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United Kingdom - Severance pay and redundancy payment


Severance pay and redundancy payment - United Kingdom - 2019    

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Notes / Remarks
1) No statutory severance pay in the event of non-economic dismissals

2) The Employment Right Act 1996 only provides for a statutory termination payment in the event of redundancies. (Sec. 135, 155 and 162 ERA)
Employees are entitled to redundancy payment provided that they have been continuously employed for at least two years with the same employer.
The number of week pay due depends on the age of employee, the length of service, and is to be calculated, as follows:
- 0.5 week's pay for each year of service where the employee was below the age of 22;
- 1 week's pay for each year of service where the employee was between 22 to 40 of age;
- 1.5 week's pay for each year of employment where the employee was 41 and over.

Examples taken from the website of the Department for Business, Innovation & Skills, UK Government:

Example 1 - An employee aged 25 with 7 years service will be entitled to 5 weeks' redundancy pay. The 5 weeks entitlement is based on 0.5 weeks' pay for each completed year of service between age 18 and 22 and 1 week's pay for each completed year of service between age 22 and 25. (The middle band of 1 weeks' pay only applies where an employee, who is entitled to a redundancy payment, has completed a year service at age 22 or above).

Example 2 - An employee who is 38 years old and has 12 years of service will be entitled to 12 weeks' redundancy pay. The 12 weeks is based on 1 week's pay for each completed year of service between age 26 and 38.

Example 3 - An employee who is 49 years old and has 15 years of service will be entitled to 19 weeks redundancy pay. The 19 weeks' entitlement is based on 1 week's pay for each completed year of service between age 34 and 41 and 1.5 weeks' pay for each completed year of service between age 41 and 49.

(A link to the statutory redundancy pay table established by the Department for Business, Innovation & Skills, UK Government is provided below under "source of additional information")