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Redundancy pay explained

The contents of this article are for general information purposes only and does not constitute as legal advice. Specialist advice should be taken in relation to specific circumstances.


If you’ve been made redundant, or you just want to feel prepared, there are a few types of redundancy pay-out that you should be aware of. It’s important that you understand what you are entitled to and why, as well as knowing who you can turn to for free, independent advice.

Here’s a brief description of each type of payment:

1.       Notice of termination

Your employer should tell you in advance if you are being made redundant.

If it’s included in your contract, your employer may choose to make you redundant immediately and pay you ‘in lieu of notice’ – so you’ll cease employment there and then, and receive all of the basic pay you would have received during your notice period.

2.       Holiday pay

If you’ve been made redundant, you should be paid for any holiday days you haven’t taken, or be able to use them before you leave the company.

Even if you are on a reduced salary due to coronavirus, you’re entitled to holiday pay at your full salary amount (not at the reduced rate).

3.       Statutory Redundancy Pay 

If you’ve been an employee with the same company for two years or more and you haven’t been offered suitable alternative work, it’s likely that you are entitled to statutory redundancy pay.

The amount of this pay-out is calculated according to how long you have worked for the company, how old you were during this time, and your average weekly pay over the last 12 weeks.

To help you calculate what statutory redundancy pay you may be entitled to, the UK Government’s website has a handy calculation tool.

There are however some exclusions as to who can claim statutory redundancy, for example members of the armed forces or apprentices. The full list of exclusions can be found here.

4.       Contractual Redundancy Pay

Finally, it’s worth checking your contract of employment. Some employers do include additional redundancy pay, which may be paid on top of any statutory redundancy payments.   

If you’re struggling to find any information about this, it may be worth asking your employer to see if they can help you find the information you need.