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Statutory redundancy pay

4 July 2024

If you have been in the same job for two years or more and are made redundant you will usually be entitled to redundancy money. The legal minimum that you are entitled to receive is known as ‘statutory redundancy pay’.

If you’ve held the same job for two years or more and your employer makes you redundant, you usually qualify for redundancy money. This is the legal minimum known as ‘statutory redundancy pay’. However, you may not qualify for this pay if your employer offers to keep you on or provides suitable alternative work that you refuse without a good reason.

Your age and length of service determine the amount of statutory redundancy pay you can receive. Here’s how it works:

  • If you’re under 22, you’ll receive half a week’s pay for each full year you’ve worked.
  • If you’re between 22 and 40, you’ll receive one week’s pay for each full year you’ve worked.
  • If you’re over 41, you’ll receive one and a half week’s pay for each full year you’ve worked.

However, there are limits. The cap on weekly pay is £700, and the maximum length of service is 20 years. In the 2024-25 tax year, the maximum statutory redundancy pay you can receive is £21,000. Northern Ireland has slightly higher maximums.

Your employer can choose to make a higher payment, and your employment contract might entitle you to a higher payment.

The overall limit for tax-free redundancy pay is £30,000, whether it’s your statutory redundancy pay or a higher pay-out from your employer. This means that any redundancy pay up to £30,000 is not subject to tax, which can be a significant benefit.

Remember, it’s always a good idea to seek professional advice when dealing with redundancy to ensure you’re fully aware of your rights and entitlements. It’s also important to consider your next steps and potential employment opportunities.

Source: HM Revenue & Customs Tue, 02 Jul 2024 00:00:00 +0100

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