The CG Professional team are proud to have been working with leading firm Marshall Peters to deliver details on accessing support for redundancy payments.
We have put together some information below, but feel free to reach out to your CG contact or Lee Morris from Marshall Peters so your business can be guided through this process.
Financial Assistance for Redundancies
One key step in preserving a business in times of hardship is by reducing outgoings. With staff wages generally being one of the highest costs of a business, it follows that a reduction in the workforce may be a critical step. However, the cost of redundancy may be unaffordable.
If your cash flow cannot stand the added burden of redundancy pay, which can be high for long serving staff members, you may have to look for financial assistance via external funding, such as a business loan. The problem that a lot of businesses will find is that either bank are unwilling to lend the money (because they deem the you “too risky”), they take too long to give you an answer, they want to charge extortionate interest rates, or they want you to put your own assets at risk by providing a Personal Guarantee in support of the loan (AVOID!!!)
As an alternative, you may be able to get help from the Government to meet the unaffordable cost of redundancies.
Financial Assistance from the Government
There is a little-known Government department called the Redundancy Payments Service (RPS) whose tole is to meet redundancy payments and other employee payments when the employer cannot afford to do so.
It is primarily called upon by an Insolvency Practitioner when an employer goes into insolvency (e.g. Liquidation), but can also be accessed by employers to help avoid insolvency.
The RPS will need to be repaid over time, but the Financial Assistance programme may be the most affordable, least risky solution for employers to meet the extraordinary and immediate burden of redundancy pay.
Who can apply?
To be eligible for Financial Assistance from the RPS there are two qualifying criteria;
- You must provide documentary evidence proving that you are unable to fund the statutory redundancy payments. For example;
- Bank statements
- 3 months’ cash flow forecasts
- Details of any secured creditors e.g. bank loans/mortgages
- Evidence that you’ve made a reasonable attempt to raise the money by other means
- The RPS must be satisfied that the employee is entitled to receive the statutory redundancy payment. To include;
- Verification of wages such as PAYE submissions
- Information about employee(s) being made redundant, such as National Insurance Number, start & end dates, notice date and date of birth.
How to apply?
We would be happy to guide you through your Financial Assistance Application to the RPS. Simply email firstname.lastname@example.org for further guidance, or call us on 01257 45 20 21
If your accountant/bookkeeper/financial controller normally handles these types of matters on your behalf, please feel free to put them in touch with us and we’ll help them pull the information together for you.
Alternatively, for a more detailed list of the information required by the RPS to submit your own application, please email email@example.com
Applications must be submitted to the RPS in writing, by email to RPS.FA@insolvency.gov.uk or by post to The Insolvency Service: Redundancy Payments Office, PO Box 16684, Birmingham, B2 2LX.
The RPS do have a telephone line but have been somewhat uncontactable by phone during the Coronavirus crisis. Telephone: 0330 3310020
Please remember that you should always consult with CG Professional first if you are considering making redundancies.
Please also remember that staff redundancies, and the Financial Assistance programme, should be carefully considered alongside other insolvency and non-insolvency options. You should consult with Marshall Peters to ensure that this is the correct course of action if you are worried about your business.