Employees who are made redundant and have two or more years of continuous employment will be entitled to a statutory redundancy payment.
Statutory redundancy pay
To be entitled to a statutory redundancy payment the employee must:
- have been employed for at least two years
- be dismissed in a redundancy situation (see what is a redundancy), and
- not have unreasonably refused suitable alternative employment.
Suitable alternative employment
The employee loses the right to a redundancy payment if they unreasonably refuse suitable alternative employment.
It is often difficult to judge what amounts to suitable alternative employment and it will be for a tribunal to determine on the facts of each case what is suitable.
Where the work is very similar, or uses the same skills and experience, with the same terms and conditions, it is likely to be suitable. But if there is a significant change in duties or terms and conditions it may not be found to be suitable.
The employee’s personal circumstances will also be relevant in determining if they have been unreasonable in refusing such an offer. For example, a small change in hours of work may be more difficult for someone with caring responsibilities than for others without such responsibilities.
Where the work is different the worker will usually be entitled to a statutory four-week trial period.
Amount of payment
Statutory redundancy payments are calculated depending on the age and length of service of the employee as follows:
- Half a week’s pay for each full year you were under 22.
- One week’s pay for each full year you were 22 or older, but under 41.
- One and half week’s pay for each full year you were 41 or older.
Length of service is capped at 20 years and a week’s pay is capped at £538. The maximum redundancy pay is £16,140. These figures are current from 6 April 2020 and are increased each year. (In Northern Ireland the current figures are £560 per week with a maximum of £16,800).
Contractual redundancy
Many employers will provide enhanced redundancy payments, perhaps by increasing the accrual or not applying the statutory caps. So always check your employer’s policies.
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