When should I receive my redundancy payment?

What is a redundancy payment?

Redundancy refers to the loss of a job due to business circumstances. Employees may be made redundant due to a reduction in staff or the closure of the business itself.

If you are made redundant from your job you may be entitled to a redundancy payment to compensate you for your loss of work, provided that you have been working for your employer for at least two years.

Under statute you can receive redundancy payments of:

• Half a week’s pay for each year of employment where you were aged under 22
• One week’s pay for each year of employment that you were aged between 22 and 40
• One and a half week’s pay for each year of employment that you were over the age of 40

One week’s pay is currently capped as is the maximum award. What this cap is can change from year to year. Length of service in employment is capped at 20 years when calculating redundancy. Some employment contracts provide for an ‘enhanced’ redundancy payment and it is important to check your contract.

If you have been dismissed from your role due to misconduct this does not constitute redundancy. You would not be entitled to receive a redundancy payment in this situation.

When are redundancy payments offered?

The most common situation in which to make a claim for a statutory redundancy payment is if you have been made permanently redundant from a company without being offered suitable alternative work, which is defined by:

• The similarity of the new role to your current job
• The terms of the new role
• How closely your skills and circumstances align with those required by the new role
• The similarity of the pay, status, hours and location with your former job

If you believe that your employer has the option of suitable alternative employment available yet they have declined to offer it to you, your redundancy may constitute unfair dismissal.

You may also be able to claim for redundancy payments if you have been made redundant temporarily for either:

• More than four consecutive working weeks
• More than six non-consecutive weeks within a period of 13 weeks

If you are claiming temporary redundancy, you must write to your employer and make a claim within four weeks of your last non-working day within the temporary redundancy period.

If your usual work is going to resume within four weeks and continue for at least 13 weeks, your redundancy claim may be dismissed.

When are redundancy payments not applicable?

There are many situations in which employees are not entitled to receive a statutory redundancy payment, including:

• If your employer offers to allow you to resume work
• Your employer offers you suitable alternative work which you refuse

If your employer is offering you what they describe as suitable alternative employment and you believe it is not a suitable alternative, you can make a claim to an employment tribunal to resolve the matter.

There are some roles that are never entitled to redundancy payments, either because they are covered by other arrangements or because statutory redundancy simply does not apply.

These roles include:

• Former registered dock workers and share fishermen
• Crown servants
• Members of the police or armed forces
• Apprentices who have not been employed at the end of their training
• Domestic servants employed by immediate family members

Who is responsible for paying a redundancy payment?

Your former employer is responsible for paying your redundancy payment, in order to provide you with compensation for failing to provide alternative employment. In some instances redundancy pay will be provided in the next payroll date after the last date of employment (known as the “Effective Date of Termination”), although this can vary from case to case. If you are in any doubt when your redundancy pay is to be provided to you, you should contact your employer in the first instance to ask for clarification.

What to do if your redundancy payment is delayed?

If your employer does not pay your redundancy payment at the agreed time, your first step should be to contact them and remind them of the date that you were entitled to the payment.

If your employer still does not pay your redundancy, you should appeal to an employment tribunal. You must do this within six months of the date that you were entitled to receive the payment.

If you require the services of an employment tribunal in order to resolve a redundancy dispute, our team of highly skilled employment solicitors at Kew Law will be glad to offer help and advice as well as a no-obligation quote for our legal services.

With branches across Essex and Suffolk, we specialise in providing local legal support. We understand the value of swift dispute resolution for employees making redundancy claims and will do our very best to respond to your enquiry within a single working day.