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How much is redundancy pay?
Your redundancy pay will depend on your annual salary (before tax) and the number of years you’ve worked at the company. If you have been working for the company for at least two years, then for each full year you have been working, the company owes you:
- Under 22 years old – Half a week’s pay.
- Between 22 and 40 years old – One week’s pay.
- 41 years and older – One and a half week’s pay.
Although statutory redundancy pay comes with some terms and conditions, which include:
Whilst working, if you turned 22 or 41, the higher rates will only apply for the full years you were aged over 22 or 41.
The maximum weekly amount of redundancy pay you can get is capped at £544, regardless of whether you earn more.
You can only get redundancy pay for a maximum of 20 years’ work. For example, if you’ve had your job for 28 years, you’ll only get 20 years worth of pay.
Megan (aged 28) has worked at an accountancy firm for ten years, earning £500 a week. Unfortunately, Megan has just been made redundant, and her pay is as follows:
Half a week’s pay from when she was under the age of 22 = £1,000
Six week’s pay for the six years she worked over the age of 22 = £3,000
Overall, Megan will receive a statutory payment of £4,000. However, this payment is excluding any contractual pay.
What about holiday pay and pay in lieu of notice?
Suppose you’ve been made redundant, and you haven’t taken some of your holidays. In that case, your employer must either pay you for your untaken holiday or let you take a holiday before you leave.
Pay in lieu of notice:
In a circumstance where your employer decides to end your contract immediately, you can claim payment in lieu of notice (PILON). PILON is essentially compensation from your employer for terminating your contract early.