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Statutory redundancy pay guide

Employees being made redundant are often entitled to statutory redundancy pay.

An employer is responsible for paying the redundant worker an agreeable amount. If this fails to occur, the employee can then pursue a claim with the Employment Tribunal within 6 months.

It is therefore vital that you get the statutory redundancy pay right to avoid costly and time-consuming litigation.

Read our guide for information on how to calculate redundancy pay. Many businesses also turn to our Employ-Line service for more detailed advice, ensuring that their redundancy procedure and pay remain correct and legally compliant.

Eligible employees

When deciphering which employees are entitled to redundancy pay, remember that an employer must meet all the below factors to qualify:

  • Been employed under a contract of employment
  • Completed a minimum of 2 years' service
  • Been dismissed, made redundant or put on short-time working

Different redundancy pay rates

Once you have decided which employees are eligible, you need to calculate what they should be awarded. There are different redundancy pay rates available based on the age, length of service and dismissal date of the employee, which include:

  • After their 41st birthday, they receive 1.5 weeks of pay for every year of employment
  • After their 22nd birthday, they receive 1 week of pay for every year of employment
  • Up to their 22nd birthday, they receive half a week's pay for every year of employment

There are also certain caps on the amount of statutory redundancy pay a person can receive, with length of service being limited to 20 years and the maximum payment being £13,500.

Your employer responsibility

Once you have worked out the redundancy pay an employee is to be awarded, you must provide a written letter that states how much the individual will receive and how you came to the decision.

This payment has to be given to the employee once you have made them redundant, or shortly after they have left the business.

Legal support from Linder Myers

Employers turn to Linder Myers for legal guidance throughout their redundancy procedure.

Our solicitors can advise throughout your employee selection to make sure that your choice is both fair and objective. Meanwhile, we can also help with the calculation of statutory redundancy pay and draft up letters for employees, making sure that your business remains fully protected.

For further information on the legal support available to you during a redundancy procedure, contact us on 0844 984 6444.

Disclaimer: The information provided was correct at the time of writing but may have undergone changes following this point.

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