Redundancy: the basics
An employee dismissed by reason of redundancy and who has been continuously employed for two years or more is entitled to a statutory redundancy payment. The amount is based on weekly gross pay, age and length of service. This is subject to a cap of £489 a week and 20 years’ service. Some employers provide for enhanced redundancy payments, either contractually or on a discretionary basis.
Redundancy provisions: who is covered?
All employees, defined as any individual who had entered into or who works under a contract of service, are covered. Employees need at least two years’ continuous employment to claim a redundancy payment, but only one year’s continuous service to bring a claim for unfair dismissal.
Where an employer selects an employee for redundancy for a reason that is automatically unfair, no qualifying period is required. In that situation an employee can bring a claim without any qualifying period. Also, if an employee has been selected for any discriminatory reason, with reference to the Equality Act 2010, the qualifying period is not relevant to bring a discrimination claim.
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