Redundancy is generally where an employer needs to reduce his or her workforce. It may happen because a workplace is closing down, or because fewer employees are needed for work of a particular kind. Normally your job must have disappeared. It is not redundancy if your employer immediately takes on a direct replacement for you. But it will not matter if your employer is recruiting more workers for work of a different kind, or in another location.
The statutory redundancy payments scheme aims to ensure that those who are dismissed through no fault of their own receive compensation. Employees with more than 2 years service are statutorily entitled to a lump sum from their employer, based on their age, length of service and contractual earnings up to a maximum limit which is currently £500 per week (from 14th February 2016) and is reviewed annually.
For redundancies made on or after 1 October 2006, the amount will be calculated as:
- Up to the age of 21, you will receive half a week’s pay for each completed year of service.
- 22 – 40 years of age, you will receive one week’s pay for each completed year of service.
- 41+ years of age, you will receive 1½ weeks' pay for each completed year of service.