Financial entitlement if you are made redundant

What am I entitled to if I am made redundant?

If you are made redundant, as a minimum you are due payment of usual salary and benefits until your final day of employment, notice and payment in lieu of accrued but untaken holiday. We deal with each of these below so that you can easily calculate how much redundancy pay you are owed.

Notice Pay 

The amount of notice you are entitled to will be stated in your employment contract and is subject to a statutory minimum which depends on your length of service. The statutory minimum is one week’s notice for one month to up to two years’ service then one additional week's notice for each further complete year of service, up to a maximum of 12 weeks. Your employer may require you to work your notice period (or part of it) or may make a payment to you in lieu of all or part of your notice, this is sometimes referred to as a PILON.

Pay in Lieu of Accrued but Untaken Holiday

If you have accrued but untaken holiday entitlement on termination of employment, you will be entitled to payment in lieu of that holiday. Or, if you have taken more holiday than you have accrued as at your last day of employment, your employer may make a deduction from your final payment in respect of that overtaken holiday.

Depending on your length of service, you may be entitled to redundancy pay, either statutory redundancy pay or enhanced redundancy pay if your employer offers enhanced redundancy terms.

Statutory Redundancy Pay (SRP)

If you have over two years’ service, you will be entitled to a statutory redundancy payment. The amount of SRP is calculated using a formula that takes into account your age, length of service and weekly pay, subject to an upper limit. The government provides a useful calculator.

Enhanced Redundancy Pay

If your employer offers enhanced redundancy terms you may be entitled to an additional redundancy payment, this will usually be set out in a redundancy policy, through established custom and practice or it may be conditional on you entering into a settlement agreement.

If you are made redundant, your employer should write to you setting out the payments you are entitled to. Up to £30,000 of redundancy pay can be paid tax free.

Ergo Law can guide you through redundancy situations and provide advice. We often negotiate settlements where an employer has failed to adhere to the law, please do get in touch to arrange an appointment if you are experiencing an unfair redundancy.

ACAS is a good source of free advice and more information on redundancy rights can be found here.