A “week’s pay”

Under the statutory scheme, the level of redundancy pay depends on an employee’s gross earnings at the date of dismissal, but the calculation of a “week’s pay” is subject to a statutory cap and revised on 1 February of each year. From 1 February 2013, the statutory cap is £450. Anyone earning less than £450 receives statutory redundancy pay based on actual gross earnings.

Redundancy pay is based on earnings at the dismissal date. An employee who has previously worked full-time but is working part-time work at the dismissal date will have the whole of their redundancy pay calculated at the part-time rate, without reflecting their previous full-time work (Barry v Midland Bank [1998] IRLR 138).

Employees who agree to cut their pay or hours to avoid redundancy will have their redundancy pay worked out using the reduced rates, unless they have agreed something different. The only exception is where the cut in hours amounts to “short-time working” (see Chapter 9).