How to Calculate Redundancy Entitlement

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According to the United Kingdom's Office for National Statistics, the unemployment rate reached 8% in February 2010, the highest rate since 1996. Understanding your redundancy entitlement after being notified of your job dismissal can help ease your transition to unemployment. Given the high unemployment rate in the UK, stories of employer miscalculation for redundancy entitlement can be found by doing a simple internet search. You should calculate the amount you are entitled to be paid in case your employer miscalculates and gives you less than its policy or the government demands.

Things You'll Need

  • Last paycheck
  • Employment contract
  • Paper
  • Pencil
  • Calculator
  • Review your employment contract for entries on company policy about redundancy pay. The redundancy pay must be at least the statutory amount, which is the minimum amount as mandated by law.

  • List the number of years you have been continuously employed and your age. Use these entries to first calculate the number of weeks you are eligible for pay. The formula is:

    • 0.5 week's pay for each full year of service where your age was under 22
    • 1 week's pay for each full year of service where your age was 22 or above, but under 41
    • 1.5 week's pay for each full year of service where your age was 41 or above
  • List your weekly pay up to £380. Multiply the number of weeks found in step 2 by this weekly pay. The result is your statutory redundancy pay.

  • Add any additional redundancy pay provided in your employment contract to the result of step 3 to calculate your total entitlement.

Tips & Warnings

  • Ensure that you understand the employer's calculation for your redundancy pay and how often it will be paid.
  • If your notice period is abbreviated, you should receive additional compensation for the gap between the mandatory notice period and the period you received.
  • Write to your employer to request redundancy payment if you are eligible but have not received it yet. It should automatically come to you.
  • Tax is not applied to redundancy pay less than £30,000.
  • Ensure the circumstances of your dismissal entitle you to redundancy pay before depending on its arrival.
  • People with less than two years of service may not be entitled to redundancy pay.
  • Be clear about what date your relevant date is. This will determine the amount of weeks counted in your redundancy pay calculation.

References

  • Photo Credit sad image by Alexandra Gnatush-Kostenko from Fotolia.com contract 20309 image by pablo from Fotolia.com stationary image by pix29 from Fotolia.com five pounds image by Petr Gnuskin from Fotolia.com
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