Statutory redundancy pay

The statutory redundancy pay scheme provides a minimum amount of redundancy pay that an employer must pay to an employee who has been dismissed by reason of redundancy (see the definition in Chapter 1), provided they meet the qualifying conditions.

To qualify for a statutory redundancy payment, the individual must be an employee and must have been continuously employed by their employer for at least two years.

Agency workers are specifically excluded from the right to statutory redundancy pay, unless they are employed directly by the agency and can satisfy the continuous service condition.

Share fishermen and women, domestic workers and employees of oversees governments are also excluded. Civil servants and certain other public sector employees are not covered by the statutory scheme but have their own agreements (sections 155-161 of the ERA 96).

As well as excluded groups of workers, individuals can be denied a statutory redundancy payment under section 135 ERA if:

• they have accepted or unreasonably refused suitable alternative employment (see Chapter 4);

• they were dismissed for gross misconduct; or

• they were dismissed for taking strike action prior to the statutory notice period (section 143 ERA).

An employee also risks losing redundancy pay if they leave without working their notice (see page 67).

Redundancy payments are a form of pay (Barber v Guardian Royal Exchange [1990] IRLR 240). This means that employees can pursue equal pay claims where redundancy payments discriminate on grounds of sex.