Redundancy pay

If you are faced with making employees redundant, the terms that determine the amount payable may be written into your staff contracts of employment.

Otherwise, employees will normally be entitled to statutory redundancy pay if they have been working with you for two years or more.

Entitlement is usually based on:

• half a week’s pay for each full year you were under 22 years of age,
• 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.

Your weekly pay is the average you earned per week over the 12 weeks before the day you got your redundancy notice.

Coronavirus furlough scheme

If an employee was furloughed prior to being made redundant the average weekly pay is their normal wage rather than any reduced amount they may have been paid during furlough.

According to HMRC sources, if you were made redundant on or after 6 April 2020, your weekly pay is capped at £538 and the maximum statutory redundancy pay you can get is £16,140. If you were made redundant before 6 April 2020, these amounts will be lower.

Also, please note that employees are not entitled to statutory redundancy pay if you offer to keep them on or if you offer suitable alternative work which an employee refuses without good reason.

Take advice

If you are faced with making staff redundant you should consider taking advice to ensure the process is dealt with correctly.