Right to a redundancy payment

You must be an employee and have 2 years' continuous service to qualify for a statutory redundancy payment.  Employee and continuous service have legal definitions and if you are unsure you should check.

 

This is calculated in the same way as the basic award for unfair dismissal, by taking the employee’s age, years of service and average weekly pay to arrive at a figure.

 

However, the weekly pay is limited to a maximum of £475 per week for redundancies on or after 6 April 2015 (£464 per week for redundancies in the year before this date) and a maximum of 20 years service will be considered. The years of service at different ages are taken into account.

 

This is how the statutory entitlement is calculated in detail:-

  • Years of service between 18, but below 22 years of age, the employee's weekly pay is multiplied by 0.5
  • Years of service between 22 and 41, the employee's weekly pay is multiplied by 1
  • Years of service from 41 onwards, the employee's weekly pay is multiplied by 1.5
  • Therefore the absolute maximum that can be awarded is 20 years @ £475 x 1.5 = £14,250

 

There is a table known as the “ready reckoner” which sets out the amounts for each different age group.   The link below will take you to the automatic version of the table on the direct.gov website.  It will enable you to quickly calculate your redundancy payment.

 

http://www.direct.gov.uk/redundancy.dsb

 

Remember that an employee’s contract may give them a right to a severance payment which is greater than the statutory entitlement. Any better contractual right will ‘trump’ the statutory right.

 

Time limits for claiming redundancy payments

 

Claims for statutory redundancy payments can only be made in an employment tribunal. Unusually the time limit for a claim is 6 months from the Effective Date of Termination.

 

Even more unusually, time limits may be indefinitely extended if an employee has written to the employer to ask for a redundancy payment. If the written claim is sent to the employer within 6 months of the EDT, there is no time limit for making an application to the ET for an order that it be paid. If a written request is made between 6 and 12 months after the EDT, and a claim is submitted at any time thereafter, the tribunal still has power to award a payment if they think it would be reasonable to do so.

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