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Calculating your redundancy pay

How much redundancy pay you get depends on your wage, how long you have worked at the company and your age. If you are trying to work out your redundancy payment, find out how it is calculated or use the online calculator.

Contractual redundancy pay

You should check your employment contract for how much redundancy pay you are entitled to. Some employers offer employees more generous packages than the statutory minimums as part of their employment benefits.

Your employer cannot offer you less than the statutory minimum through your employment contract.

Statutory redundancy pay

The calculation for your statutory redundancy pay is based on:

  • how long you have been continuously employed
  • your age
  • your weekly pay, up to a certain limit (430 current maximum)

You will get:

  • 0.5 weeks pay for each full year of service where your age was under 22
  • 1 weeks pay for each full year of service where your age was 22 or above, but under 41
  • 1.5 weeks pay for each full year of service where your age was 41 or above

The maximum number of years that can be taken into account is 20 years. You can't be given statutory redundancy pay for more than 20 years' employment.

For example: If you are 45, your weekly pay is 430 per week and you have completed 15 years full service, you will receive 7,310 statutory redundancy pay.

Step one: 1.5 weeks x 4 years full service when you were 41 or above = 6 weeks

Step two: 1 week x 11 years service when you were under 41 = 11 weeks

Step three: 6 weeks + 11 weeks = 17 weeks x 430 (max weekly wage) = 7,310 statutory redundancy pay

Theonline calculator can help work out how much statutory redundancy pay you might be entitled to.

Relevant end date for your years of service

The number of weeks redundancy pay you should receive is worked out up until a set relevant date. It is important to know when this date is so you canwork outhow many full years of continuousservice you have.

The 'relevant date' can be a number of dates.In most cases it will be the date when your employment ends (eg the last day of your notice period). In some situations it will be different:

  • if your employer gave you a statutory notice perioduntil a set date,then changed your notice period to finish earlier - the relevant date will be when your notice should have finished before it changed
  • if you are on a trial period for another position within the company and your employer lets you go because the work is not suitable -the relevant date would be when your original contract ended before the trial period
  • if you do not have a statutory notice period (eg because of a payment in lieu arrangement)the relevant date would be when your employment contract would have ended if you had a statutory notice period

Tax

Redundancy pay under 30,000 is not taxable. More information on whether elements of the payment, such as pay in lieu of notice (PILON), is taxable is available from HM Revenue and Customs. Pay in lieu of notice is money paid to you by your employer as an alternative to being given your full notice.

Where to get help

Acas Helpline

08457 47 47 47

If you are being denied your rights, talk to your employer first of all. If you have an employee representative (eg a trade union official), they may be able to help. If this doesn't work, you may need to make a complaint using your employer's internal grievance procedure.

For more information on where to get help with redundancy contact Acas (the Advisory, Conciliation and Arbitration Service).

This content is subject to Crown Copyright

Source:
DirectGov
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