Surplus Earnings

Client is on unpaid leave, caring for seriously ill child, and receiving UC.

Employer is making client redundant and will make a terminal payment, comprising a redundancy payment and a significant amount of holiday pay/payment in lieu of notice.

The client’s intention is to use most of her terminal payment to reduce debts, so she won’t be prevented from continuing to get UC by the level of her capital,  but the part of her terminal payment that counts as earnings will be so great that the surplus earnings rules will exclude her from UC for some time.

If the client were to close her UC claim voluntarily shortly before receiving her terminal payment, would this be effective to exclude the application of the surplus earnings rules?

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