When Should I Receive My Redundancy Payment UK?

When you make an employee redundant, you may need to pay them redundancy. Specific rules and regulations govern redundancy payments, and as an employer, it’s essential to understand those rules to avoid inadvertently falling foul of them and ending up before an employment tribunal. A question often asked by employees who have been made redundant is, ‘When should I receive my redundancy payment UK?’

At GAP HR, we are experts in HR and employment law matters. We offer a range of packages to suit every client’s needs and budget, many of which include unlimited email and telephone support. Accordingly, our HR specialists will be on hand to answer any queries you have about redundancy or any other HR issue.

Call us now on 01491 598 600 or email us on  cw@gaphr.co.uk and we will be delighted to help you.

What Is A Redundancy Payment?

When you make an employee redundant, you may have to make a redundancy payment to them. There are two types of redundancy payments, which are as follows:

• Statutory Redundancy Pay

Statutory redundancy pay is a payment you must make to an employee by law. You are only obliged to pay statutory redundancy to employees who have worked for you for two years or longer.

• Contractual Redundancy Pay

Statutory redundancy payments are the minimum amount you must pay to employees who have worked for your organisation for two years or more. However, you may have agreed to pay extra money to your employee in the event of redundancy as part of their employment contract. You may have also agreed to pay contractual redundancy, regardless of their length of service. If your employment contracts contain provisions relating to contractual or enhanced redundancy pay, you must adhere to them.

How Are Redundancy Payments Calculated?

Statutory redundancy payments are calculated with reference to the employee’s gross salary (including any bonuses, commission, and guaranteed overtime), their age, and how long they have worked for your business.

For employees aged between 17 and 21, you must pay half a week’s wages for each full week they worked for you.

For employees aged between 22 and 40, you must pay half a week’s wages for each full year they worked for you until they turned 22, and one week’s wages for each full year they worked for you from age 22 onwards.

For employees aged 41 and over, you must pay half a week’s wages for each full year they worked for you between the ages of 17 and 21, one week’s wages for each full year they worked for you between the ages of 22 and 40, and one and a half week’s wages for each full year they worked for you from age 41 onwards.

Statutory redundancy payments are capped at 20 years of service. If an employee has worked for your business for over 20 years, you only need to pay redundancy pay based on the last 20 years of their employment. Furthermore, statutory redundancy payments are currently capped at £700 per week, regardless of how much the employee actually earned. Accordingly, as things stand, the maximum statutory payment you will be obliged to make to an employee is £21,000.

Contractual redundancy payments must be calculated in accordance with the affected employee’s contract of employment. You must follow the contractual terms precisely.

You must inform the employee in writing how you calculated their redundancy pay and how the amount will be paid to them.

If you require assistance with working out the redundancy pay due to an employee, either statutory or contractual, our specialist HR advisors can help.

When Should You Make Payment Of A Redundancy Payment UK?

You should notify the employee when they can expect to receive their redundancy pay. This will usually be on or before their final pay date.

What Can An Ex-Employee Do If Their Redundancy Payment Is Delayed?

You must ensure you make any redundancy payments promptly and by the date agreed with the employee. If the payment is late, your employee will likely contact you and remind you of the payment due date. You should then make the payment immediately to avoid the employee taking further action against you.

If you fail to pay the employee their redundancy pay despite them reminding you, they are entitled to make an employment tribunal claim forcing you to do so. Strict time limits govern these types of claims. The employee must issue their claim either:

  • In cases involving unpaid statutory redundancy payments, six months minus one day from the date on which their job ended.
  • In cases involving unpaid contractual redundancy payments, three months minus one day from the date on which their job ended.

Call us now on 01491 598 600 or email us on  cw@gaphr.co.uk and we will be delighted to help you.

When Should I Receive My Redundancy Payment UK?

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