What you need to Know About Redundancy Pay

Redundancy pay is paid through the payroll. Under normal circumstances, it doesn’t happen very often, but it still needs to be done right. So what do you need to know about redundancy pay?

Who is eligible for Redundancy Pay?

Employees whom you make redundant may be entitled to redundancy pay, which is referred to as a statutory redundancy payment. To be eligible for statutory redundancy pay, the employee must meet the following criteria:

  • be an employee working under a contract of employment
  • have at least 2 years? continuous service
  • have been dismissed, laid off or put on short-time working. Employees who opted for early retirement don’t qualify.

How to calculate Statutory Redundancy Pay

Employees who are eligible for Statutory Redundancy Pay are entitled to:

  • 1.5 weeks’ pay for each year of employment after their 41st birthday
  • a week’s pay for each year of employment after their 22nd birthday
  • half a week’s pay for each year of employment up to their 22nd birthday


  • An employee’s length of service is capped at 20 years and weekly pay is capped at £508.
  • The maximum amount of statutory redundancy pay an employee can receive is £15,240.

Finally, employers can give their staff extra redundancy pay if they want to, over and above the statutory amount, or pay redundancy to employees who have a qualifying period of less than 2 years.

As outsourced payroll providers, we can take all this burden away from you and let you get on with running your business. It’s what we specialise in, so call us on 0121 422 0550 or contact us for an initial chat to see if we can help. Why not give us a call about outsourcing your payroll and let us deal with all the detail?

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