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redundancy payment

The sum that an employee dismissed because of *redundancy is entitled to receive from his employer under the Employment Protection (Consolidation) Act 1978. The sum is the total of: (1) one and a half weeks’ pay for each year of the employee’s *continuous employment in which he was aged 41 or more; (2) one week’s pay for each year’s service between the ages of 22 and 41; and (3) half a week’s pay for each year between the ages of 18 and 22. Continuous employment exceeding 20 years is ignored, and a maximum amount of weekly pay to be used in the calculation is prescribed by regulations made by the Secretary of State for Employment and reviewed annually. Employees under 18 or over normal retiring age (65 for men, 60 for women) have no statutory right to a redundancy payment. The sum payable to men over 64 and women over 59 is reduced by one twelfth for each complete month by which their age exceeds 64 or 59, respectively.

Employers of less than 10 employees can obtain a rebate of 35% of the redundancy payment from the Department of Employment. No rebate is given on any sum paid in excess of the statutory payment, although the employer may be obliged under a collective agreement or individual employees’ contracts of employment to pay larger sums.

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