WFM UK: Calculating Statutory Redundancy Pay – Fourth & HotSchedules Customer Success Portal

Overview

This article provides an overview of statutory redundancy pay (SRP) and shows how to extract useful information from HR & Payroll to help with calculations. In any situation where redundancies are being made, employers should always seek advice from legal representatives or professional bodies such as ACAS or CIPD.

Statutory Redundancy Pay

The amount of SRP an employee is entitled to depends on their age, the amount of time they have worked for the company, and their weekly pay amount. An employee must have worked continuously for at least 2 years to be entitled to SRP.

The current guidelines state that the total amount that employees will get is:

Under 22 years old – 0.5 week’s pay for each full year of service
22 to 40 years old - 1 week’s pay for each full year of service
41+ years old - 1.5 weeks’ pay for each full year of service

The maximum number of years that can be considered is 20 years.

When working out the number of statutory redundancy weeks due, work out the number of years in each age bracket the employee had during their employment. For example, if they have 10 years’ service and are 30 years old, they would have 2 years under 22 (2 half weeks) and 8 years between 22 and 40 (8 full weeks), giving a total of 9 full weeks’ redundancy due.

An online calculator is available here https://www.gov.uk/calculate-your-redundancy-pay

Weekly Pay

Employees with Fixed Salaries

For salaried employees, the weekly rate is typically worked out using the annual salary divided by 52.

Employees with Variable Hours

Weekly pay should be calculated using an average of the hours worked over the previous 12 weeks. If employees have been furloughed, the last 12 weeks that they actually worked should be used.

Bureau Customers

Your Payroll Specialist will calculate the average weekly earnings for employees who are being made redundant. Please contact your Specialist for more information.

Calculating Salaried Weekly Pay

There are several reports available within HR & Payroll that can help with calculating the weekly rate for salaried employees.

Using a customised report is recommended, one which can provide all required information in a single export.

To create a customised report, go to HR > Reports > Customised reports > Create Template
Enter the Template Name
From the Report Type drop-down, select Employee Details Report
Select Save

**Fig.1 - Creating a customised report**

On the next page, use the Report Group drop-down and select Employee Details
Use the Return tickboxes to select the data fields to be returned in the export
Enter the order in which the fields will be returned, using the Sequence column
Select any required Conditions – for example, to show current employees only, select '=' against the Status field
Use the Order fields to determine if the results should be displayed in ascending or descending order

Suggested fields to select from the 'Employee Details' Report Group

Forename
Surname
Length Of Service (Years)
Date of Birth
Age

Scroll down and select Save
Then use the Report Group drop-down again and select Employee Work Details

Suggested fields to select from the 'Employee Work Details' Report Group

Employee Number
Status (use = condition to return current employees only)
Location
Division
Job Title
Paid by Rota (Use = condition and select no to return salary paid employees only)
Salary
Start Date

**Fig.2 - Selecting fields, sequence, condition for the customised report**

Scroll down, Save again and then select Run Report

The report will be downloaded as a CSV file. The information in it can be used to calculate the weekly SRP owed to salaried employees and the number of weeks to be paid.

Identifying 12 Weeks Average (Hourly)

Several reports can be run to establish what hours were worked over the past 12 worked weeks for variable-hour employees.

Employee Hours Worked Export

To view the Employee Hours worked export, go to Rotas > Reports > Exports > Employee Hours Worked
Select Location and Division
Enter the date range
Select Run Report

The export will download as a CSV file and show the following information:

Location
Division
Employee Number
Surname
First Name
Status (full time, part time, flexible etc)
Hours under each day selected
Pay Rate
Total Hours
Extra Payments
Additional Payments
Overtime Hours
Bank Holiday Hours

Payroll Payments by Pay Basis

To view the Payroll Payments by Pay Basis export, go to Payroll > Reports > Exports > Payroll Payments by Pay Basis
Select Company, Location, Division
Select Pay Basis
Select Pay Run (an export will need to be run for each pay run)
Select Run Export

The export will download as a CSV file and show the following information:

Processing Date (pay date)
Pay Period
Location
Division
Employee Number
Employee Surname
Employee Forename
Contract
Payment Type
Units
Rate
Total Payment

Custom Report

To build a custom report, go to Payroll > Reports > Custom Reports

Existing custom reports will be displayed.

Select Create Template from the top-right corner
Enter a Template Name
Select the Report type – if the 12 weeks span two tax years, two separate custom reports will be required
Add a Description if desired (will show in the main 'Custom Reports' screen alongside the Name)
Select Save

**Fig.3 - Creating a custom report for hourly pay data**

On the Next page, select the data fields that need to be returned on the export
Enter the order for the fields to be returned in Sequence
Select any required conditions (for current employees only, select an = sign under Condition next to status)
Select Save to go through each of the pages
Select Run Report

**Fig.4 - Selecting fields, sequence, condition for the hourly data customised report**

Suggested fields to select are:

Employee Number
Firstname
Surname
Location
Division
Job Title
Company
Pay Basis
Tax Year (adding an = as a condition will allow a search for a specific tax year)
Pay Period
PaymentDescription (payment type name)
PaymentUnits
PaymentRate
PaymentVale
PayslipElementID (if reporting on payment types, please ensure this is always selected)
Status (adding an = as a condition will allow a search for current employees only)

Calculating Average Weekly Pay

Once the details of the last 12 weeks' pay have been gathered, add the gross amounts up, then divide by 12 weeks to calculate the average weekly pay.

After the average weekly pay has been calculated, a new custom report can be made within the HR module to report on both age and length of service. Please see the 'Calculating Salaried Weekly Pay' section of this article for more information.

Holiday Accrual

As well as SRP, employees are entitled to their accrued holiday. Customers with the 'Final Holiday Pay' setting turned on will have the holiday paid out automatically when the termination date is entered. If this setting is turned off, or customers want to get the data beforehand, a custom report can be created.

The steps below show how to create a custom report which can be run to report on an employee’s holiday accrual.

Go to HR > Reports > Customised Reports > Create Template (from top-right corner)
Add a Template Name
Select Holiday Data from the Report Type drop-down
Select Save to proceed

As with previous examples in this article, on the next page, make selections for Return, Sequence and Condition as required
Select Run

The export will download as a .csv file, and once created in Customised Reports, it can be accessed again at any time.

Making Payments

In April 2020, legislation around redundancy payments changed so that any payments over £30,000 are subject to Class 1A National Insurance. This category of National Insurance is an employer's cost and is usually associated with benefits in kind.

In line with the change of legislation, Fourth introduced a new setting within payment types to help manage this additional employer cost. Please see WFM Release Note - Termination Payments for more information.