The ongoing economic challenges tell us that there will be some tough times ahead and that further cost-cutting together with business restructuring may be necessary in order to allow continued trading in some cases.
It is not widely known that the Redundancy Payments Office (RPO) may be able to help with making redundancy payments on behalf of an employer. The primary objective of this financial assistance scheme is to save jobs based in the UK by helping businesses fund the costs of redundancy, an expense which could potentially add further financial risk to the business and therefore jeopardise further jobs.
Direct payments are made to redundant employees from the National Insurance fund when an employer’s application has satisfied the qualifying criteria. Once an application is approved, the employer enters into a formal undertaking to repay the debt in fixed monthly instalments. The repayment amount and the term are negotiable and no interest will accrue on the debt owed.
The criteria for a company that wishes to make an application are:
1. The business will continue to trade after roles are made redundant.
2. The business can save some of the jobs of its workforce by making some roles
redundant.
3. The business can demonstrate it can repay the resultant debt in full.
4. The business has been refused a loan by its bank.
5. The business can provide documents to support it has no funds from which to
make the redundancy payments itself.
6. The business can confirm that it has undertaken all possible cost-saving
exercises.
7. If the business is part of a group, it would have to provide evidence that there
are no funds within the rest of the group to assist with redundancy costs and
the RPO would need a guarantee.
See below recent examples of loans secured by Corporate Strategies.
Manufacturing Company
Turnover: £25m
Reason: Loss making division
Cost of redundancy: £340k
Loan schedule: 36 months
Jobs saved: 82
Engineering Company
Turnover: £2m
Reason: Loss of contract
Cost of redundancy: £15k
Loan schedule: 12 months
Jobs saved: 45
A decision may take up to 4 weeks from the date of receipt of all the relevant information. Corporate Strategies are happy to assist clients who may find this of interest.
Please contact your local Corporate Strategies representative or call 0800 002 9969.
Ric Miller
E: rmiller@corporatestrategiesplc.com