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Guides: Redundancy

An Employer's Guide to Redundancy

Redundancy Guide Contents > Entitlement to notice and redundancy pay

4. Entitlement to notice of redundancy

The minimum notice period is set down by law.

At the time of writing it is one week's notice after one month’s employment, two weeks after two years and three weeks after three years and so on up to 12 weeks maximum. If however, the employee selected has a longer notice entitlement, say three months, then it is the longer period that prevails.

During the course of the notice period an employee must be given (if he or she requests it) time off to seek other employment or undergo training to increase their employment prospects but the employer only has to pay 40% of a week’s wage for the whole such time taken in the notice period.

Entitlement to redundancy pay

The rules change from time to time so should always be checked for updates (they are readily available online). The statutory entitlement depends upon the length of continuous employment, the age of the employee and the weekly pay (to a maximum of £400 at the time of writing).

For each year of continuous service during which an employee was under 22 years the entitlement is half a week’s pay, over 22 years and under 41 years one week, and 41 years and over one and one-half week's pay. 

But it is important to remember that the employer may choose to pay what he wishes just so long as it is as least as generous as the statutory entitlement and so long as the sum is genuinely in respect of the termination of the employment and not for other reasons, say in a family business taking the opportunity to gift a sum of money to a family member, then it will be treated as redundancy pay and the employee retains the entitlement to receive the sum tax-free (up to £30,000).

Disclaimer

While we hope the above has been found to be useful it is intended only as a general guide, may not reflect the very latest developments in law, and cannot be a substitute for professional advice. We cannot accept any responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this guide.