This is calculated by taking the employee’s age, years of service and average weekly pay to arrive at a figure.

There is a limit on the amount of a week's pay that can be taken into account in working out your entitlement. The limit is reviewed each year and at 1 February 2002 is £250 per week and the maximum years that will be considered is 20. However, the years of service also depend upon your age.

This is how it is calculated in detail:

• Years of service below 22 years of age, your weekly pay is multiplied by 0.5

• Years of service between 22 and 41, your weekly pay is multiplied by 1

• Years of service from 41 onwards, your weekly pay is multiplied by 1.5

The redundancy pay is not payable to employees aged 65 or over the normal retirement age for their particular organisation. From 64 to 65 the award is reduced 1/12th for every month up to 65 when it becomes nil.

The employee must have 2 years’ continuous service to qualify for this redundancy payment. However, if the employee is just under the 2 years’, it can be extended.

Contracts

Employees may have redundancy terms stated in their contracts or the employer may already have an agreed redundancy procedure.

These will usually be more generous than the minimum stated by law. The only problem with these is that the employer may want to exclude employees from these schemes to lower the cost of redundancy. Especially if the employer has to make a large amount of people redundant.

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