NIM02600 | Class 1 NICs: Earnings of employees and office holders: Payments made on termination of employment: Redundancy payments: Statutory and non-statutory payments

Redundancy payments can be:

• Statutory. The Employment Rights Act 1996 gives an employee who has been employed for the requisite minimum period, and who is dismissed by reason of redundancy, a statutory right to a minimum level of compensatory payment from their employer.

• Non-statutory. These are payments made in excess of the minimum statutory payment. These payments are subject to the Class 1A NICs charge on amounts which exceed £30,000. See NIM13200.

See NIM02590 for a definition of “redundancy” and NIM02580 for general guidance regarding NIC liability in respect of redundancy payments.

The elements of a redundancy payment, which together constitute the redundancy package, could include:

• post-employment notice pay

• compensation for loss of pension rights

• a general sum on account of loss of employment which may, or may not, be more than the statutory minimum.

each element will need to be considered separately to decide its NICs liability.