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Redundancy Pay

Redundancy is when an employee is dismissed because their employer can no longer:

  • carry out the business for which they are employed

  • carry out the business in the place where they are employed

  • require them to carry out work of a particular kind

You have the right to a statutory redundancy payment if you are an employee who has worked continuously for your employer for at least two years and you are being made redundant.

Statutory redundancy pay is also due when a fixed-term contract of two years or more expires and is not renewed because of redundancy.

You do not have to claim statutory redundancy pay from your employer, they should automatically pay it to you. However, in circumstances where your employer has become insolvent, you must claim your statutory redundancy pay from the government National Insurance fund: by applying to a department called the Redundancy Payments Office.

How much statutory redundancy pay you will receive depends on:

  • how long you have worked for your employer
  • your age
  • your pay 
Here is a calculator to show how much is owed to you.
 
The maximum number of years to be taken into account for the purposes of calculating a redundancy payment is 20 and the entitlement is calculated as follows:
  1. One half week's pay for each complete year in which the employee was less than 22 years old;
  2. One week's pay for each complete year in which the employee was less than 41 but not less than 22 years old;
  3. One and a half week's pay for each complete year of employment in which the employee was 41 years old or more.
  4. If over 64 years of age the employees claim is reduced by one twelfth for each month over 64 to a maximum of 65 where there is no payment.

Employees must be able to show two calendar years of continuous employment at the relevant redundancy date, but any period of continuous employment before his 18th birthday does not count. Weeks count as weeks of continuous employment if an employee actually works 16 hours or more or works under a contract normally involving 16 hours' work or more.