Statutory redundancy pay is the amount that you are legally entitled to, and is calculated based on your age, weekly pay, and length of employment. If you’re made redundant at age 41 or above, it is calculated as 1.5 weeks’ pay for each full year of service. Weekly pay is calculated as the average pay over your last 12 weeks of employment before redundancy, meaning your employer cannot calculate it using a lower pay that you might have received in the past. Weekly pay is capped at a current limit of £566 for these purposes, however, and only up to 20 years of employment (no more) can be taken into account.
So, for example, if you were made redundant at the age of 58 after working at a company for eight years with a weekly pay of £300, you would receive 1.5 weeks’ pay for each of those eight years. That means you would receive £450 (1.5 x £300) multiplied by eight, which works out at £3,600.
Your employer must show you in writing how your redundancy pay has been worked out. You can also use this service on the GOV.uk website to calculate it yourself if you don’t think they’ve got it right.
Alternatively, you may have a specific amount of redundancy pay named in your contract that is more than the statutory pay you’re entitled to. Check your contract to see whether this is the case, and bear in mind that your employer cannot use a contract to pay you below the statutory amount. In other words, contractual redundancy pay should always be either equivalent to or more than statutory pay – statutory pay is the absolute minimum.