Financial Assistance with Covering Redundancy Pay Costs

The UK Government can step in and pay redundancy pay when an employer cannot afford it. It always does this when employers go into liquidation, administration, bankruptcy, etc, but outside of this it was always different.

The “Financial Assistance Programme” is one that has existed for some time, but it has historically been very difficult to access.

But, it has now become much easier to access this.

WHO CAN ACCESS IT?

Any employer who is not subject to informal insolvency proceedings can apply. This means businesses that:

  • Are still trading
  • Have stopped trading but have not gone into formal insolvency
  • Will soon stop trading but are not going into formal insolvency

HOW DO YOU ACCESS IT?

If you think you qualify email the RPS at rps.fa@insolvency.gov.uk with details of:

  • your name
  • confirmation you are the employer
  • details of who should be the main point of contact
  • business name
  • business address
  • number of redundancies

WHAT STOPS ME FROM MAKING A CLAIM REGARDLESS?

The employer must be able to evidence that they cannot afford to pay the statutory redundancy pay due.

HOW MUCH CAN I CLAIM?

You can only claim the statutory limit in terms of weeks and the weekly rate of pay.

The current weekly limit is £525 per week (correct at 23 March 2020).

The statutory limits are 0.5 week’s pay for each full year you were employed and under 22 years old;

1 week’s pay for each full year you were employed and between 22 and 40 years old;

1.5 week’s pay for each full year you were employed and 41 or older.

SO IS THIS FREE MONEY?

Strictly no. The Government (Redundancy Payments Service) will look to recover the cost of the payments taken from the employer. If the employer fails to repay they may take enforcement action.

But, if the business is to fall into a formal insolvency process there would be no point, whilst given what is happening with Covid 19 and the unprecedented support for businesses, it is unclear how the Government may act in this regard. Only time will tell, but if nothing is it is interim relief.

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