Redundancy is sometimes a necessary evil and unfortunately, it comes with a cost for employers.

There are a number of things to think about when carrying out redundancies, including warning employees of redundancies, creating and applying fair and non-discriminatory scoring criteria and thinking through suitable alternative options. In cases of large scale redundancies, you also need to think about collective consultation rules. And last but no means least, you need to think about pay.

So who is entitled to statutory redundancy pay?

Employees who have worked for at least two years will be eligible for a statutory redundancy payment if the reason for their dismissal is redundancy.

However, an employee will not be entitled to a statutory redundancy payment if they are kept on or if you offer the employee suitable alternative work and they unreasonably refuse.

If an employee has been laid off for 4 weeks in a row or 6 weeks in a 13 week period, they can give written notice that they are going to claim a redundancy payment. The employer can reject the claim if there is a reasonable chance that normal working hours will be resumed within four weeks.

How much are employees entitled to?

The amount they receive will depend on their age, pay and their length of service.

The employee has the right to be paid as follows:

  • half a week’s pay for each full year if they are under the age of 22
  • one week’s pay for each full year they are 22 or older, but under 41
  • one and half week’s pay for each full year they are 41 or older.

The maximum length of service that will be taken into consideration for the purpose of a statutory redundancy payment is 20 years. A week’s pay is capped at £489; therefore if they have been made redundant after 6th April 2017, the maximum statutory redundancy pay they will receive is £14,670.

Employees need to be provided with a written statement which sets out the payment due and shows how the payment has been calculated. If you fail to do so, you may be fined.

Enhanced redundancy pay

Some employers may provide their employees with a contractual right to enhanced redundancy payments. This will be more generous than the statutory redundancy payment and you may make employees who have less than two years service eligible.

To discuss redundancy payments in detail, seek legal advice at the earliest opportunity.

Find what you were looking for?

Our FREE resources library contains over 200 searchable blogs, guides and templates focused around Employment Law and Health & Safety issues that employers face on a day-to-day basis.

Get your FREE download

We combine the service quality of a law firm with the certainty of fixed-fee services to provide expert, solutions-focused Employment LawHR and Health & Safety support tailored to employers.

Call us on 0345 226 8393.

Get your FREE download

We combine the service quality of a law firm with the certainty of fixed-fee services to provide expert, solutions-focused Employment LawHR and Health & Safety support tailored to employers.

Call us on 0345 226 8393.

Before you go…

We can help with that HR problem or health and safety query. If you’re an employer, leave your details below and our team will call you back.

Register your interest

Submit your details and one of our team will be in touch.

Get your FREE consultation

Submit your details and one of our team will be in touch.

Download your FREE guide

Submit your details below.

Request a callback

Submit your details and one of our team will be in touch.

Need some help?

Call our team now on:

01244 668 182

Request a Callback

Submit your details and one of our team will be in touch.

Request a Callback
Hi, how can we help?
Click the button below to chat to an expert.

Get your FREE consultation

Submit your details and one of our team will be in touch.