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How to calculate redundancy payments and unfair dismissal awards
Basically you get one weeks’ pay for each year worked and from the age of 41 one and a half weeks’ pay for each year.Also used as the ‘basic award’ in unfair dismissal claims.
Redundancy Payments: Ready Reckoner
The redundancy payment due to each employee under the statutory redundancy payment scheme depends on his or her age and length of service (up to twenty years). This determines the number of weeks pay due, which is then subject to a limit on weekly pay.
To calculate the number of weeks pay due, you should use the following amounts –
- 0.5 week’s pay for each full year of service where age during year less than 22
- 1.0 week’s pay for each full year of service where age during year is 22 or above, but less than 41
- 1.5 weeks’ pay for each full year of service where age during year is 41+
To calculate a redundancy payment if made redundant – see the link below:
Ready Reckoner for calculating the number of weeks’ pay due
Employers using the above amounts to calculate an employee’s entitlement to redundancy pay should note that where an employee’s service crosses two bands, the figures in each band should be added together. For example -
Example 1 - if you are 25 with 7 years service, you will be entitled to 5 weeks’ redundancy pay. The 5 weeks entitlement is based on 0.5 weeks’ pay for each completed year of service between age 18 and 22 and 1 week’s pay for each completed year of service between age 22 and 25. (The middle band of 1 weeks’ pay only applies where an employee, who is entitled to a redundancy payment, has completed a year service at age 22 or above).
Example 2 – if you are 38 years old and have 12 years of service, you will be entitled to 12 weeks’ redundancy pay. The 12 weeks is based on 1 week’s pay for each completed year of service between age 26 and 38.
Example 3 – if you are 49 years old and have 15 years of service, you will be entitled to 19 weeks redundancy pay. The 19 weeks’ entitlement is based on 1 week’s pay for each completed year of service between age 34 and 41 and 1.5 weeks’ pay for each completed year of service between age 41 and 49.
The maximum week’s pay that an employee is entitled to under the statutory scheme is £380. If you were made redundant on or before 30 September 2009 you will be entitled to the previous maximum amount of £350.
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