Being made redundant, understandably, puts pressure on you and your family. However, if you have been made redundant, it is important you understand what payments you should receive. Please read on to find out more.
If you have been made redundant, you will be entitled to your contractual payments and, depending on how long you have been with your employer, you may also be entitled to a redundancy payment.
What Contractual Payments Will I Be Entitled To If I Have Been Made Redundant?
No matter how long you have been employed, you will be entitled to the following contractual payments:
- Notice Pay
- Accrued but untaken holiday
- Outstanding bonuses, commission, and expenses
Each of the above are addressed below.
Notice Pay
If you are dismissed by reason of redundancy, you are entitled to notice pay. For more information about your entitlement to notice pay, please see our blog here – https://lincslaw.co.uk/blog/leaving-your-job-make-sure-you-understand-your-notice-entitlements/
Essentially, if you have been dismissed by reason of redundancy, you could receive your notice either:
- Through the passage of time. This means your employer gives you notice of your dismissal, but you remain employed throughout your notice period (either working for your employer or placed on garden leave) and you receive your usual pay.
- Payment In Lieu Of Notice (PILON). This is where your employment is ended immediately, and you are paid for your notice period as a lump sum. Importantly, your employer should only use PILON if this is expressed as an option in your contract of employment.
Holiday Pay
If you have been dismissed by reason of redundancy, you should also be paid for your accrued (i.e., built up) but untaken holiday. Alternatively, if you are still working for your employer, you may want to ask to use your holiday entitlement and take the time off work instead. Either way, your holiday entitlement should be dealt with before/on your departure from the company.
If you are unsure about how much annual leave you are entitled to, please see our blog here – https://lincslaw.co.uk/blog/annual-leave-what-holiday-should-i-get-off-work/
Bonuses, Commission, and Expenses
Importantly, if you are dismissed by reason of redundancy, you should also receive any bonus, commission and/or expenses you are entitled to. What you will be entitled to will, of course, depend on your personal circumstances and your contract of employment. For example, some bonus schemes do not entitle you to receive payment if you leave the company before the payment date.
For more information about this, please contact us for a free no obligation initial consultation. Please use the contact form, engage in a web chat, email contactus@lincslaw.com or call us on 01522 440512 and we’ll be happy to help.
I Have Been Made Redundant – Am I Entitled to A Redundancy Payment?
If you have been made redundant, in addition to the above, you may also be entitled to a redundancy payment. You will generally be entitled to a redundancy payment if the two conditions below apply:
- You have been employed by the company continuously for two years or more; and
- You have been dismissed by reason of redundancy.
Each of the points above are addressed below.
Have You Been Continuously Employed For Two Years or More?
To be entitled to a redundancy payment, you must have been continuously employed (i.e., worked under a contract of employment) with your employer for at least two years.
Have You Been Dismissed By Reason of Redundancy?
Secondly, to be entitled to a redundancy payment, you must have been dismissed by reason of redundancy. If you have been dismissed for a different reason (for example, your misconduct), you will not be entitled to a redundancy payment.
To explain, to be dismissed by reason of redundancy, the definition of redundancy must be met. Your dismissal must be wholly or mainly attributable to:
- Your employer ceasing to trade altogether; or
- A workplace closing or moving; or
- There is a reduced need for employees to carry out a particular kind of work.
For more information about the definition of redundancy, please see our blog here – https://lincslaw.co.uk/blog/are-you-in-a-redundancy-situation/
I Am Entitled to A Redundancy Payment – How Much Should I Receive?
If you are entitled to a redundancy payment (as above), you will be entitled to at least a statutory redundancy payment. Importantly, however, you could be entitled to an enhanced redundancy payment. Please see below.
Statutory Redundancy Payment
A statutory redundancy payment is the minimum the law says you should receive. If you have at least two years’ continuous service with your employer and you were dismissed by reason of redundancy, you will automatically be entitled to (at least) a statutory redundancy payment.
A statutory redundancy payment is calculated on a formula based on:
- An age multiplier (please see below)
- Your gross weekly pay
- Your (full) years of service.
To explain, the age multiplier (as referenced above) relates to how many weeks’ pay you should receive, depending on your age. Working backwards from the date of your dismissal, you are entitled to:
- Half a week’s pay (0.5) for each year of complete service between the ages of 17 and 21.
- One week’s pay (1) for each year of complete service between the age of 22 and 40.
- One and a half week’s pay (1.5) for each year of complete service at 41 years old or over.
There are, however, limits on the figures above. As at the date of this blog, these include:
- For dismissals on or after 6 April 2022, the maximum weekly pay is £571. This means if you are paid an average of say £700 per week, only £571 can be used in your statutory redundancy calculation. The maximum statutory redundancy payment you can receive is £17,130. Please note, these figures change every year.
- The maximum full years’ service which will be considered is 20 years. This means, for example, if you have been employed for 35 years, only 20 years can be used in your statutory redundancy calculation.
By way of an example –
Mr Bloggs is 35 years old. He has just been dismissed by reason of redundancy, after six years loyal service with his company. Mr Bloggs’ average gross weekly pay was £600. He is not entitled to an enhanced redundancy payment (as below).
Using the example above, Mr Bloggs’ statutory redundancy payment would be calculated as:
1 (age multiplier) x £571 (current statutory cap on weekly wage) x 6 (full years’ service) = £3,426
Enhanced Redundancy Payment
As above, you may be entitled to an enhanced redundancy payment. As the name suggests, this would be more than a statutory redundancy payment. This may be expressly detailed in a clause in your contract of employment, or in other documentation.
Alternatively, your entitlement to an enhanced redundancy payment could be implied into your contract of employment (i.e., unwritten, but nevertheless agreed) through custom or practice. This may be the case where it is well known that your employer (or the industry they operate in) pay such enhancements, to the extent that your employer creates an expectation for you to receive such payment.
As such implied term would not be expressly detailed in your contract of employment, it would be harder to rely on, should your employer refuse to pay. For this reason, should you wish to rely on this reasoning, we would advise you to seek legal advice as soon as possible.
Can My Employer Refuse to Pay My Redundancy Payment?
As above, you will be entitled to a statutory redundancy payment if:
- You have been employed by the company continuously for two years or more; and
- You have been dismissed by reason of redundancy.
However, in limited circumstances, you may risk losing your entitlement to such payment. For example, if you are found to have unreasonably refused an offer of suitable alternative employment, you may waive your right to such payment. For more information about this, please see our blog here – https://lincslaw.co.uk/blog/redundancy-what-is-suitable-alternative-employment/.
If this is the case, we would suggest you seek legal advice as soon as possible. Here at Lincs Law Employment Solicitors, we would be delighted to help. Please contact us for a free no obligation initial consultation. Please use the contact form, engage in a web chat, email contactus@lincslaw.com or call us on 01522 440512 and we’ll be happy to help.
Lincs Law Employment Solicitors Can Help You
If you have been made redundant and you are unsure about what payments you are owed, we would be delighted to help. Please contact us for a free no obligation initial consultation. Please use the contact form, engage in a web chat, email contactus@lincslaw.com or call us on 01522 440512 and we’ll be happy to help.
For more information about the redundancy process, please see here- https://lincslaw.co.uk/services/employees/resignation-dismissal-and-redundancy/redundancy/.
Kate Key
Trainee Employment Solicitor
Lincs Law Employment Solicitors
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