New enhanced redundancy pay calculator now part of Liveflo - video transcript

Transcript to accompany the video introducing the new XpertHR redundancy pay calculator

Some employers choose to go beyond the statutory minimum when calculating redundancy pay – and there are specific provisions in the Equality Act 2010 for them to make enhanced payments without being in danger of breaching the age discrimination legislation, so long as their scheme mirrors the statutory scheme regarding age bands and multipliers and the enhancements follow specified rules. 

The XpertHR Liveflo redundancy flowchart, which forms part of your XpertHR subscription, now contains a new redundancy pay calculator allowing you to calculate enhanced redundancy payments following these rules. And, of course, if you don’t enhance redundancy pay in one of the specified ways, you can still use it to calculate statutory redundancy payments. 

Let’s take a look. When you open the redundancy pay calculator you’re asked if you enhance redundancy payments in one or more of the permitted ways. These are: 

  • removing or increasing the statutory cap on a week’s pay; and/or
  • multiplying the appropriate amount allowed for each year of employment by a factor of more than one; and/or
  • multiplying the total redundancy payment by a factor of more than one. 

If you answer "no" and click "next", you are simply asked for the employee’s date of birth, the date his or her employment started and will end, and the employee’s average weekly earnings, and the redundancy payment is calculated using the statutory formula. 

We’re not going to do this now. Let’s click "back" instead and answer "yes" and then click "next". 

You are now asked to provide details of the ways in which your organisation enhances payments. Remember you can choose one, two or all of the options – we’re going to look at them all. 

For example, a redundancy scheme might apply a cap of £500 instead of the statutory cap – so we’ll click on "the cap on a week’s pay is increased" option before entering the increased cap of £500. 

The scheme might also multiply the appropriate amount allowed for each year of employment by two, resulting in one week's pay for each year of employment at age 21 or under (instead of half a week’s pay under the statutory scheme), two weeks' pay for each year of employment between the ages of 22 and 40 (instead of one week’s pay under the statutory scheme), and three weeks' pay for each year of employment at age 41 or over (instead of one and a half weeks’ pay under the statutory scheme). 

So we’ll click "yes" and enter the factor, which in our example is two. 

The scheme might then allow multiplication of the total redundancy payment by a figure of, say, two. 

So we’ll click "yes" and enter the factor, which in our example is two. 

Now click "next". 

You will now be asked if payment under the enhanced scheme is limited to employees with two years' service. Let’s assume it is. 

Then click "next". 

On this screen you are asked for the employee’s date of birth, the date his or her employment started and will end, and the employee’s average weekly earnings. Let’s put in some example data [date of birth: 11/10/1968; date employment commenced: 12/11/2001; date employment will terminate: 31/03/2011; average weekly earnings: £560]. When you click "calculate", the redundancy payment is calculated using the enhancement details we provided. 

Drag the scroll bar down to see the full results. 

You can see that the employee was 33 when he started work and will be 42 when his employment terminates. He has eight full years’ service within the age group 22 to 40, and one year’s full service at age 41 and over. Because our example scheme multiplies the amount allowed for each year of service by a factor of two, he is entitled to 16 weeks’ pay, instead of eight, for his service at age 22 to 40, and three weeks’ pay, instead of one and a half, for his service at age 41 and over, making a total of 19 weeks’ pay. 

His average weekly earnings are £560. The statutory cap on a week’s pay in force at the date of the termination of employment is £400, but our example scheme increases the cap to £500, meaning the employee is entitled to 19 weeks’ pay at £500 per week. The example scheme also multiplies the total redundancy payment by a factor of two, so the calculation is 19 x £500, multiplied by two – giving a total of £19,000. 

You can see that the redundancy payment that would have been payable to the employee under the statutory scheme is also provided for comparison – in this case it would have been £3,800. 

Now you’ve done the calculation you can cut and paste it into a Word document or an email, or print it out.