Editor's message: All employees who have completed at least two years' continuous service are entitled to a statutory redundancy payment. The amount is calculated using the employee’s length of service and age during that service, together with their weekly pay. However, length of service is limited to 20 years and there is a statutory cap on the value of a week's pay.
Some employers offer enhanced contractual redundancy terms that go beyond the statutory minimum. For example, an employer could offer redundancy pay based on the statutory formula, but using the employee’s actual week's pay (ie removing the statutory cap on a week’s pay).
The Government has placed a cap on public-sector exit payments that affects redundancy pay for public-sector workers in England, Wales and Scotland. The cap means that exit payments, which include redundancy pay, for most staff in the civil service, local government, NHS and police have a ceiling of £95,000.
Stephen Simpson, principal employment law editor
HR and legal information and guidance relating to redundancy payments.