Guide

Who Qualifies for Statutory Redundancy Pay

Not everyone who loses their job is entitled to statutory redundancy pay. Here are the eligibility criteria — and the situations where the right to it does not apply.

The three qualifying criteria

To qualify for statutory redundancy pay, all three of the following must apply:

  • You are an employee — not a freelancer, self-employed person, or contractor
  • You have at least 2 years of continuous service with your employer
  • You are dismissed because of genuine redundancy — not for another reason like conduct or capability

Employment status — employee vs contractor

Statutory redundancy pay applies only to employees, not to self-employed contractors, freelancers, or agency workers (unless they are on a PAYE contract with the agency and meet the other criteria).

The distinction between employee and self-employed status is based on the reality of the working relationship, not what the contract says. Key factors include:

  • Whether you are required to do the work personally, or can send a substitute
  • Whether you are in control of how and when the work is done, or whether your employer directs you
  • Whether you bear financial risk (covering costs, rectifying mistakes at your own expense)
  • Whether you work exclusively for one employer or for many clients

If you are unsure of your employment status, ACAS can advise.

The 2-year service rule

You must have at least 2 years of continuous service before statutory redundancy pay becomes available. This means 2 years with the same employer (or an employer that inherited your service through a TUPE transfer).

Service is calculated from your start date to the date your employment ends. Partial years do not count — only complete years of service contribute to the calculation.

If you have less than 2 years' service and are dismissed for redundancy, you are not entitled to statutory redundancy pay — though you may still have a claim for unfair dismissal if the process was defective.

Who does not qualify

Even if you have 2 years' service and are an employee, you may not qualify for statutory redundancy pay if:

  • You were dismissed for misconduct — redundancy must be the genuine reason, not a pretext for dismissing someone for poor performance or misconduct
  • You resigned — you cannot claim statutory redundancy if you voluntarily leave your job, unless this constitutes constructive dismissal (where your employer's conduct forced you to leave)
  • You are a crown servant — certain public sector employees are excluded from statutory redundancy schemes under specific legislation
  • You are a member of the armed forces — military personnel are covered by separate arrangements
  • You are a share fisherman — covered by a different government scheme
  • Your employer is insolvent — in this case, the Redundancy Payments Service (RPS) steps in and pays your entitlement directly, so you still receive it — just from the government instead of your employer

Situations that are NOT redundancy

The following situations are sometimes confused with redundancy but do not qualify for statutory redundancy pay:

  • Resignation — even with a mutual agreement to leave, if you initiate the resignation you generally cannot claim statutory redundancy
  • Constructive dismissal — while you may have a claim for unfair dismissal, this is technically a different legal route from redundancy
  • Fixed-term contract ending — if your contract expires naturally and is not renewed, this may or may not constitute redundancy depending on the circumstances. If the employer simply chose not to renew without a genuine business reason, it could be redundancy
  • Ill health dismissal — if you are dismissed due to long-term ill health, statutory redundancy pay may or may not apply depending on whether there is a genuine redundancy situation underlying the dismissal

Agency workers and atypical arrangements

Agency workers generally do not qualify for statutory redundancy pay from the agency unless they have a contract with the agency that establishes an employment relationship (not just a contract for services). Agency workers employed under a "contract of employment" with the agency — even if they are on a temporary assignment — may be eligible if they have 2 years' service with the agency.

If you are an agency worker and have been dismissed, seek advice from ACAS (0300 123 1100) about your specific situation.