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Redundancy pay

The weekly maximum pay which can be taken into account when calculating statutory redundancy pay is set to increase from 1 October 2009.

Employees who have at least two years’ continuous service qualify for a redundancy payment.

The entitlement is as follows:

  • for each complete year of service until the age of 21 - half a week’s pay
  • for each complete year of service between the ages of 22 and 40 inclusive - one week’s pay
  • for each complete year of service over the age of 41 - one and a half weeks’ pay.

A week’s pay is that to which the employee is entitled under his or her terms of contract as at the date the employer gives minimum notice to the employee. The maximum statutory limit for a week’s pay is £350 with effect from 1 February 2009 and will increase to £380 with effect from 1 October 2009. The maximum service to be taken into account in calculating redundancy is 20 years. This means that the maximum statutory payment cannot exceed 30 weeks’ pay or £10,500 (£11,400 Oct 2009).

The maximum week’s pay figure is generally reviewed annually however the £380 limit will continue until 1 February 2011. Employers may, of course, pay in excess of the statutory minimum.

Internet link: Direct gov website redundancy

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