Statutory redundancy pay rates increase for 2017-18

The maximum amount that can be used to calculate an employee’s statutory redundancy pay increases to £489 per week from today.

Calculations for statutory redundancy pay are based on an employee’s weekly pay (subject to the maximum amount), length of continuous service and age:

• for every year of employment in which the employee was aged 41 or over, he or she is entitled to receive one and a half weeks’ pay;
• for every year of employment in which the employee was aged between 22 and 40, he or she is entitled to receive one week’s pay; and
• for each year of employment in which the employee was aged under 22, he or she is entitled to receive half a week’s pay.

A maximum of 20 years’ service can be used to calculate statutory redundancy pay. This means that the maximum statutory redundancy payment an employee can now receive is £14,670.

The increased maximum statutory redundancy pay rate takes effect for employees who have a termination date on or after 6 April 2017. An employee must have at least two years’ continuous service to qualify for statutory redundancy pay.

Employers that wish to provide enhanced redundancy payments to their employees should use a scheme that mirrors the structure of the statutory redundancy pay scheme, or they may risk a claim of age discrimination.

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For dismissals where the effective date of termination is on or after 6 April 2017, the maximum compensatory award for unfair dismissal also increased.

The new ceiling is £80,541, up from £78,962.