If your job has been made redundant, your employer will have to pay you off.
The amount you’ll get is based on your age, salary and length of service. There’s a legal maximum, but many employers pay more as a goodwill gesture.
The first £30,000 of this payment is free of tax and National Insurance. 
As well as this, you’ll also receive any holiday pay that’s due by the date you leave. That is, pay for annual leave that you’re owed but haven’t yet taken.
If you’ve taken more holiday than you are entitled to at the time of leaving, your employer will make a deduction accordingly.
Calculating your holiday pay
There are various things you need to check.
For example, your contract of employment may say that you have to take any outstanding annual leave as part of your notice period.
If not, you need to know a few things:
- How many days you usually work each week
- Your total holiday entitlement for the year (A)
- The fraction of the year that has passed so far
g. if you leave after seven months, the fraction is 7/12 (B) - How many days you’ve already taken (C)
The formula is (A x B) – C
Here’s an example.
Let’s say you work full-time (5 days per week), and you’re entitled to 28 days’ holiday each year.
You leave after 3 months, and you’ve taken 4 days off by then.
28 x 3/12 – 4 = 3
That means you’re entitled to three days’ holiday pay.
To prevent underpayment, your employer should always round the figure up.
Working your notice (or not)
If your employer wants you to go without working the notice period that’s specified in your employment contract, you’re also entitled to Payment in Lieu of Notice (PILON for short).
This makes up for the salary you would have earned if you’d carried on working.
In addition, you may also be entitled to a sum of money covering the pension, car allowance and any other benefits you would have received during the notice period.
What this means to you
You don’t have to accept the first amount your employer offers. We may be able to negotiate a better settlement agreement for you (they’re known as compromise agreements in Northern Ireland).
Why not give us a call to discuss it?
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