Managing Employee Redundancies – Calculating Redundancy Pay

Written by Andrew Johnson, Founder and CEO HRGuide - Thu 10th Oct 2024

Calculating Redundancy Pay and Notice Periods

Calculating Redundancy Pay

Statutory redundancy payments should be made on the following basis:

  • Up to the age of 21 – 0.5 week’s pay for each completed year of service
  • 22 – 40 years of age – 1 week’s pay for each completed year of service
  • 41+ years of age – 1.5 weeks’ pay for each completed year of service

You can use the governments redundancy pay calculator to assist you in calculating employee’s redundancy pay at:  

Calculate your employee’s statutory redundancy pay – GOV.UK (www.gov.uk)

Contractual and statutory notice periods

The minimum legal notice period to be given by an employer is:

  • one week’s notice if the employee has been employed by the employer continuously for one month or more, but for less than two years
  • two weeks’ notice if the employee has been employed by the employer continuously for two years, and one additional week’s notice for each further complete year of continuous employment, up to a maximum of 12 weeks

An employer can include longer periods of notice in the employment contract which is known as contractual notice periods. Remember that this notice period starts from the date you have completed consultation and informed the employee of your final decision to select them for redundancy. It is your decision whether you choose that they work this notice period or not.

Get expert advice on redundancy from HRGuide

It's important to have a reliable redundancy policy and procedure outlined in your employment handbook. This ensures everyone is aware of how redundancy is dealt with. If you don't follow a fair procedure and take inappropriate redundancy action, you may be taken to an employment tribunal. 

Download our more detailed step by step HR How to Guide for more detail on managing redundancies by subscribing to https://www.hrguide.co.uk/subscribe.php

If our step-by-step HR How to Guide doesn’t give you the support you need, simply call us on our HR Helpline for expert advice.