What redundancy pay is
Redundancy pay is a statutory payment that many employees are entitled to when their job is no longer needed. It is designed to provide some financial support when an employer reduces its workforce or closes a workplace.
In the UK, this is often called statutory redundancy pay. Some employers also offer enhanced redundancy packages, which can be more generous than the legal minimum.
Who can qualify
To qualify for statutory redundancy pay, you must usually be an employee with at least two years’ continuous service. You must also be dismissed because of redundancy, not for misconduct or poor performance.
Agency workers, self-employed contractors and some other categories of worker may not be entitled to redundancy pay. Your employment status and contract will affect what rights you have.
How redundancy pay is calculated
Statutory redundancy pay is based on your age, length of service and weekly pay. The calculation gives more weight to older workers and those with longer service.
At present, the amount is capped by a maximum weekly pay figure and limited to 20 years of service. This means very long service is not counted beyond that point.
You can use the government redundancy calculator to estimate what you may be owed. Your employer may use a different formula if they provide an enhanced scheme.
Notice pay and redundancy rights
Redundancy pay is separate from notice pay. If your employer ends your employment, they must also give you proper notice or pay in lieu of notice, unless your contract says otherwise and the law allows it.
You should normally receive both notice-related pay and redundancy pay if you qualify. Holiday pay, unpaid wages and any contractual bonuses may also be due, depending on your circumstances.
What happens during the notice period
During your notice period, you may still have the right to work, unless your employer puts you on garden leave or pays you in lieu of notice. You may also be entitled to reasonable time off to look for another job if you have enough service.
If you are made redundant, your employer should explain the reason clearly and follow a fair process. In many cases, there should be consultation before final decisions are made.
If you think your redundancy pay is wrong
If you believe your redundancy payment is too low, ask your employer for a written breakdown. Check your length of service, weekly pay and whether notice has been handled correctly.
If the issue is not resolved, you may be able to raise a grievance or get advice from ACAS, a trade union or an employment lawyer. In some cases, you can bring a claim to an employment tribunal, but strict time limits apply.
Frequently Asked Questions
Redundancy pay under notice and redundancy rights is money an employer may owe when a job is ending because the role is no longer needed. It can include statutory redundancy pay, notice pay, holiday pay, and other entitlements depending on the contract and local law.
Eligibility for redundancy pay under notice and redundancy rights usually depends on having enough continuous service, being an employee rather than a worker or contractor, and being dismissed because the job is redundant rather than for misconduct or resignation. Local rules may also set age and service requirements.
Redundancy pay under notice and redundancy rights is usually calculated using factors such as age, length of continuous service, and weekly pay, subject to legal caps. Employers may also need to pay contractual redundancy amounts if the contract is more generous than the statutory minimum.
Redundancy pay under notice and redundancy rights can be separate from notice pay. Notice pay is usually payment for the notice period, while redundancy pay compensates for losing the job. Both may be owed, depending on the contract and applicable law.
Yes, an employee can often receive redundancy pay under notice and redundancy rights while serving notice. The notice period and redundancy payment are separate entitlements, so the employee may keep working, be placed on garden leave, or receive payment in lieu of notice.
If the employer pays in lieu of notice, redundancy pay under notice and redundancy rights may still be due if the dismissal is truly a redundancy. The payment in lieu usually replaces salary during the notice period, while redundancy pay compensates for the loss of the job.
Bonuses are not always included in redundancy pay under notice and redundancy rights. Whether they count depends on the contract, bonus scheme rules, and whether the bonus is discretionary or contractual. Notice pay and holiday pay may be calculated differently from redundancy pay.
Redundancy pay under notice and redundancy rights is separate from holiday pay. Any untaken accrued holiday is usually paid out separately when employment ends, in addition to redundancy pay and notice pay, if required by law or contract.
An employee may lose redundancy pay under notice and redundancy rights if they unreasonably refuse a suitable alternative role offered by the employer. However, suitability depends on the duties, pay, location, status, and other terms of the new role.
If an employer goes bankrupt or becomes insolvent, redundancy pay under notice and redundancy rights may still be claimable through an insolvency scheme or government fund, depending on the country. Employees may need to submit claims within strict deadlines.
For fixed-term contracts, redundancy pay under notice and redundancy rights may apply if the contract ends early because the role is redundant and the person qualifies under the law. If the contract simply reaches its agreed end date, redundancy rights may not apply unless local rules say otherwise.
Yes, part-time employees can have redundancy pay under notice and redundancy rights if they meet the same eligibility rules as full-time employees. The calculation usually uses their actual pay and service, so the amount may be lower but the right can still exist.
Agency workers may or may not have redundancy pay under notice and redundancy rights, depending on their legal status and local employment laws. Many agency workers are not classed as employees of the hirer, but they may still have rights against the agency or under specific regulations.
Redundancy pay under notice and redundancy rights may be taxed differently depending on the type of payment and local tax law. Some redundancy compensation can be tax-free up to a limit, while notice pay, wages, and holiday pay are often taxed as normal income.
An employee should check the contract for notice periods, enhanced redundancy terms, payment in lieu clauses, bonus rules, holiday entitlement, and any restrictions on alternative employment. These terms can affect redundancy pay under notice and redundancy rights beyond the statutory minimum.
Yes, redundancy pay under notice and redundancy rights can sometimes be negotiated, especially where the employer offers an enhanced package or a settlement agreement. Employees may ask for more notice pay, a higher redundancy amount, or other benefits such as an agreed reference.
An employee should keep the redundancy letter, contract, payslips, notice correspondence, settlement documents, and any calculations provided by the employer. These records help verify redundancy pay under notice and redundancy rights and support any dispute or claim.
Deadlines for claiming redundancy pay under notice and redundancy rights depend on the jurisdiction and type of claim. Some claims must be brought quickly through an employment tribunal, labor authority, or insolvency scheme, so it is important to act promptly.
Yes, redundancy pay under notice and redundancy rights can be challenged if the dismissal was not a genuine redundancy or if the redundancy process was unfair. An employee may be able to dispute the amount owed or bring a claim for unfair dismissal or unpaid wages.
Someone seeking help with redundancy pay under notice and redundancy rights can contact an employment lawyer, union representative, labor advisory service, or government employment agency. These sources can explain eligibility, calculate possible payments, and advise on next steps.
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