Whenever the dreaded word ‘redundancy’ is mentioned it can be very alarming. Whatever your circumstances are there can be uncertainty and lots of questions, not least in terms of finances. Here, our Head of Employment Law Yunus Lunat looks at the area of redundancy pay, outlining the law surrounding it and providing useful tips on calculating how much you may receive.

Types of Redundancy Pay


This is the minimum that you are entitled to by law (see below).


This is what an employer may choose to pay you in addition to the minimum legal requirements, and this will be stipulated in your contract or employee handbook. It cannot be less than the statutory entitlement.

Calculating Statutory Redundancy Pay

To qualify for statutory redundancy pay you must have worked for your employer for two years or more, and works as follows:

  • Aged 18- 22: You are entitled to half a week’s pay for each full year of service;
  • Aged 22-40: You are entitled to one week’s pay for each full year of service;
  • Aged 41 and over: You are entitled to a week and a half’s pay for each full year of service.

Important points to remember

  • Redundancy pay is based upon your weekly wage before tax (gross);
  • The weekly figure for statutory redundancy pay is capped at £489.00 per week;
  • The first £30,000 of any payment is tax free;
  • You are entitled to a written breakdown setting out the way in which the redundancy payment was calculated;
  • You are entitled to receive payment for any holiday which you had accrued but had not taken at the time of your redundancy.

Notice Pay

As well as Statutory Redundancy Pay, an employer should continue to pay your salary as usual during the notice period, or make a payment in lieu of notice (you can only be paid in lieu of notice if this is a term in your contract.) Payments in lieu of notice, as well as holiday pay, are subject to the usual deductions for tax and National Insurance.

What happens if my employer fails to make the necessary payments?

Seek legal advice urgently, as you will only have six months from the date upon which your employment ends to submit a claim to an Employment Tribunal.

If you are unsure about how much you may receive, or indeed have any queries about the redundancy process, please contact Yunus on 0113 284 5023 or at yunus.lunat@isonharrison.co.uk – same day appointments are often available.

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