Here's what to expect if you’re made redundant, what your rights are and how to calculate how much pay you'll get.
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UK redundancy pay explained
This guide will look specifically at redundancy pay in the UK, the statutory minimum amount your company can pay you and how to calculate what you'll get.
If you'd like a more detailed look at redundancy and how it might affect you, read this general guide on UK redundancy instead.
You’ll usually be entitled to redundancy pay if you’re an employee that has been working for your current employer for at least two years.
But according to Citizens Advice, you’ll only get the money if it’s a ‘genuine redundancy’ – and you are entitled to a consultation about why you’re being made redundant and any alternatives.
If you are made redundant, you should ensure haven’t been discriminated against, which could be the case if the decision were made partly made based on gender, pregnancy, ethnicity or other specific factors.
You can find out more here, but it’s vital to stress you can still be made redundant if you fit the criteria above, it just can’t be the reason for being let go.
It’s vital to check if you’re being made redundant for a fair reason. If the decision is based on certain factors – for example, asking for certain work rights or making a complaint, it could be an unfair redundancy.
Again, the above factors don’t protect you from redundancy, it just can't be the reason for the company’s decision.
If the company is planning to let go 20 or more employees, there must be a group redundancy consultation.
Contact Citizens Advice if your company has not done a group consultation as you may be able to challenge their decision.
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UK redundancy pay eligibility
If you’re made redundant (and the decision was made fairly), there are two types of redundancy pay you could get.
You could get ‘statutory’ redundancy pay, which is what you’re legally entitled to or ‘contractual’ redundancy pay, which is extra money your contract states you can get in addition to the former.
The money will be paid by your employer.
If you’ve been employed continuously for two years by your employer and are classed as an ‘employee,’ you’ll get statutory redundancy pay.
This also applies to part-time workers and those on fixed-term contracts of two years or more (or consecutive shorter contracts that add up to at least two years) if their employer no longer has a role available or chooses not to renew their contract.
According to Citizens Advice, you’ll get statutory redundancy pay if there was a genuine need for your employer to make redundancies.
There are a few instances where you won’t get statutory redundancy pay. For example, for misconduct, if your employer offers to keep you on or offers a suitable alternative role that you refuse without a good reason.
The full list of reasons why you won’t be eligible for statutory redundancy pay are detailed here.
As for contractual redundancy pay, you should check your contract to see if this is specified. If you can’t find this in your contract, it’s worth asking your employer or checking your staff handbook.
Your employer should calculate your contractual redundancy pay (if you’re offered it) and will tell you when to expect payment.
According to Citizens Advice, contractual redundancy pay cannot be less than the statutory amount.
If you’re having issues with your redundancy pay, talk to your union rep (if you’re part of one) or talk to an employee representative, or alternatively contact Citizens Advice.
If you’re a member of a union, speak to your union rep first - they should have been involved in the redundancy negotiations.
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UK redundancy pay calculator: what are you owed?
If you’re entitled to statutory redundancy pay, you’ll get the following for each full year you’ve worked for your employer:
- Half a week’s pay up to the age of 22;
- One week’s pay if you’re aged between 22 and 40;
- One and a half week’s pay if you’re 41 or older.
You can use this GOV.UK calculator to figure out how much statutory redundancy pay you're entitled to.
The length of service is capped at 20 years and the maximum weekly amount you can get is capped at £571 a week (even if you earn more) or £17,130 overall, which is not taxable.
You only pay tax if you exceed £30,000 for redundancy pay (including severance pay), as well as on any wages or holiday pay the company owes you.
And if you turn 22 or 41 while working for your employer, you’ll only get the higher rates for the full years you were that age.
Your weekly pay is calculated as the average you earned per week over the three months before you got your redundancy notice – and shouldn’t be affected by sick pay, maternity leave or overtime.
If you were on furlough due to the COVID-19 pandemic, your redundancy pay will be based on what you would have normally earned.
Your employer should pay your redundancy pay on the day you leave work or on an agreed date soon after in the same way you get paid. You should also get a written statement showing how your redundancy pay was calculated.
How much notice am I entitled to?
You must be offered a notice period if you’re being made redundant.
Statutory redundancy notice periods are:
- One week’s notice if you’ve been employed between one month and two years;
- One week’s notice for each year if employed between two and 12 years;
- 12 weeks’ notice if employed for 12 years or more.
Your employer must offer the above at a minimum although they can give you a longer notice period. You should get paid throughout your notice period.
It’s worth noting that your employment can be ended without notice if ‘payment in lieu of notice’ is in your contract, so your employer will pay you instead of offering a notice period.
Your employer may offer the option for ‘payment in lieu of notice’ even if it’s not in your contract.
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Can I get redundancy pay if I’m temporarily laid off?
You may be able to claim statutory redundancy pay if you’ve been temporarily laid off without pay or less than half a week’s pay for either over four weeks in a row or over six non-consecutive weeks in a 13-week period.
In this situation, write to your employer to inform them you intend to claim statutory redundancy pay – within four weeks of your last non-working day.
You should write to your employer again if they don’t reject your claim within seven days of receiving it.
Can I get redundancy pay if I’m on a zero-hour contract?
Whether or not people on zero-hour contracts get statutory redundancy pay depends on whether they are defined as a ‘worker’ or an ‘employee.’
“Your employment status - whether you’re an ‘employee’ or a ‘worker’ - determines your rights at work,” commented Matthew Bradbury, employment expert at Citizens Advice.
“Only ‘employees’ have the right to a statutory redundancy payment.
“If you’re on a zero-hours contract, your employer might class you as a ‘worker’ and refuse to give you a redundancy payment on that basis.
“However, it could be possible to argue that you are, in fact, an employee.
“These arguments aren’t legally straightforward and there are short time limits for taking action.
“That’s why if you’ve lost your job and you’re on a zero-hours contract you should seek support as soon as possible.
“Your local Citizens Advice will be able to help you understand what you’re entitled to.”
It’s also worth stressing that you’ll still need two years of continuous employment to qualify for redundancy pay.
What are my next steps if I’m made redundant?
If you’ve sadly been made redundant and you cannot challenge it for any reason, there are steps you can take to help you navigate this difficult period.
Check out loveMONEY’s step-by-step guide if you’ve been made redundant, including how to sort your finances, find your new career and tips on how to cope.
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