What redundancy pay are you entitled to?

Redundancy is stressful enough without worrying about what pay you might – or might not – receive.  

Knowing about the different types of redundancy pay and their limitations can help. There are three types of redundancy pay you may be entitled to. These are: 

• Statutory redundancy pay 
• Contractual redundancy pay 
• Statutory notice pay 

Statutory redundancy pay 

Statutory redundancy pay is the minimum your employer must pay you. You’re usually entitled to it if you’ve worked for your employer for at least two years. However, there are exceptions. So, it’s worth checking the Government website to be sure. 

Statutory redundancy pay is based on your age and length of employment. You’ll get: 

• Half a week’s pay for each full year of service that you were younger than 22 
• One week’s pay for each full year of service that you were 22 or older, but under 41 
• One and a half week’s pay for each full year of service that you were 41 or older 

Your weekly pay is based on your average earnings, before tax, in the 12 weeks before you received your redundancy notice. Any bonuses, commission or overtime you’ve earned in this period will be factored into this.  

Statutory redundancy pay is currently capped at £643 per week, and length of service is capped at 20 years. The maximum you can receive is therefore £19,290. 

Contractual redundancy pay 

Contractual redundancy pay is money you may receive on top of statutory redundancy pay. Receiving it is dependent on your employment contract. It could top up your statutory pay if your weekly pay or length of service exceed the caps. It could also mean you receive some redundancy pay if you’ve only worked for your employer for a short time. 

Statutory notice pay 

Your employer must give – and pay you for – a statutory notice period on top of your other redundancy pay.  If you and your employer agree that you won’t work this notice period for any reason, they should pay you in lieu of notice (PILON). 

Your notice period and pay depend on how long you’ve worked for your employer. The statutory notice periods are: 

• At least one week if you’ve been employed for more than a month, but less than two years 
• At least one week for each year of employment between 2 and 12 years 
• 12 weeks if you’ve been employed by this company for 12 years or more 

Protecting your redundancy pay 

If your employer goes into administration, they may not be able to pay what you’re entitled to. In this case, you’ll be contacted by their ‘insolvency practitioner’. This is the person in charge of the company’s debts.  

You could claim at least some of the money owed to you from the Government’s Redundancy Payments Service. You can get: 

• Up to eight weeks’ unpaid wages 
• Pay for annual leave you’ve earned but not taken 
• Statutory redundancy pay 
• Statutory notice pay 

To apply to the Redundancy Payments Service, you’ll need a CN case reference number from the insolvency practitioner. Once your application has been submitted, you’ll usually receive the money you’re owed within six weeks.  

You’ll need to make a separate claim if your employer hasn't paid your statutory notice pay. This requires an LN reference number. You can get this from the insolvency practitioner. 

If your employer doesn’t pay 

You should receive all the redundancy pay you’re entitled to on or before your final pay date. The only exception to this is if you and your employer have agreed another date in writing.  

If you don’t receive your redundancy pay on time, or you believe it’s incorrect, then you should contact your employer. Keep communication in writing and include any evidence you have. This could be a letter confirming your redundancy pay, or communications from earlier in your employment about pay increases or changes to your wages. 

Make sure you challenge any issues with your redundancy pay as soon as you can. You must claim for any unpaid redundancy pay within six months of your job ending. 

Help is available if you need it 

If you need help with your redundancy pay, or advice on another aspect of being made redundant, you can get it from: 

• Citizens Advice 
• ACAS 

You can also get help with your search for a new job from the JobCentre Plus Rapid Response Service. 

Next, learn more about the redundancy process and your rights. 

Sources 

https://www.gov.uk/redundancy-your-rights 

https://www.citizensadvice.org.uk/work/redundancy/check-your-rights-if-youre-made-redundant/  

https://www.acas.org.uk/your-rights-during-redundancy/redundancy-pay