s the lower amount.
So, if their week’s pay is lower than the cap of £571 (April 2022) that’s what they would be paid. Okay, that’s tax-free. There is waiting, if you are 41 or older while you’re working for a company, for a club, then you get one and a half times waiting.
What you need to do if you go onto that link that will bring you to the government website. And that’s what we use as well. You need their date of birth, their weekly pay, how long they’ll have been with you uh when you make them redundant, and it will work out how much they’re entitled to. And then you know what you’re going to have to pay to park company.
And then some clubs will say well we don’t have the money to do that. So, then we need to be thinking about different strategies.