Calculate an employee's redundancy pay

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

Calculate an employee's redundancy pay

Most employees have a statutory right to redundancy payments.

The exceptions are:

  • 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 £508 a week.
  • Maximum statutory redundancy pay is therefore 20 x 1.5 x £508 = £15,240.

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