Whilst there is some help from the Government to help keep staff on during the COVID-19 pandemic, in some cases, it’s going to be too difficult.
When staff are made redundant and have at least two years’ continuous service, they may be eligible to receive statutory redundancy pay. To receive this, they must:
- Be an employee with a contract of employment
- At least two years continuous employment
- Have been dismissed, laid off or put on short time working
If an employee takes early retirement, they are not eligible for statutory redundancy pay.
How much will they receive?
This depends on their age and how long they have served the business:
- 1.5 weeks’ pay for each full year of employment after their 41st birthday
- One weeks’ pay for each full year of employment after their 22nd birthday
- Half a weeks pay for each full year of employment up to their 22nd birthday
Service is counted backwards form the date of dismissal.
What is the cap on redundancy pay?
Statutory redundancy pay is capped at 20 years’ service. Weekly pay is capped at £538 per week (from 6 April 2020). As such, the maximum amount of statutory redundancy pay is £16,140 (20 x 1.5 x £538).
How is a week’s pay calculated?
When an employee is paid an annual salary, weekly pay is this salary divided by 52. If their pay varies, the average weekly pay over a 12-week period is used.
What is contractual redundancy pay?
If an employer has a contractual redundancy pay scheme, then they can pay employees that are made redundant contractual redundancy pay instead, as long as the employee will receive at least what they would be entitled to with statutory redundancy pay.
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