As the name would suggest redundancy pay is provided to an employee when they are made redundant. In the UK employers are entitled to reduce their workforce in certain circumstances. Staff are sometimes eligible for:
- Redundancy pay
- A notice period
- The option to move into a new job within the same company
Staff are entitled to redundancy pay if they have worked for a company for more than two years. The pay is calculated on the basis of:
- half a week’s pay for each full year you were under 22
- one week’s pay for each full year you were 22 or older, but under 41
- one and half week’s pay for each full year you were 41 or older
The length of service taken into account of redundancy pay is capped at 20 years. Weekly pay is capped at £475.
Unfortunately not everybody is entitled to redundancy pay. If a member of staff is asked to stay on after a round of redundancies, or they’re offered suitable alternative work and refuse it, they might lose their right to redundancy pay.
When a member of staff is made redundant they should be given sufficient notice. The statutory notice periods are:-
- At least one week’s notice if employed between one month and two year
- One week’s notice for each year if employed between 2 and 12 years
- 12 weeks’ notice if employed for 12 years or more.
Often the contract of employment will specify the exact amount of notice required so it’s worth checking this.
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