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What is redundancy pay?

If your employer informs you that your job is no longer necessary to the business, you are likely to be made redundant. If this happens, you will receive redundancy pay depending on how long you have worked at the company.

Can I be made redundant because of my age?

No. Being made redundant because of your age would be considered discrimination. The government website clearly outlines what unfair dismissal is.

Your employer should use a fair and objective way of selecting you for redundancy. Commonly used methods are:

  • last in, first out (employees with the shortest length of service are selected first)
  • asking for volunteers (self-selection)
  • disciplinary records
  • staff appraisal markings, skills, qualifications and experience

Your employer can make you redundant without having to follow a selection process if your job no longer exists, for example, if:

  • your employer is closing down a whole operation in a company and making all the employees working in it redundant
  • you’re the only employee in your part of the organisation

Your employer may offer you a different role if one is available.

If you feel you have been discriminated against, you should contact your employer’s HR department. If this doesn’t help you, you should make a claim to an employment tribunal.

How much redundancy pay could I expect to receive?

Your statutory redundancy pay settlement will depend on how long you have worked for your employer. The maximum amount of statutory redundancy pay you could receive is £15,750, and this is capped up to 20 years of service.

You will be entitled to:

  • Half a week’s pay for each year of employment if under the age of 22
  • A week’s pay for each year of employment if aged between 22 and 40
  • A week and a half’s pay for each year of employment if aged over 41

Will I have to pay tax on redundancy pay?

You will have to pay tax on redundancy pay if the amount is more than £30,000.

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