Redundancy pay

Employment Law London provides services to both employees and employers. Employees and employers are protected by and subject to employment legislation.

Redundancy pay

Employees in a redundancy situation are entitled to a statutory redundancy payment if they have at least two years’ service after reaching the age of 18. The entitlement is calculated in the same way as the basic award for unfair dismissal claims. The calculation is made by considering the employee’s age, length of continuous service and gross average weekly wage. Each completed year of service, up to a maximum of 20 after the age of 18, counts for payment on the following scale (with a maximum of currently £330 for a week’s pay):

  • between 18 and up to 21 years of age – ½ week’s pay;
  • between 22 and up to 40 years of age – 1 week’s pay;
  • between 41 and up to 65 years of age -  1½ weeks’ pay.

Where an employee is made redundant after his 64th birthday, the payment is reduced by one-twelfth for every month after that.

The current maximum redundancy payment is £9,900 (i.e. 1½ x 20 x 330).

Redundancy pay under £30,000 is not taxable.

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