Redundancy Payments

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Here's some information on the redundancy payments scheme under the Employment Rights Act 1996. Outlining the provisions relating to time off to look for work and for training during redundancy, how a complaint is settled and the rules for offsetting pension and lump sum payments under occupational pension schemes against statutory redundancy payments. This page is not an authoritative statement of the law.

The Redundancy Payment Offices

The Redundancy Payments Offices can give you more information about entitlement in cases where an employer fails to pay a statutory redundancy payment for which an employee qualifies.


There is a helpline to answer your questions. The number to ring is 0845 145 0004 (calls are charged at local rates).

Redundancy Payments

When is a redundancy payment due?

Your employer must give you a lump-sum payment if you:

1.  are made redundant;
2.  have at least 2 years continuous service since the age of 18.
3.  You may also be entitled to other - non-statutory - payments.

Who can qualify?

You will receive payment only if you are an employee working under a contract of employment. Self-employed people and members of a partnership do not qualify under the Act though they may have separate contractual agreements.

Directors and other office holders may be employees if they work under a contract of employment. They will not qualify if they do not work under a contract of employment..

Contracts of employment may be spoken or written and last for any length of time or be fixed. In law, employees generally have a contract as soon as they start work and by doing so prove that they accept the conditions offered by the employer. For further details your Contracts of Employment (PL810). A few groups of employees do not qualify for a statutory redundancy payment.

What 'dismissal' means

In general, to be due a payment, you must have been dismissed by your employer rather than have resigned and the reason for dismissal must have been redundancy.

If you are laid off (that is, you receive no wages) or put on short time (that is, you receive less than half a week's pay) for four weeks in a row or six weeks out of 13 weeks, you may also claim a redundancy payment without waiting to be dismissed for redundancy. You must make your claim in writing to your employer, who may refuse to pay if he or she believes normal working is likely to return within four weeks.

If you are on a fixed-term contract and it ends without being renewed, this counts as a dismissal and you may be due a redundancy payment.

If your employer says that redundancies will be needed and asks for volunteers you will qualify for a payment if you volunteer, as long as your employer actually dismisses you.

If your employer changes in circumstances covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981, your contract of employment will be transferred automatically to the new employer. You have the right to tell the new or previous employer that you do not want to be transferred. However, this will be treated as a resignation, and you will not be entitled to a redundancy payment. The document Transfers of undertakings (PL699) explains the Regulations.

If you have been given notice of redundancy, you may leave early by agreement with the employer and still qualify for payment. But the minimum period of notice which the employer has to give (by contract or by law) must have started by the time you give your notice.

What 'redundancy' means

You will be entitled to a payment under the Act only if the reason for your dismissal is redundancy. This means that your dismissal must be caused by your employer's need to reduce his or her workforce. Redundancy may happen because a work place is closing down, or because fewer employees are (or are expected to be) needed for work of a particular kind. Normally your job must have disappeared. It is not redundancy if your employer immediately takes on a direct replacement for you. But it will not matter if your employer is recruiting more workers for work of a different kind, or in another location (unless you were required by contract to move to the new location).

If you are dismissed because of a need to reduce the work force, and one of the remaining employees moves into your job, you will still qualify for a redundancy payment so long as no vacancy exists in the area (type of work and location) where you worked.

General rules on length of service

You must generally have at least two years' continuous service with your employer to qualify for a payment. Service before the age of 18 does not count for these purposes. The rules on length of continuous service are described briefly in the What are the payments? section and in more detail in Continuous employment and a week's pay.

It’s true that some employers may have concerns and doubts about taking on people who have been made redundant, but these people are rare and above all, an apologetic response to questioning around the issue is only likely to reinforce whatever prejudice may be present.

Be prepared to answer the question “Why did you leave your last job?” Be up front and truthful about it. What were the reasons for redundancy? If it was corporate change or cost cutting, tell them that the organization underwent a change programmed and give the reason. Explain that as part of the programmed a number of positions were identified as no longer being required including your own, and that redundancy was offered. If you lost your position after a merger, you can talk about how you were considered less suited to the new culture compared with your rival for the position. You might be asked to expand upon this so do prepare for this possibility: How has the culture changed? How do your values and those of the organization differ?

Always be positive about your previous employer. Nobody wants to think that when you leave them there is a possibility that you might bad mouth their organization. Explain that while you might have been disappointed you understand and accept the situation. You might say that you consider the outcome to be right for both parties and that you see it as an opportunity. Whatever you decide to say, be truthful and don’t be ashamed – don’t stop looking the interviewer in the eye, and don’t go about it on too much! Treat the issue as if you have no problem with it and therefore you see no reason for why the other person should have a problem with it.

Remember, redundancy is just one of the ways that people leave organizations. Too many highly talented people leave by this route for anyone to consider that it is only the weak that are made redundant is simply is not the case.

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