Redundancy Pay on Zero Hours Contract: What You Need to Know
A zero hours contract is where an employee has no guaranteed hours of work and only gets paid for the hours they work. This type of contract is often used by employers who need flexibility in their workforce, for example, to cover staff shortages or seasonal work. However, if you are on a zero hours contract and your job is at risk of redundancy, you may be wondering if you are entitled to redundancy pay.
The short answer is yes, you are entitled to redundancy pay on a zero hours contract, provided you meet certain criteria. Let`s take a closer look at what these are.
Qualifying for Redundancy Pay
To qualify for redundancy pay on a zero hours contract, you must have been employed for at least two years. This is the same as for employees on permanent contracts. If you have worked for less than two years, you will not be entitled to redundancy pay unless your employer offers it as part of your contract.
Calculating Redundancy Pay
The amount of redundancy pay you are entitled to depends on your length of service, age, and weekly pay. The maximum length of service that counts towards redundancy pay is 20 years. The current statutory redundancy pay rate is:
– Half a week`s pay for each full year of service under the age of 22
– One week`s pay for each full year of service between the ages of 22 and 41
– One and a half week`s pay for each full year of service over the age of 41
The weekly pay used to calculate your redundancy pay is subject to a statutory maximum, which is currently £544.
For example, if you are 35 and have been employed on a zero hours contract for 5 years, and your weekly pay is £350, your redundancy pay would be calculated as follows:
– 5 years service x 1 week`s pay (between the ages of 22 and 41) x £350 = £1,750
Tax and National Insurance Contributions
Redundancy pay is taxable but the first £30,000 is tax-free. National Insurance contributions are not payable on redundancy pay.
Claiming Redundancy Pay
If you believe you are entitled to redundancy pay, you should speak to your employer as soon as possible. If they agree that you are entitled to it, they should offer it to you. If they refuse, or you are not happy with the amount offered, you can make a claim to an employment tribunal.
In conclusion, if you are employed on a zero hours contract and are facing redundancy, you are entitled to redundancy pay if you have been employed for at least two years. The amount you are entitled to depends on your length of service, age, and weekly pay. If your employer refuses to pay you redundancy pay, you can make a claim to an employment tribunal.