How to calculate a Statutory Redundancy Payment - Back to Basics Series

When being made redundant, employees with 2 years’ continuous service are entitled to a Statutory Redundancy Payment. 

The amount paid will depend on their age, length of service (capped at 20 years’ service) and weekly pay (capped at £475 a week*) as follows:

  • 0.5 weeks’ pay for each complete year of service where the employee was under the age of 22 for any part of the year;
  • 1 week’s pay for each complete year of service where the employee was aged 22 to 40 at the beginning of the year;
  • 1.5 weeks’ pay for each complete year of service where the employee was aged 41 or over at the beginning of the year. 

Or for an online calculator see: https://www.gov.uk/calculate-your-redundancy-pay.

In addition to a Statutory Redundancy Payment, an employee may be entitled to a contractual redundancy payment. Such a contractual payment may arise where there is an express agreement, which may be set out in an Employment Contract, redundancy policy or collective agreement or following a written/verbal statement by someone with authority. A contractual payment may also arise where there is an implied agreement, such as where terms are regularly applied by a custom and practice. Such a custom must be “reasonable, notorious and certain”.

If an employer is prepared to offer above what it is otherwise required to pay, it is usual to ask an employee to sign a Settlement Agreement to settle/waive any and all claims and so give both parties a clean break.

For more information on any of the issues above, or if you’d like help with redundancy or Settlement Agreements, give one of our employment experts a call on 0113 201 4900 for a free, initial consultation.

*The figure for 2016/17 has yet to be announced but it is estimated to rise to £489.
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