REDUNDANCY PAY CALCULATOR

A guide on redundancy pay from the employment law experts

Marjon Law, specialist employment lawyers is owner-led by Marc Jones, who is ranked and recommended in legal publications as a leading employment law solicitor, with over 20 years of experience practising solely in employment law.

If you would like urgent advice on redundancy pay, please contact us as soon as possible.

This web page should be read in conjunction with the web page REDUNDANCY

How is redundancy pay calculated?

Redundancy pay is paid to employees only and can comprise:

• a statutory redundancy payment
• an enhanced redundancy payment
• notice pay
• holiday pay.

What is a statutory redundancy payment?

A statutory redundancy payment is calculated with reference to an employee's age, length of service and a statutory week's pay on the date of dismissal.

The maximum number of years to be taken into account for length of service is 20 years and based on a sliding scale dependent on each completed year of continuous service and age:

• below the age of 22, an employee will receive half a week’s pay
• below the age of 41 but not below 22, an employee will receive one week’s pay
• not below the age of 41, an employee will receive one and a half weeks’ pay.

The statutory limit for a week's pay changes annually from 6 April: see web page compensation, rates and tables.

For the latest statutory redundancy payment calculator: see web page compensation, rates and tables.

What is an enhanced redundancy payment?

Some employers may provide employees with an enhanced redundancy payment (eg 1 week’s full pay for each year of service). Such payments may be inclusive or exclusive of an employee’s entitlement to a statutory redundancy payment. 

Enhanced redundancy payments are normally discretionary ie their is no contractual entitlement to receive this. However, if an employer has always made an enhanced redundancy payment this may amount to an implied term of an employee’s contract of employment.

If the employer decides to stop making enhanced redundancy payments this could be a breach of contract, and the employee can bring an employment tribunal claim (if the amount claimed is under £25,000) or a claim in the civil courts (if the amount is above £25,000). Advice should be sought before doing this.

If an employer offers an enhanced redundancy payment (or an ex-gratia payment in excess of statutory redundancy payment), an employee will almost always make this conditional on the employee signing a settlement agreement.

Marjon Law have advised on hundreds of settlement agreements.

What payment is an employee entitled for notice?

An employer has the choice as to whether an employee:

• is required to work their notice period
• is placed on garden leave for their notice period (ie they remain employed but are not required to work)
• receives a payment in lieu of working their notice.

The above will normally be set out in an employee's employment contract.

The statutory minimum notice period to be provided to provided by employers to employees is 1 week for each completed year service to a maximum of 12 weeks.

If an employee's contractual notice is less than the statutory notice period, the employer must either provide the statutory notice period to terminate the employee's employment or make a payment in lieu of notice equivalent to the statutory notice period.

What holiday pay is an employee entitled?

Employees are entitled to be paid in lieu of all accrued untaken holiday to the termination date. The exception will be if there is a provision in an employee's employment contract that states employees will be deemed to have taken their accrued untaken holiday during garden leave.

The material contained in this web page is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

Why choose Marjon Law for redundancy pay advice?

We have been involved directly and indirectly with hundreds of employment tribunal claims for clients for over 20 years, many of which involved redundancy.

As specialist employment lawyers, our clients' interests are paramount to us. 

We ensure that all our clients receive the best advice possible.

We will advise on the process after the redundancy, whether the redundancy pay is correct, any settlement agreement that may be offered, and any subsequent employment tribunal claim.

Contact us today ...