Statutory redundancy pay is a payment you are entitled to receive from your employer if you have been dismissed by reason of redundancy and have at least two years of continuous employment. It is a legal minimum and some employers pay more under enhanced contractual redundancy schemes.
You must have been continuously employed for at least two years, you must have been dismissed by reason of redundancy, and you must not have unreasonably refused an offer of suitable alternative employment. If you accept a trial period in an alternative role and then reject it, your entitlement to redundancy pay depends on whether your rejection was reasonable.
Statutory redundancy pay is calculated based on your age, your length of continuous service up to a maximum of 20 years, and your weekly pay up to a statutory cap. For each complete year of service, you receive half a week's pay for each year worked under the age of 22, one week's pay for each year worked between 22 and 40, and one and a half week's pay for each year worked aged 41 or over. The weekly pay is capped at the statutory limit, which is updated annually.
Statutory redundancy pay is free from income tax and national insurance up to 30,000. If you receive a redundancy payment above 30,000, the excess is taxable. The first 30,000 of any genuine compensation payment on termination of employment is generally free from tax, including statutory redundancy pay forming part of a larger settlement.
If your employer refuses to pay statutory redundancy pay or you dispute the amount calculated, you can bring a claim to the employment tribunal. The time limit for bringing a redundancy pay claim is six months less one day from the effective date of termination. This is different from the three-month time limit for unfair dismissal claims.
Statutory redundancy pay requires two years of service and is calculated by reference to age, service, and weekly pay. It is free from tax up to 30,000. If your employer refuses to pay, you can claim at the employment tribunal within six months less one day of termination. Many employers offer enhanced contractual redundancy pay above the statutory minimum, and this should be checked in your employment contract.
Early specialist advice can save you significant time and cost further down the line. Contact the Barrister Connect team here.