Hello Buzzbee and welcome.

We've heard from our experts a number of times that an individual might normally keep the statutory element of their redundancy payment.

I'm not sure we've discussed such a large statutory payment before and I'm not sure if that makes any difference. The point of course is to ensure you have some cash pending getting back on your feet in new work.

I'm sure one or more of our experts will comment further later.

Hi Buzzbee,

I don't believe the size of the statutory element makes any difference, guidance to trustees is that you should be allowed to keep this part of any payment.

I find myself in the same situation as Buzzbee regarding statutory redundancy pay. I received over 7.5k statutory redundancy and my TD wants to take 4.6k from me. Life is stressful enough with trying to secure a new job coming up to the age of 50 without this on top. Can my trustee take this amount from a statutory payment?

Welcome to the forum Daphne55.

We've heard from a number of the experts that post here over the years that statutory redundancy payments will be yours to keep and that any other type of redundancy payment (perhaps due to a beneficial contract or negotiations) will usually need to be paid over.

Was the full £7.5k a statutory payment only?

Yes it was. The company I worked for went into liquidation therefore redundancy was paid through the government. I should be due 90 days notice money once the notice period is up and have been advised that the TD would only take 3 months payments from that. I have been in contact with the TD regarding the 4.6k and advised them that I would be looking into this further before agreeing to anything. They called back saying that the least they would be looking for is 12 months payments but I have less than this to go on the TD and if they aren't entitled to take anything from my statutory redundancy I don't think I should agree to this either. Do you?

I've been told to call back in April to see what my situation is as they understand that without a new job then I have to use my redundancy payment to live on. Once I get a job and we see what is left then they will let me know how much would be required. I appreciate this but just feels like I've worked over 20 years and will have no reward.

I realise I have debt but I also have things that could be replaced around the home and with a little one things aren't cheap.

Hopefully I'll get to feel the benefit of some of it.

Do you have another job Daphne55? Perhaps you could come to the same arrangement as me?

Hi Buzzbee, no I don't have a job but when I mentioned to my Trustee that I wanted to check with the AIB before I agreed to them taking the large amount he called me back with the offer of only taking 12 months payments. I feel this sort of proved that what they are trying to do is wrong. I don't think they are entitled to take anything from the statutory payment. I've emailed Accountant in Bankruptcy asking the question as to whether the TD can take money from my stat redundancy. I will await their reply. I feel the same as you, I worked for 32 years and being made redundant was stressful enough without all this. I'll let you know what AIB have to say.

It seems to be quite a complicated area. The AiB's guidance for trustees in bankruptcy has information on how redundancy payments are treated. I don't think that it's any differnt in TDs?

So, statutory redundancy payment doesn't vest in the trustee. That basically means that it doesn't go to the trustee automatically.

Other payments, which are voluntary payments from the employer, do vest in the trustee. For example, extra payments based on years of service and wages.

The guidance also says that, once the debtor has received the statutory redundancy payment, the trustee should consider if a contribution, or enhanced contribution, should be sought.

It all sounds like a very complicated issue... [:0]

Thanks Daphne55. That will be great if you could let me know what they say. 😉

It is a bit of a grey area unfortunately. The issue was tested in court back in 1990 and the Sheriff agreed that the statutory redundancy payment should be viewed as income and therefore would not vest in a trustee in a sequestration (the same rules would normally apply in a protected trust deed).

However, as candlewick rightly says, in viewing the statutory redundancy payment as income then the trustee still has the option to seek a contribution from it if they wish, as long as the debtor's needs are being reasonably catered for.

It sounds as though the trustee in Daphne55's case is trying to find a compromise, which may well be the easiest way forward for all concerned.