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Wednesday, 3 October 2023

Entitlement to redundancy pay

If you are made redundant you may be entitled to statutory redundancy pay if you have worked for your employer for at least two years. The amount you are entitled to will be based on your weekly pay, age and continuous employment with your employer.

Statutory redundancy pay basics

You have the right to a statutory redundancy payment if you are an employee who has worked continuously for your employer for at least two years and you are being made redundant.

Statutory redundancy pay is also due when a fixed-term contract of two years or more expires and is not renewed because of redundancy.

You do not have to claim statutory redundancy pay from your employer, they should automatically pay it to you. If your employer does not give you statutory redundancy pay when you are entitled to it you should write to them asking for payment. If your employer still refuses to pay you or cannot make the payment you could make an appeal to an Employment Tribunal.

How much statutory redundancy pay you will receive depends on:

  • how long you have worked for your employer
  • your age
  • your pay

Company redundancy pay

Your employer may offer you additional redundancy pay under your employment contract. For example, they may offer you a higher pay rate, or reduce the qualifying criteria so more people are entitled. You should check your employment contract for details about your contractual redundancy pay.

Your employer cannot offer you lower than the statutory redundancy pay scheme in your employment contract.

Alternative work

You are not entitled to a statutory redundancy payment if your employer either:

  • offers to keep you on
  • offers you suitable alternative work which you refuse without good reason

If you leave your job for a new one before the end of your notice period, your statutory payment might also be affected.

Short-term and temporary lay-off of employees

Statutory redundancy pay can be claimed from your employer if you have been temporarily laid off for either:

  • more than four weeks in a row
  • more than six non-consecutive weeks in a 13 week period

You should write to your employer telling them you intend to claim statutory redundancy pay. This must be done within four weeks of your last non-working day in the four or six week period.

Within seven days of receiving your letter, your employer could send you a counter-notice if they believe that your normal work is likely to start within four weeks and continue for at least 13 weeks. If your employer does not reject your claim within seven days of receiving it, then you should write to your employer again giving them your notice.

Notice pay

As well as a statutory redundancy payment, your employer should pay you through your notice period, or pay you in lieu of notice depending on your circumstances. Payment in lieu of notice is money paid to you by your employer as an alternative to being given your full notice. Details of the notice period will be in your employment contract.

Written statement of statutory redundancy pay

When you are paid a statutory redundancy payment your employer must give you a written statement showing how your payment has been calculated. If your employer fails to give you a written statement you should write to them asking for one. If they still do not provide one you should seek further advice from Acas (the Advisory, Conciliation and Arbitration Service).

Insolvent employers

If your employer is declared insolvent or cannot pay your statutory redundancy pay, you can apply for a direct payment from the National Insurance Fund. To do this you must first write to your employer asking for your statutory redundancy pay. If they are still unable to pay you then you should fill out a RP1 form available from the Insolvency Service.

Employees not entitled to statutory redundancy payments

Some employees are not entitled to receive statutory redundancy payments. In some specific situations employees that should normally be entitled to statutory redundancy pay might lose this right with their employer.

Finding a new job

If you have been selected for redundancy you may find a new job elsewhere before your redundancy notice period has finished. If you leave the job you are being made redundant from before your notice period has finished, you may lose your rights to a statutory redundancy payment.

Dismissal on the grounds of misconduct

You are not entitled to statutory redundancy pay if you are dismissed for misconduct with either:

  • no notice
  • little notice
  • a statement from your employer saying they would have been entitled to dismiss you without notice

However, your employer must still follow fair dismissal procedures otherwise you might be able to make a claim to an Employment Tribunal. This situation is only likely to occur in gross misconduct cases.

Strike action during your notice period

If you go on strike during your redundancy period then you are still entitled to your redundancy rights. However, your employer might ‘serve a notice of extension’ which is a request that you work the days lost during the strike period at the end of your notice.

If you do not agree to work the lost days, then your employer may be able to refuse to make your statutory redundancy payment.

Employees not entitled to redundancy payment

If you fall into the following categories then you are not entitled to receive statutory redundancy pay:

  • members of the armed forces
  • House of Lords and House of Commons staff
  • some apprentices - although you should check your contract
  • some employees with fixed-term contracts before 1 October 2023 - you should check your contract of employment
  • domestic servants working in private homes who are members of the employer’s immediate close family
  • share fishermen paid only by a share in the proceeds of the catch
  • Crown servants or employees in a public office
  • employees of the government of an overseas territory

You should check your contract or speak to your employer to see if you have any contractual redundancy entitlements.

Where to get help

Acas helpline

08457 47 47 47

If you are being denied your rights, talk to your employer first of all. If you have an employee representative (eg a trade union official), they may be able to help. If this doesn't work, you may need to make a complaint using your employer's internal grievance procedure.

Acas (the Advisory, Conciliation and Arbitration Service) offers free, confidential and impartial advice on all employment rights issues.

For more information on where to get help with employment issues visit the employment contacts page.

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