Redundancy pay - Your rights during redundancy

Redundancy pay

You have the right to redundancy pay if you're an employee and have worked for your employer for 2 years or more.

If you're not sure if you're classed as an employee, it's a good idea to talk to your employer and check your employment status.

Working out redundancy pay

How much redundancy pay you get depends on:

  • your age
  • how long you've worked for your employer

You might get more than the minimum amount the law says you should get ('statutory'), if it's in your contract.

Up to £30,000 of redundancy pay is tax free.

You may not be eligible for statutory redundancy pay if your employer offers you a suitable alternative job and you turn it down.

Redundancy pay is based on:

  • your weekly pay before tax (gross pay)
  • the years you've worked for your employer ('continuous employment')
  • your age

Weekly pay should also include:

  • regular overtime provided in your contract – this is overtime your employer must offer and you must work
  • any bonuses or commission

Find out how to work out average pay for bonuses and commission on GOV.UK

If you're aged 17 to 21

Your employer must give you half a week's pay for each full year you've worked.

If you're aged 22 to 40

Your employer must give you:

  • 1 week's pay for each full year you worked from age 22
  • half a week's pay for each full year you worked before that

If you're aged 41 or over

Your employer must give you:

  • 1.5 weeks' pay for each full year you worked from age 41
  • 1 week's pay for each full year you worked when you were between 22 and 40
  • half a week's pay for each year you worked when you were between 17 and 21

Your employer must tell you in writing how your redundancy pay has been worked out.

Use the redundancy pay calculator on GOV.UK. You'll need to know your weekly pay (before tax and other deductions) to use the calculator.

If you have questions about your redundancy pay, you can contact the Acas helpline.

Working out redundancy pay when you are paid in lieu of notice

'Payment in lieu of notice' (PILON) is when you stop work straight away but still get paid for your notice period. 

When working out redundancy pay, your employer must calculate how long you have worked for them based on the 'relevant date'. If you have been given PILON, the relevant date is the date your employment would have ended if you had worked all of the statutory notice period.

This might mean you have worked for your employer for another year for redundancy pay calculations.

Example of calculating redundancy pay when you have been given payment in lieu of notice

If you have worked for your employer for 8 years and 11 months you would be entitled to 8 weeks' statutory notice. If your employer pays you in lieu of notice they would have to add those 8 weeks to the amount of time you have worked for them when calculating your redundancy pay. This means you would have worked for your employer for 9 years and 1 month. You must get redundancy pay for 9 years of work, not 8 years of work.

Limits on redundancy pay

There are limits to how much redundancy pay you can get. You can only get it for up to 20 years of work.

This means, for example, that if you've worked for your employer for 22 years you'll only get redundancy pay for 20 of those years.

The maximum weekly amount used to calculate redundancy pay is £643 – even if your wage is more per week.

The maximum statutory redundancy pay you can get in total is £19,290.

When you'll get paid

Your employer should tell you when you'll get your redundancy pay – this should be on or before your final pay date.

You and your employer can agree to a different date, which should be put in writing.

They should also tell you how you'll get paid, for example in your monthly pay or in separate payments.

If your employer does not pay you

If you do not get your redundancy pay you should:

1. Write to your employer as soon as you can. The date you should get your redundancy pay should be no later than your final pay date, unless you and your employer agree another date in writing.

2. Tell them what you're entitled to and include any evidence to back it up. For example, you could include a letter that states your first day at work or an email confirming a recent pay increase.

You have to claim for any unpaid redundancy within 6 months of your job ending.

If your employer is insolvent

If your employer is insolvent, you can apply for redundancy pay from the government's Redundancy Payments Service (RPS).

Find out about your rights if your employer is insolvent on GOV.UK

If your employer is no longer trading but has not registered as insolvent, you might be able to either:

  • make a claim to an employment tribunal
  • contact the Redundancy Payment Service if your employer registers as insolvent later

To talk through your options, you can contact the Acas helpline.

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