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Being a Step Ahead in the Face of Impending Redundancy

Over the decades, the world has grappled with several periods of economic uncertainty. Many UK businesses have been affected in most of these uncertain times. And lots of staff members have been made redundant.

It is no secret a lot of laid-off staffers don’t actually know how a redundancy calculator works. Other affected staffers may not even have an idea who pays for redundancy.

But if you’re currently expecting a redundancy payout, knowing a great deal about is a must. And that’s not all!

There’s lots of info you may miss in a hurry that could affect your redundancy payment. So ensure you stock up on essential info before the redundancy comes around.

Why You Need to Know How Redundancy is calculated?

If it happens you’re affected by redundancy, don’t despair. There’s still a lot of time to get your career back on track.

To fare better when your current position is gone, you’ve got to maximize your redundancy payout.

When you know how redundancy figures get put together, it becomes easier to understand how much you’re entitled. Also, with knowledge of how much you’re expecting, it becomes more comfortable to create a timeline to get another job.

How Is Redundancy Calculated?

Three parameters get the highest consideration when redundancy calculations are necessary. And they are;

  • Your age (At the time redundancy occurs)
  • Years you’ve worked for your employer (full calendar years)
  • Weekly wages you were entitled to at the company before tax

In most cases, statutory payments could differ based on when the redundancy took place. Government regulations are also flexible on how much redundancy pay employers owe their laid-off staff.

When it comes to age and how long you’ve been with an employer (in years), the current legislation states that;

  • Staff affected by redundancy under 22 years of age will get half of their week’s pay for every year served
  • Workers within 22 – 41 years of age will receive a week’s payment for every year spent with their employer
  • Over 41 years old workers are entitled to one-and-a-half week’s payment for each year with an employer

These form a basis for employers to dole out redundancy pay to their affected staff. But some employers could exceed the amounts as mentioned above.

Also, it’s noteworthy that you can only get a redundancy payout for two decades at a particular firm. Other years won’t count when the employer finalises your redundancy calculation.How to Use a Redundancy Calculator

Online calculators are easier to manage when you need to calculate redundancy pay. On sites like, you only need to enter correct figures in the spaces provided. Your correct redundancy entitlement will get displayed in moments.

But to give you a clear idea of how a redundancy calculator works, check out the example below;

– Age at redundancy: 50 years

– Full years worked: 25 years

– Weekly pay: £400

Here’s a brief working:

Over 41 (entitled to 1.5 weeks’ compensation for each year of service)

Worked for 25 years (only 20 years will g put into consideration for the calculation)


Other Factors that Could Increase/Reduce Your Redundancy Package

Since companies adopt the template set by law to calculate redundancy pay, you may expect a uniform payment pattern. But some companies put other factors into consideration which could increase your expected salary. Here’re some of the most common factors firms consider;

Pay instead of notice.

You have a right to know when your job will become redundant. If you’ve worked for your employer for two full years, you’re entitled to a week’s notice before the redundancy. Also, you’re entitled to a week’s notice for every full year you’ve been with your employer.

If an employer doesn’t wish you to continue working during this notice period, you’d be paid instead of receiving notice.

Holiday payment

Does your employer owe you holiday pay? If yes, you’re entitled to holiday pay or leave for the holiday before the redundancy kicks in.

Minimum Redundancy Package

The minimum redundancy payout for workers stands at ½ week pay for under-22years workers with two years of service. It is also one week pay for 22 – 41-year-old workers for a 2-year service period. It can also be 1½ week’s pay for 41+ workers for two years.

This figure may differ in Northern Ireland and if the employer wishes to lower their duration for staff to qualify.

Maximum Redundancy Entitlement

The maximum amount a worker is entitled to as redundancy pay is within £16,000 – above £30,000. This figure puts into consideration the parameters on the redundancy calculator.

Employers can exceed this figure should they be able to afford it. And staff contractual redundancy payouts could significantly increase this figure.

How to Maximize Redundancy Payout

The easiest way to maximize your payout is by checking out your contract. If you take a closer look at what you signed off on, you could tell if you’re entitled to lots more in redundancy payments.

Also, check out whether your employer is offering you what you’re supposed to get. If not, then you’d have to negotiate your payout with evidence to back up your claim.

When is an Employee Ineligible for Statutory Redundancy Pay?

As you’d expect, there’re certain situations where employers may not need to pay workers they make redundant. Here’re the most common scenarios where an employee may not get a redundancy payout;

  • Seasonal employees
  • An employee that works at a firm for less than 12 months
  • Casual workers
  • Trainees for a short period with an employer
  • Small business employees (workers in a firm with fewer than 15 employees)
  • Employees sacked for misconduct

What is a Voluntary Redundancy?

Voluntary redundancy refers to a situation where an employer requests a staff member to end his/her contract. In most cases, employers ask such from employees in return for a higher redundancy package.

What is the Role of ACAS in Redundancy Payments?

ACAS (Advisory, Conciliation and Arbitration Service) is the last resort for employees that feel they haven’t received a fair payout.

Also, workers who feel they haven’t received fair treatment can rely on ACAS for expert advice at no charge.

But just to be safe, it’s best to leave an arbiter option for last. Follow alternative channels such as your employer’s complaints/employee welfare infrastructure or an employment tribunal before contacting ACAS.

How to Avoid Losses after Redundancy Sets In

Redundancy is becoming increasingly common among firms that get bankrupt or have to downsize the workforce to stay afloat.

If it happens to you when you’re off-guard, redundancy could be unbelievably painful. So to avoid being in limbo after a lay-off, follow these steps;

Avoid debt at all costs.

No matter how stable your current job may be, an economic downturn could affect your employer. And most employers always keep staff lay-off on the table when working against closing down.

If you’ve got a post-redundancy debt to deal with, settling off what you owe could be straining. You may not even have enough to settle off all your debts.

Imbibe a savings culture

Set off a part of your earnings on a monthly, quarterly, or annual basis as you see fit. With a healthy savings culture, you’d have a lot more to fall back on if things go south.


1.     How many types of redundancy pay are workers entitled?

A staff qualified for redundancy is entitled to contractual redundancy pay, statutory redundancy pay, or both. Contractual redundancy pay refers to extra cash you’re eligible to be paid. This payout offers bonuses on contracts and comes along with the sanctioned amount.

Statutory redundancy pay is the legally-backed amount you have access to from an employer.

2.     How do you calculate weekly pay for redundancy?

Weekly pay can get computed with ease by dividing a worker’s annual salary by 52. Workers with uneven weekly payments or fewer working weeks can get their weekly pay figure with a different method.

The worker’s total number of working weeks can give a definite figure of their weekly pay.

3.     How much redundancy will I get for 8 years?

If you’ve been working for 8 years at one firm, you can get the expect the following redundancy pay based on age;

  • 22 – 41 years worker for 8 years get 8 weeks redundancy pay
  • 41+ workers for 8 years get 1.5 X 8 weeks’ pay, which is at least 12 weeks redundancy pay

4.     Is redundancy tax-free?

If you’re paid a statutory redundancy amount not exceeding £30,000, you don’t have to pay taxes. But if your pay exceeds this amount, you’d be taxed for every increase above the non-taxable threshold figure.

Also, bonuses such as pay instead of notice and holiday pay are taxed whether your payment exceeds £30,000.

5.     Is redundancy pay based on current salary?

Redundancy payments are based on your current annual salary. The last annual salary you received is what your employer divides to arrive at a weekly figure.

6.     Is redundancy paid in a lump sum?

Yes. Redundancy payments are doled out in lump sums to affected employees. Statutory redundancy payouts are fixed amounts paid directly to you with other benefits if any.

7.     Is redundancy calculated on final salary?

Yes, your redundancy payments get computed with your salary before tax. This figure is derived for each full year you’ve been working for an employer.

8.     Do you get more money if you take voluntary redundancy?

With voluntary redundancy, you’re likely to get paid more than a statutory redundancy package you let run out.

On the flip side, normal calculation parameters such as your age and years of service are still put into consideration.

9.     Can you negotiate redundancy?

Yes, you can. If you’re not satisfied with the severance package your employer’s offering to pay, negotiate your pay up. You can effectively do this with a calculation on how much you should be getting. Also, terms on your contract could make your pay package go higher.

10. What is a typical redundancy package?

Redundancy pay is fair when it’s based on;

  • Your salary before tax, divided by your working and holiday weeks
  • Years of service from 2 years get the required weekly pay for each complete year of service

11. How do I survive redundancy?

If you still wish to work after your last position got redundant, surviving can be comfortably done through;

  • Getting the maximum payout from your employer
  • Re-entering the labour force as quickly as possible
  • Making a financial plan with the cash you have before getting new employment
  • Cutting non-essential costs until you find a new job
  • Exploring self-employment possibilities

12. How do I prepare myself for redundancy?

After you receive a notice on when your job is scheduled to end, you can be best prepared by;

  • Know your rights and entitlements before the redundancy window elapses
  • Join a workers union
  • Save as much as you can
  • Search for new employment

13. Can you be made redundant if your job still exists?

Yes, it’s possible to be made redundant even if your current position still exists.

If your employer opts to offer another person your current position, you can be made redundant. In some circles, this practice is called bumping.

Final Word

With a redundancy calculator, you can turn a not-so-great situation for some into something you can comfortably manage.

Make sure you know your rights at all times and what you’re entitled to from your employer. If you notice things aren’t going your way, there are channels where you can get expert advice for free.

Maximize your redundancy payout. It’ll make you more comfortable and financially-balanced before landing your next big job.

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