Calculate an employee's redundancy pay

Reviewed by Michael Scutt, head of employment, Crane & Staples Solicitors

Business owner performing calculations

Most employees have a statutory right to redundancy payments

There are a few exceptions and some people are not entitled to redundancy pay. These include:

  • people with less than two years' service;
  • people who unreasonably refuse an offer of suitable alternative employment;
  • employees who have adopted 'employee owner' or 'employee shareholder' status.

Service is counted up to a maximum of 20 years.

  • Each year of service from age 41 onwards entitles a person to 1.5 weeks' pay.
  • Service between ages 22 and 41 entitles a person to one week's pay per year.
  • Service aged under 22 entitles a person to half a week's pay per year of service.

A 'week's pay' is based on actual income (or average weekly earnings).

  • This is capped at £525 a week.
  • Maximum statutory redundancy pay is therefore 20 x 1.5 x £525 = £15,750.

Visit the GOV.UK website to work out the payment owed to an employee being made redundant.

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