Reorganisations and Redundancy – FAQs

Reorganisations and Redundancy – FAQs

Listed below are some questions we are commonly asked:

How do I calculate an employee’ statutory redundancy entitlement?

If an employee has at least two years’ continuous service by time their employment ends because of a redundancy situation, they are entitled to receive a statutory redundancy payment.

Statutory redundancy pay is calculated according to a formula based on age, length of service and pay. Firstly, you calculate the length of their continuous service. Then, counting backwards from the date that their employment terminates, the employee is entitled to:

  • One and a half week’s pay for each complete year of service after age 41;
  • One week’s pay for each complete year of service between ages 22 and 40; and
  • Half a week’s pay for each complete year of service under the age of 22.

A maximum of 20 years’ service can be taken into account when calculating a statutory redundancy payment. A week’s pay is capped at the statutory maximum (currently £400), but the amount is usually increased in February each year.

Disclaimer: This information is provided for general guidance only and is not intended to constitute legal advice. You must consult our employment solicitors if you require advice on your situation or circumstances.

 

When does a redundancy situation arise?

A redundancy situation will most commonly arise if you close your business, a workplace within your business, or if you no longer need as many employees to undertake a particular type of work.

Disclaimer: This information is provided for general guidance only and is not intended to constitute legal advice. You must consult our employment solicitors if you require advice on your situation or circumstances.

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