Statutory redundancy pay is the minimum amount that an employer must pay an employee when making them redundant, as set by law, and it is calculated based on the employee’s age, length of service, and weekly gross pay, subject to a cap.
Eligibility for Statutory Redundancy Pay:
To qualify for statutory redundancy pay, an employee must meet the following conditions:
- At least two years’ continuous service with the employer.
- Be made redundant (i.e., their job is no longer available due to the employer’s circumstances, such as closure or downsizing).
- Be working under a contract of employment.
Calculation of Statutory Redundancy Pay:
The amount of statutory redundancy pay an employee is entitled to is calculated based on:
- Age – The employee’s age determines the number of weeks’ pay they are entitled to.
- Length of Service – The number of years the employee has worked for the employer.
- Weekly Pay – The average weekly gross pay (up to a statutory maximum).
Those under 22 years of age are entitled to half a week’s pay for each full year’s service; 22 to 41-year-olds are entitled to one week’s pay for each full year, and those aged 41 or older are entitled to one and a half week’s pay for each full year.
Currently, a week’s pay is capped at £700, with a maximum length of service of 20 years. Therefore, if an employee is made redundant after 6 April 2024, the maximum statutory redundancy pay they will receive is £21,000. An employee won’t be entitled to redundancy pay they unreasonably refuse an offer of suitable alternative employment.
