{"id":1790,"date":"2022-01-17T02:37:13","date_gmt":"2022-01-17T02:37:13","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1790"},"modified":"2024-06-25T02:36:56","modified_gmt":"2024-06-25T01:36:56","slug":"calculate-redundancy-pay","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/","title":{"rendered":"How to Calculate Redundancy Pay in England and Wales"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">As an employer, there are times when you may n<\/span>eed <span style=\"font-weight: 400\">to make difficult decisions concerning your workforce. For example, you may need to reduce your overall number of employees and <a href=\"https:\/\/legalvision.co.uk\/employment\/make-employee-redundant\/\">make some employees redundant<\/a><\/span>. Losing a job is a massive change and will undoubtedly impact a person&#8217;s life. Therefore, when you make an employee redundant, you must follow certain rules to protect your employees. This article will look at <span style=\"font-weight: 400\">how to calculate redundancy pay, including who may be entitled to it.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is Redundancy?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">If you need to reduce the number of people working for you, you may have to <a href=\"https:\/\/legalvision.co.uk\/employment\/dismissing-an-employee\/\">dismiss some employees<\/a>. This process is often known as redundancy. There are many rules you must follow when carrying out redundancy, such as:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">selecting those who you are going to make redundant fairly;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">potentially offering those who you intend to make redundant an offer for an alternative job where possible, or time away from work to look for a new job; and\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">offering the correct notice period.\u00a0<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">You may also consider consulting with your employees about the process.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is Redundancy Pay?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Redundancy pay is an amount of money you may offer to your employee when you make them redundant. There are rules about the legal minimum amount you must offer, which is termed statutory redundancy pay.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">You may also choose to pay your employees more than the statutory redundancy pay amount. This is particularly helpful if you want to encourage employees to take redundancy, known as voluntary redundancy. However, you should be aware that if you offer higher than the statutory redundancy pay through voluntary redundancy, <\/span>you must offer it<span style=\"font-weight: 400\">:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">fairly;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">as widely as possible; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">without pressure.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Statutory redundancy pay is a form of \u2018termination payment\u2019, which also includes other pay such as <a href=\"https:\/\/legalvision.co.uk\/employment\/holiday-leave-entitlements\/\">holiday pay<\/a>, unpaid wages and company benefits. Indeed, not all your workers will be entitled to statutory redundancy pay.<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\"> However, it is likely that if they are an employee or have worked for you for at least two years, they will be eligible.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">In some lines of work, such as police or armed forces and crown servants, employees are not entitled to redundancy pay. Some examples include:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">an employee who works as a domestic servant for their immediate family;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">apprentices who are not yet employees as they have not completed their training; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">share fishermen, fisherwomen, or former registered dock workers (where alternative arrangements cover the latter).<\/span><\/li>\n<\/ul>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span 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However, you should note that their length of time working for you is capped at 20 years.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How Do I Calculate It?<\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Statutory redundancy pay applies for each full year an employee worked for you<\/span> and will depend on their age. For example, if the employee was under 22 years old, you should pay them half a week of pay. Furthermore, if your employee was over 22 years old, but under 41 years old, you should pay them one week of pay. Finally, for those aged over 41 years old, you should pay them one and a half weeks<span style=\"font-weight: 400\"> worth of pay.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">To work out what your employees\u2019 weekly wage is when calculating the above, you should look at the 12 weeks before the day in which you intend to give them their redundancy notice. You should then use this to calculate what their average weekly pay is. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, your employee may have been on furlough during any of this time due to Covid-19. If so, they may have been getting less than their standard pay. If this is the case, you must base your calculations on what their normal wage would have been.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">There is no need to work out your employee\u2019s average weekly wage where they are paid a set amount each week which does not change, and they have regular working hours.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Your employee\u2019s weekly wage includes:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">any regular overtime which their contract states y<\/span>ou<span style=\"font-weight: 400\"> must p<\/span>ay them<span style=\"font-weight: 400\"> for; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">any commission and bonuses.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">The government offers a <\/span><a href=\"https:\/\/www.gov.uk\/calculate-employee-redundancy-pay\"><span style=\"font-weight: 400\">helpful tool<\/span><\/a><span style=\"font-weight: 400\"> to help you calculate your employees\u2019 statutory redundancy pay, which you may wish to use to help you.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Essential Rules About Statutory Redundancy Pay<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">When calculating your employee\u2019s redundancy pay, there are some crucial rules you should remember, including that:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">y<\/span>ou must pay <span style=\"font-weight: 400\">an employee\u2019s redundancy pay on their final pay or earlier, and you must communicate to them what the date will be;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">your employee <\/span>has the right<span style=\"font-weight: 400\"> to take you to an employment tribunal should you fail to pay their redundancy pay in time;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">employees made redundant after 6 April 2021 cannot receive more than \u00a3544 per week of redundancy pay or \u00a316,320 in total;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">there is no tax due on redundancy pay and any other \u2018termination payment\u2019 which is lower than \u00a330,000;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">if you offered an employee a different role as an alternative to redundancy and without a good reason they chose not to accept this, you do not owe them any redundancy pay; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">you may owe redundancy pay to any employee you have temporarily laid off for over four weeks consecutively or for more than six weeks within 13 weeks, but the weeks are not consecutive.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">If you cannot afford to pay your employees\u2019 redundancy pay because it is a risk to your business, you may qualify for help from the <\/span><a href=\"https:\/\/www.gov.uk\/government\/publications\/financial-assistance-for-employers-unable-to-pay-statutory-redundancy-payments\/financial-assistance-for-employers-unable-to-pay-statutory-redundancy-payments\"><span style=\"font-weight: 400\">Redundancy Payments Service<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">As an employer, carrying out redundancy may be a stressful and challenging time for both you and your employees. Your employees will rely on the statutory redundancy payment you make. You must make this correctly both in terms of calculating the correct amount owed to each employee and in terms of paying it in time, plus following other rules about It. Not doing so could leave your employees in a difficult situation and could also cause you to face an employment tribunal.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help understanding how to calculate redundancy pay for your employees in England and Wales, our <a href=\"https:\/\/legalvision.co.uk\/employment-lawyers-lp\/\">experienced employment lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our <\/span><a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1719279325768\"><strong class=\"schema-faq-question\">What is redundancy?<\/strong> <p class=\"schema-faq-answer\">Redundancy occurs when an employer needs to reduce the workforce by dismissing employees. This can be due to various reasons such as business closures, cost-cutting measures, or organisational restructuring.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1719279361754\"><strong class=\"schema-faq-question\">Who is entitled to statutory redundancy pay?<\/strong> <p class=\"schema-faq-answer\">Generally, employees who have worked for the employer for at least two years are entitled to statutory redundancy pay. Some roles, such as those in the police, armed forces, and certain apprenticeships, may be exempt.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1642374903704\"><strong class=\"schema-faq-question\">Does an employer have to pay redundancy pay to their employees?<\/strong> <p class=\"schema-faq-answer\">An employer must pay their employees a legal minimum amount of redundancy pay termed statutory redundancy pay. This may differ for each employee, so it needs to be calculated individually.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1642374922389\"><strong class=\"schema-faq-question\">Can I offer my employees more than the statutory redundancy pay?<\/strong> <p class=\"schema-faq-answer\">As an employer, you can choose to pay your employees more than the statutory redundancy pay. You may choose to do this if you are offering voluntary redundancy and want to encourage staff to select themselves for this.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/1790\" \/>            <input value=\"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How to Calculate Redundancy Pay in England and Wales\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As an employer, there are times when you may need to make difficult decisions concerning your workforce. For example, you may need to reduce your overall number of employees and make some employees redundant. Losing a job is a massive change and will undoubtedly impact a person&#8217;s life. Therefore, when you make an employee redundant,<a href=\"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/\">Continue reading <span class=\"sr-only\">&#8220;How to Calculate Redundancy Pay in England and Wales&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13326,"featured_media":595,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"2115,2018,2904,3496,2759,2408","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[35],"tags":[20,21,219,291],"class_list":["post-1790","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","tag-small-business","tag-medium-business","tag-employment-law","tag-redundancy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How to Calculate Redundancy Pay in England and Wales | LegalVision UK<\/title>\n<meta name=\"description\" content=\"As an employer, you may need to reduce your overall number of employees. 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This article explains how to calculate redundancy pay.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/","og_locale":"en_GB","og_type":"article","og_title":"How to Calculate Redundancy Pay in England and Wales | LegalVision UK","og_description":"As an employer, you may need to reduce your overall number of employees. 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Prior to her freelance writing work, Clare worked for UK central government in policy and communication roles. She has also run her own businesses where she founded a magazine and was editor-in-chief. She is currently studying part-time towards a PhD predominantly in international public law. Qualifications: PhD, Human Rights Law (underway), University of Bedfordshire, Post graduate diploma, Law, Middlesex University.","sameAs":["https:\/\/www.linkedin.com\/in\/ms-clare-susannah-f-4a243545\/"],"url":"https:\/\/legalvision.co.uk\/author\/clarefarmer\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/#faq-question-1719279325768","name":"What is redundancy?","acceptedAnswer":{"@type":"Answer","text":"Redundancy occurs when an employer needs to reduce the workforce by dismissing employees. This can be due to various reasons such as business closures, cost-cutting measures, or organisational restructuring.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/#faq-question-1719279361754","name":"Who is entitled to statutory redundancy pay?","acceptedAnswer":{"@type":"Answer","text":"Generally, employees who have worked for the employer for at least two years are entitled to statutory redundancy pay. Some roles, such as those in the police, armed forces, and certain apprenticeships, may be exempt.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/#faq-question-1642374903704","name":"Does an employer have to pay redundancy pay to their employees?","acceptedAnswer":{"@type":"Answer","text":"An employer must pay their employees a legal minimum amount of redundancy pay termed statutory redundancy pay. This may differ for each employee, so it needs to be calculated individually.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/calculate-redundancy-pay\/#faq-question-1642374922389","name":"Can I offer my employees more than the statutory redundancy pay?","acceptedAnswer":{"@type":"Answer","text":"As an employer, you can choose to pay your employees more than the statutory redundancy pay. 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