Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

If you’re being made redundant from your job then – depending on how long you have worked for your employer – you will be entitled to certain payments from the business that you work for. In this article Employment Law Solicitor Chris Hadrill explores what nature of redundancy payments you should expect if you’re being made redundant.

Broadly speaking, the nature of the payments that you can expect in your redundancy severance package can be split into three different types:

  1. Contractual payments
  2. Statutory payments
  3. Ex-gratia payments

Contractual payments

Contractual payments are – as you’d expect – what you are contractually entitled to. There are a number of types of contractual payment which you could be entitled to upon termination of your employment:

  1. Your notice pay (if you’re being paid in lieu of notice instead of working this it may be referred to as “Pay In Lieu of Notice” or “PILON”) – this will include your wages as well as other contractual entitlements (such as any car allowance, medical benefits etc.) during the notice period
  2. Your accrued but untaken holiday pay
  3. Any bonus that you are contractually entitled to
  4. Any commission you are contractually entitled to
  5. Any contractual redundancy pay (sometimes referred to as “Enhanced Redundancy Pay” or “ERP”)

In order to determine what contractual payments you’re owed you should review the following (if applicable):

  1. Your contract of employment
  2. Any addendums or updates to your contract of employment
  3. Your staff handbook or other similar policies
  4. Any correspondence or documents detailing what the terms of your contract are
  5. Any collective agreement that you’re party to

Statutory payments

In a redundancy situation, you will be entitled to a statutory redundancy payment (or “SRP”) if you have worked for two years or more with your employer. Statutory redundancy pay is calculated using a particular formula based on the number of years (full) service that you have served, your age, and your gross weekly wage. For example, if you are 52, have worked for seven years for your employer, and earned a gross weekly wage of £430 then you would be entitled to the following statutory redundancy payment: £4,515 (1.5 * 7 * £430).

However, although you are statutorily entitled to a redundancy payment if you have two or more years of service with your employer, you may lose your right to a statutory redundancy payment if you unreasonably refuse an offer of suitable alternative employment.

Ex-gratia payments

Ex-gratia payments are discretionary and are generally paid as compensation for the manner of the termination of your contract of employment and, therefore, as a ‘settlement payment’ for any potential or existing claims that you could bring in the Employment Tribunal. For example, if your employer has dismissed you for redundancy but hasn’t undertaken a consultation period, considered any suitable alternative employment for you, or allowed you to appeal against you dismissal (among other things) then your dismissal may be unfair (and you may therefore choose to bring a claim for statutory unfair dismissal). You would – in this situation – be in a position to negotiate an ex-gratia payment with your employer which reflected the strength of your potential claims and the reasonable value of those claims.

So what value redundancy severance package should I expect?

Unfortunately, there’s not a simple answer to this question – the nature and value of the payments that would be reasonable in your situation will completely depend upon the facts that are specific to your situation. However, here are a number of tips for you if you’re going through a redundancy process:

  1. Check what your notice period is and what estimate what value of payment you should expect (i.e. if you are paid £500 gross per week with no other benefits payable and have a notice period of 4 weeks then you should expect a payment of £2,000 gross in respect of your notice)
  2. Check how many days accrued but untaken holiday you will have as of the date of the termination of your employment
  3. Check whether you’re entitled to and what value of statutory redundancy pay you should expect (handy tip: use the Direct.Gov website calculator to work this out)
  4. Get some legal advice from a specialist employment solicitor – you may think we would say this but if you’re being offered a settlement agreement by your employer then a) your employer has a statutory obligation to inform you to obtain legal advice from an independent adviser, and b) your employer will normally pay the majority – if not the whole – of your fees for doing so, so there’s no harm in making enquiries!

If you have an enquiry relating to your redundancy payment or want to obtain legal advice on your settlement agreement then please call our specialist employment law team today on 020 3397 3603.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

Share →

Our awards

Request a callback

Your first name (required)

Your last name (required)

Your email (required)

Your telephone number (required)

Brief details of your enquiry

Contact us

Please feel free to discuss your own position and concerns. Contact your nearest office on:

T: 020 3397 3603
E: enquiries@redmans.co.uk
W: www.redmans.co.uk

Testimonials

4.76 Average

204 Reviews

Anonymous

Excellent advice and customer service.

Posted 1 month ago

Aneet G

I would definitely recommend Redmans. Very impressed with service provided. They were extremely proactive in handling my case which made things easier for me. Provided sound advice and resolution. Special credit for this goes to Chris who dealt with my case with great determination and consideration.

Posted 1 month ago

Fern M

Very efficient and friendly

Posted 1 month ago

Neville S

A professional and friendly service, which I would highly recommend.

Posted 1 month ago

Daniel T

Extremely helpful and made a bad situation much more manageable. Where other solicitors seemed disinterested in my situation Redmans immediately made me feel like it was a team effort to achieve a more favourable outcome

Posted 1 month ago

Paul T

Excellent, quick and informative. Chris was a real star and gave me confidence during the uncertainty if a redundancy settlement.

Posted 1 month ago

Marina E

Felt in very capable hands was listened to and given excellent advice. Would not hesitate to recomend and use again if needed.

Posted 1 month ago

Rosa B

Fabulous service all round.

Posted 1 month ago

Anonymous

Redmans were quick to respond to my enquiry and dealt with my case professionally and personably. I received sound advice and was put at ease by Chris Hadrill, Partner.

Posted 1 month ago

Alkhas K

Excellent service.

Posted 1 month ago

Mathias G

Contacted them regarding my end of employment agreement. Chris Hadrill dealt with it and was done and handed back to employer same day more than happy with there service.

Posted 2 months ago

Mark W

Most professional from start to finish offering very a personal service. Most impressive and quick when dealing with the matters in hand.

Posted 3 months ago

Anonymous

Posted 3 months ago

submit

I am very glad I came across Redmans Solicitors. Fantastic service!

Posted 3 months ago

Anonymous

Fantastic communication, always happy to answer queries, highly recommended.

Posted 3 months ago

Wavenie B

They were very straight to the point, friendly and understanding people. I felt they had my best interest. They were easy to get hold of, replies were almost instant. 5/5 for customer service

Posted 3 months ago

Christina P

Caroline was fantastic to work with - extremely knowledgeable, supportive, thorough and honest. I definitely recommend Redmans!

Posted 3 months ago

Anonymous

Very well done and fast support. Professional and reliable. Highly recommended!

Posted 3 months ago

Helene L

They were very knowledgable in the respected area in terms of change in law/regulations that is crucial for the clients who are seeking for legal arvice.

Posted 3 months ago

Sara R

Very helpful and wonderful advice

Posted 3 months ago

Marie D

very good service all digitalised

Posted 3 months ago