You are entitled to a redundancy payout if you have been made redundant by your employer due to uncontrolled business circumstances like a takeover by another firm or reorganization. Your entitlement is more certain if you have been working for the employer continuously for the last two years. A redundancy payout is also due when your fixed-term contract of about two years or more is expiring and is not subject to renewal because of the redundancy.
Any redundancy payout should be made automatically. You do not need to file for a claim unless your employer fails to make the payment or disputes your entitlement. The standard procedure is for you to first send a written claim to your employer. If the employer still refuses to give you your redundancy payout, you could then proceed to ask the Employment Tribunal to rule on the matter. Remember to file the claim before the tribunal within six months after the effectiveness of the redundancy.
If your employer could not afford to give your redundancy payout, you could file for a claim to the UK Redundancy Payments Office. In general, the employer has the obligation to give your redundancy payout but in case of inability to pay, the RPO may provide the payment directly to you. If the employer is legally insolvent, you could file for the claim at the insolvency service dealing with the employer’s circumstances. Legal insolvency may mean that the employer has gone into: bankruptcy, liquidation due to a court windup order, receivership, administration, and voluntary arrangement with creditors. Death of the employer could also lead to legal insolvency.
The redundancy payout could also be filed at the National Insurance Fund. This is if you have been continuously working for an insolvent company while the firm is in the process of being transferred to a new ownership. The Insolvency Service also helps compensate former or redundant employees who are owed salaries, redundancy payouts, and other money by insolvent businesses.
You could receive your redundancy payout as soon as possible or on your last day of reporting to work. Any unnecessary delay should prompt you to immediately discuss the matter with the employer. If you think you may have to wait very long to receive your payout, you could complain about the employer to the Employment Tribunal.
In many cases, your employer may opt to offer you a hefty sum in exchange for a compromise agreement. You may notice that the amount of money involved may be somehow higher than the actual redundancy payout. Understand that signing a compromise agreement would take away your rights to file for any other complaints and claims regarding your employment (and redundancy) from the employer.
Thus, you must seek reliable and sound legal advice before entering into any compromise agreement. You should hire the services of a trustworthy and credible employment solicitor. Be guided about the legal terms and implications of certain clauses and conditions in the document before signing. You should not decide and act impulsively.