Published On: Fri, Aug 7th, 2020

Redundancy rules explained – how much pay you’ll receive is based on these factors | Personal Finance | Finance


Redundancy advice has seen huge spikes in recent months as employees across the nation understandably worry about their future. Acas, the conciliation service, recently revealed that calls to their redundancy advice line nearly tripled in June and July.

Those on fixed-term contracts will be entitled to redundancy pay if their employer doesn’t renew the contract because the job doesn’t exist anymore and the worker had the contract for two years or more, or had shorter contracts that followed on from each other that added up to at least two years.

Anyone who worked in a role for less than two years, is self-employed, works in certain public sector jobs, is a share fisherperson, works as domestic staff for immediate family or is an employee of a foreign government will not get statutory pay.

It should be noted that eligible employees could lose their right to statutory redundancy pay if they take certain actions.

The right will be lost if the employee in question turns down a suitable alternative job from an employer without a good reason, wants to leave before the job is due to end or is fired for gross misconduct.

Under current statutory redundancy pay rules, people will get different payouts based on their age and how long they’ve worked for a company.

For each full year worked for an employer, staff will get half a week’s pay if they’re aged between 18 and 22.

This will rise to one week’s pay for anyone aged between 22 and 40 and 1.5 week’s pay for those aged over 41.

There is a maximum weekly redundancy pay amount of £538, regardless of how much a person earns overall and people can only get redundancy pay that covers 20 years of work at most.

In some instances, employers may pay extra monetary amounts on top of the statutory pay, which is known as contractual redundancy pay.

Is it up to the employer’s discretion to offer this but they should tell all eligible staff how their redundancy pay is calculated and when they’ll get it under current rules.

By law, an employer’s contractual redundancy pay amounts cannot be less than the statutory amount.

Tax will need to be paid on these payments if it’s more than £30,000 but employers will deduct this themselves.



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