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Which options do I have if I am offered a redundancy package or golden handshake by my employer?


When you get a redundancy package you don't have much options anymore. Before 1 January 2014 you had the following options:

 

  1. Payment of a lump sum to your bank account
  2. Income insurance from an insurance company or a savings scheme from a bank (no longer possible since 1 January 2014)
  3. Income insurance from your own limited company (no longer possible since 1 January 2014)

 

1. Payment of a lump sum to your bank account

Normally when you are made redundant the employer will pay the redundancy package in one amount. The employer can also decide to pay you in monthly installments combined with a social security payment from the government but we will not discuss this further.

The lump sum will be normally taxed. So this means that the whole amount will be taxed together with your other income during the year. The higher the income and lump sum the sooner you will be in the highest tax bracket of 52%. When normally your salary isn't taxed against 52% the lump sum leads to a higher average taxation.

2. Income insurance from an insurance company or a savings scheme from a bank

No longer possible since 1 January 2014.

3. Income insurance with your own limited company

No longer possible since 1 January 2014.

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