I’ve worked at the same company for many years but I’ve been told I’m being made redundant. What redundancy pay am I entitled to?
If you’re being made redundant, there are two types of redundancy pay you could get. ‘Statutory’ redundancy pay is the minimum that the law says you’re entitled to, or ‘contractual’ redundancy pay, which is extra money your contract says you can get on top of the statutory amount.
You’re usually only entitled to statutory redundancy pay if you’ve been an employee for at least two years. It’s worth asking your employer or checking your contract to see if you’re entitled to more than the statutory redundancy rules allow.
Statutory redundancy pay is based on age, weekly pay and number of years in the job, up to a max of £538 a week. The Citizens Advice and Gov.uk websites have calculators to help work out how much you’ll get.
For each full year you’ve worked for your employer, you get:
- age 18 to 22 – half a week’s pay
- age 22 to 40 – 1 week’s pay
- age 41 and older – 1.5 weeks’ pay
If you turned 22 or 41 while working for your employer, the higher rates only apply for the full years you were over 22 or 41.
You won’t pay any tax on your statutory redundancy pay.
There are some limits to how much money you’ll get:
- the maximum weekly amount you can get is £538 – even if you earn more per week
- you can only get redundancy pay for a maximum of 20 years’ work (for example, if you’ve worked at your job for 23 years, you’ll only get redundancy pay for 20 years)
If your employer offers a suitable alternative job, but you refuse to take it without good reasons, they can refuse to pay your redundancy.
You won’t get statutory redundancy pay if you’ve been employed for less than two years, are self-employed or are in certain jobs like the armed forces or police (though you may be entitled to contractual pay).
If you’ve been furloughed, the law now says that your redundancy pay should be worked out using your usual wages, even if you were paid 80% while you were furloughed. However, statutory redundancy pay still limits a weeks’ pay to £538.
If your employer has told you that your redundancy pay will be based on your furlough rate of pay, you could explain to the employer that isn’t what the Gov.uk website says about redundancy pay, or contact your nearest Citizens Advice.
How long your notice period should be
Your statutory notice depends on how many years you’ve worked for your employer when you’re given notice.
You should receive 1 weeks notice for every full year worked, up to a maximum of 12 weeks.
E.g. if you have worked for your employer for 5 years and 3 months you will be entitled to 5 weeks notice.
Your contract might say what notice period you’re entitled to. If it does, this is called ‘contractual notice’.
Contractual notice can be longer or the same as statutory notice. It can’t be shorter – you should always get at least your statutory notice.
Preparing for after redundancy
Before you’re made redundant, you might be entitled to some help finding a new job, like time off for interviews.
Money might be tight for a while so you should also get advice on managing any debts you have and check if you’re entitled to any benefits.
Help getting a new job
Contact your local Jobcentre and ask for their Rapid Response Service – they specialise in helping people who have been made redundant. They will help you find a new job and may even pay for training.
You can use the service during your notice period and for up to 13 weeks after you’ve been made redundant.
Taking time off to look for work
If you’ve worked for your employer for 2 years at the end of your notice period, you’re entitled to time off to apply for jobs or go on training.
You can take the time off at any time in normal working hours. Your employer can’t ask you to rearrange your work hours to make up the time off.
How much time off you can take
When taking time off to look for work, you’ll be paid at your normal hourly rate, but only for up to 40% of a week’s work. For example you could be paid at your normal hourly rate for up to 2 days if you work 5 days a week.
You can take ‘reasonable’ time off once your employer has given you a date for when your employment will end.
What’s reasonable depends on:
- how long your notice period is
- whether your employer can run the business without you
- how far you have to travel to find work
- whether your contract says how many days you get
Ask your employer before you take any time off. Try to give them as much notice as possible and tell them what you need the time for – for example a job interview. Giving notice and a reason will make your employer more likely to agree.
Your employer might agree to you taking more time off, but you won’t be paid for it unless your employer agrees or your contract says you have a right to more paid time off.