Government Loans to Fund Redundancies

25th March 2013



Whilst throughout the recent recession there has been considerable publicity over the government’s Time to Pay schemes, few employers are aware of the assistance that is available where a company is forced to make redundancies in order to preserve the business and other employment.

Invariably a company in difficulties with declining sales needs to reduce its workforce; however in some cases it cannot afford the upfront cost to do so.  Provided all other options available have been explored then The Redundancy Payments Office (“RPO”) can assist by making a loan to the company, to enable the cost savings to be made and then will agree a repayment term that the company can afford.

  • How do I obtain the loan?

The process is relatively straightforward, with a one page questionnaire to complete and submit to the RPO, along with copies of recent accounts and financial projections to demonstrate that the company will be able to repay the loan over a future term.

  • I have made redundancies and paid the cost from my overdraft – can I now obtain a loan?

 No – the assistance is only available if you can demonstrate that there is no means of paying otherwise.  It is essential therefore that the application is made prior to redundancies are made and paid.

  • What do I need to demonstrate when making the application?

You need to convince the RPO that;

i)                    You do not have the funds or other resources to make the payment.

ii)                   By receiving the assistance it will save a significant number of jobs.

iii)                 The assistance will secure the solvency of the company for the foreseeable future; and

iv)                 You will be able to repay the loan within an agreed period.

  • How much will the RPO pay?

The RPO will cover the statutory redundancy payable under Part XI of the Employment Rights Act 1986.  The current weekly statutory limit is £450 per week.  There is a ready reckoner attached to assist you in the calculation. RPO ready reckoner

  • What is the timescale?

If the information provided is complete and presents a compelling case, it will be reviewed by the RPO and can take up to 4 weeks.  You should therefore allow 6 weeks between application/interview and a decision.  It would normally take KRECR 2-3 days to prepare your application.


How can KRECR help you?

We are experienced in assisting clients to obtain the available assistance and have found that applications are more likely to succeed if supported by a concise summary of the information required.  We can assist in producing profit and cashflow forecasts and are prepared to work on a contingency basis, ie if the application is rejected then no fee is payable.  We would expect our fees to be between 5% and 10% of the loan obtained.  Should you wish to make the application without assistance there is a national helpline of 0845 145 0004.