How to Calculate Redundancy Pay
The redundancy rate in the UK stands at about 2.7 per 1000 employees. Being made redundant is always going to be a little difficult. You ideally want to leave a position completely on your own terms and when this doesn’t happen it can be tough to handle.
When you’re not given what’s rightfully owed to you in the aftermath it only adds insult to injury. As an employee, you have certain statutory rights when it comes to redundancy pay. You may also have certain entitlements based on your individual employment contract.
It’s important to know what these are. If you’d like to learn about what kind of redundancy payment you might be entitled to read on now.
What Is Redundancy?
Redundancy differs from getting fired or resigning from a role. It’s necessary to be aware of what does and doesn’t constitute redundancy in the eyes of the law when talking about redundancy payments. The UK government defines redundancy as a form of dismissal from your job which usually happens when an employer needs to reduce their workforce.
Employees selected for redundancy must be chosen fairly and not based on discriminatory reasons such as age or gender. There is a set process an employer looking to make redundancies must go through. This includes giving a fair notice period, offering employees time off to find a new position, and, among other things, redundancy pay.
Statutory Redundancy Pay
The amount of redundancy pay you’re entitled to will depend on a number of factors. There are also certain criteria you must satisfy to receive a redundancy payment. In most cases, you’ll need to have been working for your employer for over two years to receive statutory payments. As well as this, if your employer offers you a suitable alternative position and you refuse without good reason you won’t be entitled.
If you do fill all of the above criteria then you’ll be entitled to an amount of pay based on how much you’ve worked and your monthly salary up until your dismissal date. The age you were when you worked this time also comes into play.
Here’s a simple formula you can use as a redundancy calculator of what you can expect to get.
- For every 12 months you were under 22 you’ll get half a week’s pay
- You’ll get a full week’s pay for each year you were 22 or older up until 41
- Time and a half week’s pay for every year you were 41 or older
If you were in certain roles it’s possible you’re entitled to more payments. If you were the director of a company, for example, you could be eligible for Director’s redundancy pay. For more info check it out here.
Make Sure You Get What’s Owed to You
Redundancy is never easy but when you receive regular and appropriate redundancy pay it can certainly take the sting out of things. Make sure you know your rights as a worker and you’re aware of what you are owed.
If you need more employment advice, check out the rest of our site now.