Redundancy pay calculator: How to work out how much you could take home
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Redundancies this autumn could hit close to half a million according to data from the Institute for Employment Studies (IES). The Chancellor of the Exchequer Rishi Sunak launched a slew of financial packages to avoid a “tsunami of job losses” as the furlough scheme draws to a close. But if you are made redundant, how much could you be entitled to?
What is redundancy?
Redundancy is a form of dismissal from your job which happens when an employer needs to reduce their workforce.
If you are being made redundant, you might be eligible for certain things including:
- Redundancy pay
- A notice period
- A consultation with your employer
- The option to move into a different job
- Time off to find a new job.
What are the rules for redundancy?
You must be selected for redundancy in a fair way, not for any unfair reason such as prejudice.
You cannot be selected due to age, gender, disability or pregnancy – each of which is classed as unfair dismissal.
You may choose to make someone redundant because your business model is changing what it does, doing things differently or is changing location or closing down.
Redundancies can be compulsory or non-compulsory.
Firms must follow a collective consultation process if they are making 20 or more employees redundant within any 90-day period at a single establishment.
There are no set rules to follow if there are fewer than 20 redundancies planned.
It is good practice to fully consult employees and their representatives.
Companies must notify the Redundancy Payments Service (RPS) before a consultation starts and they can be fined an unlimited amount if they do not notify RPS.
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What is redundancy pay?
Redundancy pay is a payment package workers who have been employed for more than two years are entitled to.
The legal minimum is called “statutory redundancy pay” but some people may be entitled to more in their contract.
If you have worked continuously for your employer for two years or more and you are made redundant, you have the right to redundancy pay.
Statutory redundancy pay is the legal minimum.
This is a calculator using the following formula based on the tenure of employment, the age you were in each your you worker there and current salary up to a maximum of £538 per week for 2020/2021.
The following is what you should receive based on your age:
- Under 22: Half a week’s pay for each year of service
- Aged 22 to 40: A week’s pay for each year of service
- Over 41: A wee and a half’s pay for each year of service.
This means for instance if an employee, 36, worked at a company for 15 years and four months from age 21 earning £350 a week they will receive the following:
- Half a week’s pay for the year worked aged 21: £175
- 14 week’s pay for the 19 years worked aged 22 to 36: £4,900.
Therefore in total, this worker will receive £5,075 statutory redundancy pay.
You can calculate your statutory redundancy pay here.
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