Financial assistance for employers who are unable to pay statutory redundancy payments
If as an employer you need to make staff redundant in order to survive the coronavirus crisis, there is a Government scheme in place to help fund the cost of statutory redundancy payments.
If an employer cannot afford to pay their employees redundancy pay, they can apply to the Redundancy Payments Service (RPS) (part of a government agency called the Insolvency Service) for financial assistance.
If approved, the RPS will make statutory redundancy payments directly to the redundant employees on the employer’s behalf.
The assistance takes the form of an interest free loan.
In order to be eligible:
- An employer has to provide evidence that they cannot afford to pay their employees statutory redundancy pay and that the employee has a valid claim.
- The application requires disclosure of full financial information, including:
- Business forecasts which demonstrate a realistic repayment plan
- Evidence that all reasonable measures have been taken to raise the required funds.
Whilst staff redundancies are not ideal, for employers who find themselves faced with the situation, this Government scheme may prove to be a useful tool as part of a plan to restructure and build a healthy business going forward.
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The information was correct at time of publishing but may now be out of date.