Statutory Redundancy Pay Calculator (UK)
Your Estimated Statutory Redundancy Pay:
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Redundancy pay is a payment made to employees who are dismissed from their jobs because their position is no longer needed. In the UK, there are specific rules governing statutory redundancy pay, which is the minimum amount an employer must pay by law. This calculator helps you estimate your entitlement based on these statutory guidelines.
Who is Eligible for Statutory Redundancy Pay?
To be eligible for statutory redundancy pay, you must meet the following criteria:
- You must be an employee (not a contractor or self-employed).
- You must have worked for your employer for at least 2 years continuously.
- Your job must genuinely be redundant (i.e., your employer needs fewer employees, the business is closing, or the work you do is no longer required).
You are generally not entitled to statutory redundancy pay if your employer offers you suitable alternative employment which you unreasonably refuse, or if you are dismissed for misconduct.
How is Statutory Redundancy Pay Calculated?
The calculation for statutory redundancy pay in the UK is based on three main factors:
- Your Age: Your age at the point of redundancy determines the multiplier for each year of service.
- Your Length of Service: This is the number of full years you've worked for your employer. This is capped at 20 years for calculation purposes.
- Your Weekly Pay: Your gross weekly pay before tax. This is subject to a statutory maximum, which changes annually. For the tax year 2023/2024, the cap is £643 per week.
The calculation uses the following age bands:
- Under 22: 0.5 week's pay for each full year of service.
- Aged 22 to 40: 1 week's pay for each full year of service.
- Aged 41 or over: 1.5 week's pay for each full year of service.
The calculation considers your age for each year of service. For example, if you worked for 10 years and turned 22 during that period, the years before you turned 22 would be calculated at 0.5 week's pay, and the years after at 1 week's pay.
Example Calculation
Let's consider an example:
- Employee Age: 45
- Full Years of Service: 15 years
- Gross Weekly Pay: £700
First, we apply the statutory weekly pay cap. For 2023/2024, this is £643. So, the capped weekly pay used for calculation is £643.
Since the employee is 45 (over 41), each year of service is worth 1.5 weeks' pay.
Calculation: 15 years * 1.5 weeks' pay/year * £643/week = £14,467.50
This is the estimated statutory redundancy pay for this individual.
Statutory vs. Contractual Redundancy Pay
It's important to distinguish between statutory redundancy pay and contractual redundancy pay. Statutory pay is the legal minimum. Some employers offer more generous redundancy packages as part of their employment contracts or company policy. If your contractual redundancy pay is higher than the statutory amount, your employer only has to pay the contractual amount, not both.
Taxation of Redundancy Pay
In the UK, redundancy payments up to £30,000 are generally tax-free. Any amount over £30,000 is subject to income tax and National Insurance contributions. It's always advisable to seek professional financial advice regarding the tax implications of your specific redundancy package.
Disclaimer
This calculator provides an estimate of statutory redundancy pay based on current UK government guidelines and the statutory weekly pay cap for 2023/2024. The actual amount you receive may vary based on your specific circumstances, any contractual agreements, and changes in legislation. This tool is for informational purposes only and should not be considered legal or financial advice. Always consult with an HR professional, legal advisor, or Citizens Advice for personalized guidance.