How are redundancy payments calculated

how are redundancy payments calculated

How Much Redundancy Pay Could You Expect?

  • Redundancy Pay Entitlement
  • Do I need to make a claim for a payment?
  • Is statutory redundancy pay taxable?

    Will I receive a redundancy pay:

    Yes. You will be entitled to a redundancy pay if: -

    • You are made redundant
  • If you have at least two years continuous service since 1 October 2006 there is no age restriction
  • You must be working as an employee under a contract of employment the contract may be written or verbal or a combination. By turning up to work for an employer there is an agreement of employment. Self-employed people and members of a partnership do not qualify.
  • Directors may be employees if they work under a contract of employment. They are unlikely to qualify if they have a controlling interest in the company.

    You will also need to have been actually dismissed- i.e. not resigned. You may be invited to take voluntary redundancy, but this should still qualify as a dismissal by reason of redundancy.

    What are the payments?

    Many employers unfortunately will only pay the statutory minimum redundancy pay, whilst others are more generous, for example, one month’s gross salary for every year worked. Generally, blue-chip companies and financial institutions are found to be more generous with their payments.

    It is also the case, that even where an employer may only pay the statutory minimum, they will enhance the redundancy payment by making a goodwill lump sum without reference to a specific formula. This is sometimes the case where the dismissal based on a purported redundancy is on shaky grounds.

    An employer may make an enhanced payment to take into account any shortcomings in the actual redundancy procedure and to ward of any potential tribunal claim. In turn the employee may be asked to sign a compromise agreement which will prevent you form bringing any subsequent unfair dismissal claim. A specialist employment law solicitor is best placed to negotiate a severance package for you after taking into account the strength of your claim.

    Here at Redundancy Help we have an Employment Law Specialist who can look at your compromise agreement and give you advice. Click here for further details

    If you

    are being paid only the statutory amount, this will be governed by:

    • How long you have been continuously employed by your employer;
  • How your years of continuous service relate to a particular age band;
  • Your weekly pay, up to a legal limit, revised as at February 2015 to £475.00.
  • The amount of redundancy pay is calculated as:

    • Half a week’s pay for each full year of service where age during year less than 22
  • One week’s pay for each full year of service where age during year is 22 or above, but less than 41.
  • One and a half weeks’ pay for each full year of service where age during year is 41+
  • Redundancy Payments Offices - A helpline is available to answer any of your queries, no matter where in England, Scotland or Wales your firm is based. The number to ring is 0845 145 0004.

    To help you work out your statutory payment, you can use the Redundancy Calculator for calculating the number of weeks' pay due. Don't forget, the week's pay is subject to a maximum of £450.00 as of February 01st 2013.

    When will I receive my Redundancy pay?

    If the company you were working for is paying the redundancy, then it should be paid on the last day that you work or as soon as is possible.

    If there is to be any long delay with the payment, then that needs to be discussed and agreed with the employee. If the employee feels that they have to wait too long, then they can take the employer to an Employment Tribunal.

    What is my “calculations” date?

    This is the date that you were given notice of your redundancy. The minimum notice by law is usually one weeks notice per year of employment up to a maximum of twelve weeks.

    The calculations date should fall into the following:

    • The minimum notice date
  • If you are given longer notice then the calculation will be made from the minimum date
  • The day the job ended with or without notice
  • Your employer must give you a lump-sum payment if:

    Source: www.redundancyhelp.co.uk

    Category: Bank

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