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5 Min. Read

How to Calculate Statutory Redundancy Pay

How to Calculate Statutory Redundancy Pay

Have you ever wondered what the difference was between things like layoffs, furloughs and redundancy? There are some similarities between each but there are also some major differences worth knowing about. And if you have been made redundant, you might be eligible for statutory redundancy pay.

There are different amounts that an employee can get paid in redundancy pay. But it depends on what your employer has outlined in your contract. So if you aren’t sure, take a look through your documentation to see how much your employer must pay in statutory redundancy pay.

Here’s What We’ll Cover:

What Are Statutory Redundancy Payments?

How to Calculate Statutory Redundancy Pay

Key Takeaways

What Are Statutory Redundancy Payments?

Let’s say that you have been working at your job continuously for a minimum period of two years. Your employer is legally obligated to pay you statutory redundancy pay, or basically a legal minimum. And your employer is unable to pay you less than the legal minimum.

But, as mentioned above, it can depend on what's outlined in your work contract. If your employer outlines to pay you more than the legal minimum it’s called contractual redundancy pay. If there is no mention of statutory redundancy pay in your employment contract then you will receive the legal minimum.

How Does It Work?

There are a few details to take into consideration when trying to figure out your statutory redundancy pay. How much you receive can depend on a few different things, including your age and how long you have been working at your job. The main criteria for calculating statutory redundancy pay are:

  • The duration of time you have been working in your job
  • The age that you were during each year that you worked in your job
  • Your current salary with a maximum limit of 544 pounds per week

When it comes to limits on redundancy pay you are able to receive there is a maximum amount. Regardless of how much your weekly wage is, it’s capped at just over 16,000 pounds and just under 17,000 pounds in Northern Ireland. There is also a maximum length of continuous service of 20 years, and for the years to count they need to be continuous.

If you are under the age of 22, your redundancy pay will be equal to half a week's pay for each year of service you have provided to your employer.

If you are 22-40 years of age, your redundancy pay is equal to a week’s pay for each year of service.

If you are over 41 years of age, your redundancy pay is equal to a week and a half’s pay for each year of service.

How to Calculate Statutory Redundancy Pay

It can be fairly simple to calculate your statutory redundancy pay if you have all the necessary information. Make sure that you have the specific details for how long you have been in your job and the age you were for each year. You can then take that information to help calculate how much pay you will get.

Let’s take a quick look at Susan, for example. Susan is 31 years old and has worked part-time in finance for just over 10 years. Susan gets paid around 200 pounds per week but has recently been made redundant by her employer. So, she wants to calculate her redundancy pay.

Since Susan is 31 and has been in her job for over 10 years, she will need to do a few calculations. First, she will receive half a week’s pay for the period of time worked while she was under the age of 22. Second, she will receive nine week’s pay for the nine years total that she worked in her job from ages 22 to 31.

A half weeks pay for the year of work under the age of 22 = 100 pounds

Nine weeks of pay for the nine years worked from age 22 to 31 = 1,800 pounds

Susan would receive a total of 1,900 pounds in statutory redundancy pay.

Key Takeaways

Things happen and it can sometimes be unavoidable for your employer to make you redundant. If this happens or if you have received a redundancy notice, your employer will usually pay you by the last day of your notice period or on the next payday. Be sure to discuss the details with your employer or check the staff handbook so there is no miscommunication moving forward.

The good thing is that your redundancy payment calculation is simple to do. All you need to have is the details for how long you have been in your job and the age you were. And to make it even easier, eligible employees can find a redundancy pay calculator online to determine the statutory minimum.

Use the information outlined above to determine if you are eligible for a half week's pay, full week’s pay for a week and a half’s pay for each year of service. You can make sure there is no unpaid redundancy and you get the minimum entitlement. Calculating redundancy is beneficial if you have had continuous employment. Even if it's a fixed-term contract or you don't work normal hours.

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