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How to calculate redundancy pay

How to work out your redundancy pay

Being made redundant is a horrible time for anybody, but the silver lining is of course the redundancy payout that comes with it. Not many people know this but there is a legal statutory amount which your employer has to by law adhere to. Some workplaces are nicer than others and will pay more than the statutory rate, however it is imperative to know how to calculate your statutory redundancy pay to ensure you aren’t being unfairly paid.

There is one exception to this rule however – you only qualify for redundancy pay if you have been an employee working for your employer for 2 years or more. If you have only worked there a year and a half (for example) then your employer doesn’t legally have to pay you redundancy pay – I know!

However if you’ve been at your workplace for more than 2 years then here’s how to calculate your statutory redundancy pay – it is calculated by age so below is a simple breakdown:

 

Under 22 Years Old

Half a week’s pay for each full year you worked there

 

22 Years Old up to 41 Years Old

One week’s pay for each full year you worked there

 

41 Years Old and Above

One and a half week’s pay for each full year you worked there

 

There are some stipulations to these figures:

  • The amount of time worked at any single workplace is capped at 20 years
  • Weekly pay is capped at £479.00 (approx equivalent of £25,000 annual salary)
  • The maximum amount of statutory redundancy pay is £14,370

 

So as an example, let’s say you are 30 years old and have just been made redundant from a job where you worked for 5 years on a £24,000 per year salary.

£24,000 per year salary calculates to £461.54 per week

£461.54 multiplied by 5 (years) equals £2307.70

So your statutory redundancy in this case equals £2307.70

 

It’s as simple as that!

 

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