Redundancy pay

Your employer is required by law to pay you statutory redundancy pay if you have worked for them continuously for at least 2 years, or if you are on a fixed-term contract for 2 years or more which is not renewed because of redundancy.

How much are you entitled to?

The amount of statutory redundancy pay you are entitled to is calculated according to your age, your weekly pay* and the length of continuous service. You are entitled to:

• ½ a week’s pay for each full year of service if you are aged under 22
• 1 week’s pay for each full year of service if you are aged over 22 but under 41
• 1½ weeks’ pay for each full year of service if you are over 41

* There is a maximum limit to the amount of weekly pay, and this changes each year. Visit www.direct.gov.uk to find out this year’s maximum limit.

Only complete years of service are taken into account when calculating your entitlement, up to a maximum of 20 years.

Check your employment contract as it may offer you more redundancy pay than the statutory minimum. All redundancy pay up to £30,000 is tax-free.

A written statement

Your employer must provide you with a written statement showing how your redundancy payment has been calculated and must confirm the date of your employment ending in writing.

When will you be paid?

Your employer should pay you on or soon after the date of your last day of employment and issue you with Income Tax form P45.

Other entitlements

During your notice period you are also entitled to:

• Your normal pay and benefits
• Payment in lieu of notice
• Accrued holiday pay for holiday which has not been taken

If your employer fails to pay

If your employer cannot pay any redundancy pay because they have been declared insolvent you may be able to claim what you are owed from the appointed insolvency practitioner. If this is not possible, you can apply for a direct payment from the National Insurance Fund on 0845 145 0004.

If your employer fails to pay or claims that you are not entitled to a redundancy payment, you may take your claim to an employment tribunal.

When are you not entitled to redundancy pay?

You will not be entitled to a statutory redundancy payment if:

• Your employer offers you suitable alternative work and you unreasonably refuse it
• You are dismissed by your employer on the grounds of misconduct

You may not be entitled to any redundancy payment if:

• You leave your job to start a new one
• You go on strike before the end of your notice period