SE13785 - Termination payments and benefits: redundancy payments: Statement of Practice 1/1994: general
Statement of Practice 1/1994 explains that a lump sum payment
for redundancy under a non-statutory scheme is within Section 148
ICTA 1988.
Genuine redundancy payments must be distinguished from other
payments (whatever they are called) which may be liable under
Section 19 ICTA 1988. For example, a payment that is really a
terminal bonus (such as for meeting production targets or doing
extra work in the period leading up to redundancy) is not
“compensation for redundancy”.
Sometimes an employee on a short-term contract knows when
joining the employer that a payment will be received on
termination: see
SE13825 for treatment.
Where a redundancy payment is conditional on a short period
of continued service leading up to redundancy that of itself should
not be treated as excluding Section 148 ICTA 1988 treatment. The
distinction to be made is between a payment that:
- compensates for loss of employment through redundancy and
- constitutes a reward “for acting as or being an employee”.
See example SE13990.
