Introduction to this document

Redundancy payments ready reckoner

Statutory redundancy pay is the minimum payment that must be made to an employee who is to be made redundant. It is calculated according to age, length of service and their gross weekly pay.

Redundancy payments

If the employee that you’re making redundant has been employed by you for two years or more, as a general rule they’re entitled to a statutory redundancy payment. The exact amount of the redundancy payment is dependent on their age, length of service (up to 20 years’ service can count) and gross weekly wage. The latter is subject to a statutory cap on earnings, which is reviewed each year and stands at £544 from 6 April 2021 (£538 between 6 April 2020 and 5 April 2021). Different figures apply in Northern Ireland. See the Redundancy Payments Ready Reckoner to calculate how much is due.

The calculation

First, you need to determine the number of complete years of service, working backwards from the termination date, up to a maximum of 20 years. Then, you need to allow the appropriate amount for each of those years of employment. The appropriate amounts are:

         one and a half weeks’ pay for each year of employment in which the employee was aged 41 or over

         one week’s pay for each year of employment in which the employee was aged between 22 and 40

         half a week’s pay for each year of employment in which the employee was aged 21 or under.

The law used to have an upper age limit of 65 and a lower age limit of 18 on redundancy payments. However, these have been removed, as has the provision which permitted the tapering of redundancy payments for employees aged between 64 and 65. All employees who have at least two years’ employment with you are now entitled to a statutory redundancy payment, regardless of their age.

 

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redundancy payments ready reckoner

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