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Statutory Redundancy Payments and Unfair Dismissal Awards

Posted on February 28, 2014

Changes to Statutory Redundancy Payments:

(last updated 15.04.2021)

Employees being made redundant with over two years’ service are entitled to receive a redundancy payment which is calculated at a weeks’ gross pay to a maximum of £544 (£538 before 6 April 2021 ) x full years worked, x 1.5 for years worked over the age of 41 (see the government’s ready reckoner)

As a reminder, on redundancy employees are also entitled to statutory notice of one week for each full year worked to a maximum of 12 (or contractual notice if greater). Many employers will give a payment in lieu of notice, but there is no obligation to do so. Employers who want to offer enhanced payments on redundancy will normally do so subject to a Settlement Agreement.

Compensatory Awards in Unfair Dismissal Cases:

Claimants who succeed in unfair dismissal claims (for which two years’ service is now normally required) are entitled to;

a)      a Basic Award (equivalent to a statutory redundancy payment) plus;

b)      a Compensatory Award to cover their loss of net earnings, pension etc from dismissal till the date they secure suitable alternative employment.

Compensatory awards in unfair dismissal claims are calculated on the lesser of:

–          The employee’s gross pay of one year; or

–          A statutory cap. This is £88,519 for dismissals after 6 April 2020 (previously £86,444)

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