Have you heard talks of redundancy in your workplace? Or do you simply want to be prepared in case you are made redundant in the future, or in case you have to make employees redundant?
Redundancy can be distressing for everybody involved, but it’s always best to be prepared and gain an understanding of the process.
We’ve got you covered. Keep reading for our guide to statutory redundancy pay, including information about redundancy, entitlements, exceptions, and the current payment calculations.
What Is Redundancy?
Redundancy sounds pretty daunting – it’s essentially the act of being dismissed from your job. However, it’s not the act of being fired – redundancy only occurs when employers need to lower their amount of employees.
In fact, it’s a legal requirement that if you’re made redundant, it should be in a fair way. For example, it should be because of your experience or your wages, as opposed to your gender, age, or whether you’re pregnant or disabled.
If you’re let go because of anything other than your skillset or level of experience, then this could be classed as unfair dismissal.
Being made redundant isn’t usually personal, it’s more economical. It happens if an employer can’t afford to keep you on, or if the business is going out of business.
If you’re in the process of being made redundant, you may be eligible for a notice period, the chance to move into a different role, time off to find a new job, and of course, redundancy pay.
If the business has become insolvent, then you may need to apply via the government for any owed wages and redundancy payments.
Am I Entitled To Statutory Redundancy Pay?
There are several different factors that can determine whether you’re eligible for redundancy pay or not – such as the length of your employment and the reason for your redundancy.
If you’ve been employed by the same business or employer for 2 or more years (continuously), then you should be eligible for redundancy pay. If you’ve lost your job because the business legitimately needed to make reductions in the workforce, then you should be eligible for redundancy pay.
If you class as an employee, whether you’re full time or part-time, you should be eligible for redundancy pay. You must tick all three boxes in order to qualify for redundancy pay.
If you’re on a fixed-term contract that doesn’t renew because there’s no need for the job anymore, then you may be entitled to redundancy pay. However, this is only the case if your fixed-term contract was for two or more years, or if you were on a shorter contract that followed on to another making a total of two years or more.
Unfortunately, not everybody is eligible for statutory redundancy pay. If your employer offers to keep you on or if your employer gives you another job that’s suitable, then you won’t be able to take redundancy payments.
If you’re dismissed for any other reason than the fact that the business can no longer afford to keep you or the position is redundant, then you won’t be eligible for redundancy. This includes being dismissed for misconduct – as this doesn’t count as redundancy.
If you’re a domestic servant and your employer is a direct/ immediate family member, then, unfortunately, you aren’t able to take redundancy payments.
If you’re an apprentice, crown servant, or a former registered dock worker, then you won’t be eligible for redundancy payments. However, you may be covered by other arrangements.
How Much Redundancy Pay Will I Get?
The amount of redundancy pay that you receive typically depends on your age, your earnings (before tax), and how long you’ve worked for your employer.
If you’re under the age of 22, then you’ll be entitled to half a week’s pay for each full year that you worked for your employer.
However, if you’ve 22 or older up to the age of 40, then you’ll be entitled to a full week’s pay for each year that you worked for your employer.
If you’ve over the age of 40, then you’ll be entitled to a week and a half’s pay for each year you worked there. You won’t be taxed on your statutory redundancy pay.
There’s also a limit on how much redundancy pay you can receive – the weekly limit is currently £544 per week. There’s also a 20-year limit – for example if you’ve worked for your employer for 25 years, only 20 years will count in your redundancy calculations.