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Redundancy Tip #5: Redundancy Pay

How much redundancy pay will I receive? It's the question on everyone's mind when they are placed at risk of redundancy.

The rate of redundancy pay will depend on whether the employee is entitled to:

  • Statutory redundancy pay (minimum pay rates set by law)

Or

  • Contractual redundancy pay (additional payments made by an employer in excess of legislative statutory payments).

The employment contract should be checked at the beginning of any redundancy process to identify which of these rates apply.


What are the current statutory redundancy payments? Statutory redundancy payments are available to employees with 2 years of continuous service at rates applicable to age;

  • 18-22: Half a week's pay for each full year of service.

  • 22-40: One weeks pay for each for year of service.

  • 41 or over: One and a half weeks pay for each full year of service.

Statutory payments are capped at 20 years and a maximum weekly earning of £538. Regardless of whether someone has been employed longer than this or earns above this amount.


Employers who provide contractual redundancy pay, will often make payments on top of the above statutory minimum amounts. The degree of additional payments should be specified in the contract or at the time of redundancy consultations.


Redundancy payments are non taxable unless they exceed £30,000.


For more information on redundancy pay and calculations, contact us.



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