Who Is Entitled to Statutory Redundancy Pay?

Losing your job through redundancy is unsettling, but statutory redundancy pay can provide some financial cushion while you look for new work. The amounts are modest, but they are a legal entitlement for those who qualify. This article explains who can claim statutory redundancy pay and what the main requirements are.

The Two Year Rule

The basic qualifying requirement for statutory redundancy pay is straightforward: you must have worked for your employer continuously for at least two years before the date your employment ends. This is often called the two year service requirement.

If you have been employed for less than two years, you will not qualify for statutory redundancy pay under the standard rules. However, if your redundancy is connected to whistleblowing or discrimination, separate legal protections may apply that could affect your overall claim, even if they do not change the basic redundancy pay eligibility criteria.

Your contract of employment or your employer's redundancy policy may also offer enhanced redundancy terms that apply even with shorter service. These contractual payments are separate from the statutory minimum and depend entirely on what your employer has agreed to provide.

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Employment Status and Contracts

To qualify for statutory redundancy pay, you need to be classed as an employee. Although it may seem clear cut, the distinction between employee and non employee status is crucial for legal purposes because not everyone who works for an organisation is legally an employee.

Employees can have verbal or implied contracts, so a written contract is not necessary. In practice, if you turn up for work on a regular basis, receive a wage, and your employer controls how and when you do your job, you will usually be considered an employee for legal purposes.

Workers who are genuinely self employed do not qualify for statutory redundancy pay. The same applies to contractors who work through their own limited companies. These arrangements carry different legal rights and obligations.

Part time employees are entitled to statutory redundancy pay on the same basis as full time employees, with the amount calculated according to their working hours and pay.

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Agency Workers and Casual Staff

Agency workers present a more complex situation. If you work at a company but are supplied by an employment agency, your legal employer is usually the agency rather than the company where you carry out your work. This means any redundancy claim would typically be against the agency, not the host business.

Whether agency workers build up continuous service depends on the specifics of their contract and employment relationship with the agency. Some agency arrangements may allow for continuity of service across different assignments, particularly where there is an ongoing employment relationship with the agency itself. However, many agency workers who move frequently between unconnected assignments may struggle to establish the required two years of continuous service with any single employer.

Casual workers on zero hours contracts may or may not qualify, depending on their working pattern. If you have worked regularly for the same employer for two years or more and meet the definition of an employee, you can qualify. Sporadic or genuinely casual arrangements with long gaps between work are less likely to count as continuous employment.

If you are unsure about your employment status, you can check the guidance on GOV.UK or contact Acas for advice. Getting this right matters because it affects not just redundancy pay but other employment rights too.

Calculating Your Entitlement

Once you know you qualify, the amount you receive depends on three factors: your age, your length of service, and your weekly pay. The calculation uses a formula that gives different weightings to years of service depending on how old you were during each year.

There is a cap on the weekly pay figure used in the calculation, and this cap is updated each year. The maximum number of years that count towards your payment is twenty. Current rates and thresholds are published on GOV.UK, and you can use the official redundancy pay calculator there to work out your likely entitlement.

Statutory redundancy pay is tax free up to a limit of thirty thousand pounds. Most statutory payments fall well below this threshold.

Your employer should include your redundancy payment with your final pay, along with any outstanding wages, holiday pay, and notice pay. If your employer refuses to pay or becomes insolvent, you may be able to claim through the Redundancy Payments Service. This government scheme covers statutory redundancy pay, unpaid wages, holiday pay and notice pay when employers cannot meet their obligations due to insolvency.

For detailed guidance on current figures and how to make a claim, visit GOV.UK or speak to Acas, who offer free and impartial advice on workplace matters.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Redundancy Pay Calculator lets you find out how much statutory redundancy pay you could be entitled to. Enter your details and get an estimate in less than a minute. Try it now →