Redundancy pay is compensation paid to employees who lose their jobs because their role is no longer required. It’s usually calculated based on the employee’s tenure, salary, and local labor laws.
What’s the typical formula?
Redundancy pay = (Number of years worked × weeks of pay per year)
Examples:
UK: Statutory redundancy pay depends on age and tenure
- 0.5 week per year under 22
- 1 week per year from 22 to 40
- 1.5 weeks per year over 41 (with caps)
Australia: 4 to 16 weeks based on service length
France/Brazil/Germany: Governed by national laws or collective agreements
Who qualifies for redundancy pay?
Usually, full-time employees with a minimum period of continuous service. Contractors and temporary workers are typically excluded unless local rules or contracts say otherwise.
Who calculates redundancy pay?
Employers must calculate and pay redundancy in line with legal requirements. Incorrect calculations can lead to penalties or legal claims.
Benefits of unified payroll payments
Free report: how Papaya streamlines the complexities of global workforce payments