Redundancy

If you’re making an employee redundant, you must:

• Consult with you about this, tell you why and discuss matters with you if you have more than 2 years service 
• Tell the employee why the redundancy has arisen and discuss the situation (this is called consultation)
• Tell the employee how long their notice period is – whether it’s statutory or contractual
• Keep paying the employee you until the end of the notice period
• You’ll usually carry on working until the end of your notice period. How much notice depends on how long the employee has worked for the employer
• Sometimes the employer may want to pay you instead of having you working out your notice period. This is called paying you in lieu of notice

It’s a good idea to talk with your employee if there’s any part of the redundancy notice you’re not sure about. It is good practise to put in writing: 

• The length of the notice period
• The date the notice period starts
• If they can leave before the end of your notice period
• If they need to take any unused holiday before you leave
• If they still get contractual benefits, for example a fuel card or mobile phone, during your notice period

Eligibility for redundancy pay

Only employees have the right to redundancy pay if they have worked for the employer for more than 2 years. 

If you’re not sure if your PA is classed as an employee, it’s a good idea to take advice and check employment status. 

How much redundancy pay will a PA get? 

How much redundancy pay a PA can get depends on:

• Age 
• Length of time working for the employer

They might get more than the minimum amount the law says you should get (‘statutory’), if it’s in their contract.

Up to £30,000 of redundancy pay is tax free.

Employees may not be eligible for statutory redundancy pay if the employer offers a suitable alternative job and the employee you turns it down.

Redundancy pay is based on 

• Weekly pay before tax (gross pay) 
• The years worked for your employer (‘continuous employment’) 
• Age 

Weekly pay should also include

• Regular overtime, if your contract says you must get paid for it 
• Any bonuses or commission

If the employee is aged 17 to 21

The employer must give them half a week’s pay for each full year that has been worked. 

If You’re Aged 22 to 40 

Your employer must give you: 

• 1 week’s pay for each full year you worked from age 22 
• half a week’s pay for each full year you worked before that 

If the employee is aged 41 or Over

The employer must give them:

• 1.5 weeks’ pay for each full year worked from age 41 
• 1 week’s pay for each full year worked between age 22 and 40 
• half a week’s pay for each year worked between 17 and 21 

As an employer you must tell your employee in writing how their redundancy pay has been worked out. 

Limits on redundancy pay

There are limits to how much redundancy pay an employee can get. They can only get it for up to 20 years of work. This means, for example, that if the employee has worked for you for 22 years they only get redundancy pay for 20 of those years. 

The maximum weekly amount used to calculate redundancy pay is £571 from 6 April 2022 – even if the employee’s wage is more per week.

The maximum statutory redundancy pay they can get in total is £17,130 from 6 April 2022. 

When the employee will get paid

As an employer you should tell your employee when they’ll get their redundancy pay – this should be on or before the final pay date. You and your employee can agree to a different date, which should be put in writing. You should also tell the employee how they’ll get paid, for example in their monthly pay or in separate payments. 

If the employer does not make the redundancy payment

If the employee does not get the redundancy pay they should:

• Write to their employer as soon as they can. The date they should get their redundancy pay should be no later than their final pay date, unless they and their employer agree another date in writing.
• Tell the employer what they’re entitled to and include any evidence to back this up. For example, they could include a letter that states their first day at work or an email confirming a recent pay increase. 

The employee has to claim for any unpaid redundancy within 6 months of their job ending.

If the Employer becomes insolvent

If the employer is insolvent, the employee can apply for redundancy pay from the government’s Redundancy Payments Service (RPS). 

Next steps

The employee can check with their employer for their policy on redundancy and take a look at the resources below for further guidance.