How is statutory redundancy pay calculated?
To calculate a statutory redundancy payment, the employer should:
- count backwards from the termination date to determine how many complete years of continuous employment the employee has; and
- assign the appropriate amount for each year of employment.
The amounts payable (subject to the statutory cap on a week's pay) for each year of employment are:
- one and a half weeks' pay for each year of employment in which the employee was aged 41 or over;
- one week's pay for each year of employment in which the employee was aged between 22 and 40; and
- half a week's pay for each year of employment in which the employee was aged 21 and under.
A maximum of 20 years of employment can be taken into account.
The relevant date of termination, at which length of service should be calculated, is the date on which notice expires, if the dismissal is with notice. If an employee is dismissed without the statutory minimum notice, including if they receive a payment in lieu of notice, the relevant date is the date on which the minimum notice would have expired had it been given.
See the Employment law guide for some practical examples of calculating a statutory redundancy payment. A redundancy pay calculator is also available for employers to calculate their statutory redundancy liabilities.