Expert Advice When Made Redundant _ How Is Redundancy Pay Calculated?

How is redundancy pay calculated? Why not try our Redundancy Payments Calculator? 

Whether or not you are entitled to receive a lump sum redundancy payment will depend on the following:

How old you are

• If you are under 18 you will not be entitled to a redundancy payment.  If you are older than 65 you will not be entitled to a redundancy payment
• If you are between 64 and 65 your redundancy entitlement will be reduced by one twelfth for each complete month you are over 64.  

The length of your continuous service up to the maximum of 20 years.(remember this cannot include service before age 18)

• For each complete year of your continuous service between the ages of 18 and 21 you will be entitled to half a week's pay
• For each complete year of continuous service between the ages of 22 and 40 you will be entitled to one week's pay
• For each complete year of continuous service between the ages of 41 and 65 you will be entitled to receive one and a half week's pay

What Is Continuous Service?

Continuous Service is calculated backwards from the date your notice of redundancy ends to the day you started work with your employer.  In some cases, even though you may not have been at work because of sickness or during pregnancy, your service may still count as continuous.  This is also the case for any strike or dispute action you may have taken.  The days you were not working due to strike or dispute action are deducted from the total days you were employed.  You are still classed as having continuous service although not for as long.  

What Is Classed As A Week's Pay?

A week's pay is different for each person although there is a maximum overall weekly limit.  In your particular circumstances, your week's pay is the amount that you earned in a week on the day your redundancy payment was calculated.  

Your basic weekly wage or salary is taken for the calculation if it stays the same on a weekly basis, regardless of the hours you work.  Overtime is only included if it is part of your normal working hours.  

If your basic weekly wage fluctuates because of the work you do then a week's pay is calculated by multiplying the number of hours you normally work in a week by your average hourly earnings over 12 complete weeks before your redundancy payment was calculated.  

If you had no set hours then your week's pay is calculated by averaging your hourly earnings and multiplying them by the average weekly hours over a 12 week period.  

Maximum weekly considered

There is a maximum weekly amount for statutory redundancy which is reviewed each year. Use our redundancy pay calculator.

Are you due to be paid by an occupational pension scheme within 90 weeks of dismissal?

If this is the case, any redundancy payment due to you can be reduced.

Request redundancy advice today or visit our Money Shop and choose your own guidance.