Statutory Redundancy Pay

Redundancy Procedure

Employees are entitled to statutory redundancy pay if, they are made Redundant; they have at least two years’ continuous service and they meet certain other conditions. They may also be entitled to other non-statutory payments if this has been agreed in their contract of employment.

Knight-Webb Solicitors are experienced in handling Employment Tribunal Claims, including complex Employment Discrimination at Work, as well as extensive Redundancy Law experience, both for employers and employees. We are also members of the Employment Lawyers’ Association and so have a very detailed knowledge and experience of the area of redundancy.

Who can qualify for statutory redundancy pay?

Employees will receive payment only if they are working under a contract of employment. Self-employed people and members of a partnership do not qualify under the Employment Rights Act 1996 although they may have separate contractual agreements.

Directors and other office holders may be employees if they work under a contract of employment. They will not qualify if they do not work under a contract of employment.

Contracts of employment may be spoken or written and last for any length of time or be fixed. In law, employees generally have a contract as soon as they start work and by doing so prove that they accept the conditions offered by the employer.

A few groups of employees do not qualify for a statutory redundancy payment, for example members of the armed forces.

Redundancy payments

The amount of the statutory Redundancy payment depends on:

  • length of continuous service;
  • how the years of continuous service relate to a particular age band;
  • Weekly pay up to a legal limit.

The amount of redundancy pay will be calculated as:

  • 0.5 week’s pay for each full year of service where age during the year is less than 22
  • 1.0 week’s pay for each full year of service where age during the year is 22 or above, but less than 41
  • 1.5 week’s pay for each full year of service where age during the year is over 41
  • With effect from 1 February 2013, the weekly limit for a week’s pay for the purposes of calculating statutory redundancy pay is £450.

    The maximum number of years continuous service that can be counted for statutory redundancy payments purposes is 20. Length of continuous service is counted backwards from the ‘relevant date’. This is generally the date on which the notice given to the employee ends. But if the employer gives less than the legal minimum notice, the extra notice which should have been given is added on.
    Certain absences – for example, caused by sickness, pregnancy or temporary shortage of work – can count towards continuous service even if the contract of employment was suspended.

    Employees must generally have at least two years’ continuous service to qualify for statutory redundancy pay.

    Redundancy Entitlement

    In general, to be due statutory redundancy pay, the employee must have been dismissed by the employer and the reason for dismissal must have been Redundancy. ‘Dismissal’ includes constructive dismissal.

    If an employee is laid off (that is, receives no wages) or put on short time (that is, receives less than half a week’s pay) for four weeks in a row or six weeks out of 13 weeks, they may also claim a redundancy payment without waiting to be dismissed for redundancy. They must make a claim in writing to the employer, who may refuse to pay if it believes normal working is likely to return within four weeks.

    If an employee is on a fixed-term contract and it ends without being renewed, this counts as a dismissal and the employee may be due a redundancy payment.

    If the employer says that redundancies will be needed and asks for volunteers, employees will qualify for a payment if they volunteer, as long as the employer actually dismisses them.

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