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Those seeking to claim a redundancy payment must meet certain criteria in order to qualify. First, the reason for the dismissal must fall into one of two categories. The employee must either have been dismissed due to the closing down of the entire business or the absence of a need for workers in the employee's current field. Also, in order to make a claim for redundancy payments, the employee must have been continuously employed by the business for at least two years at the time of the termination.

Statute sets the maximum redundancy payment that a claimant can receive. Note, though, that some employers voluntarily pay more than the statutory cap. A specific formula is used to arrive at the amount of compensation the employee is entitled to. The calculation is based on a nominal capped maximum weekly pay. That amount is used regardless of whether the employee's actual weekly pay was higher. However, the amount will be lowered if the employee's weekly pay figure was less than the maximum capped figure. The formula is as follows:

• The maximum number of years to be counted towards the redundancy payments is 20.
• The employee receives half a week's pay for each year of their employment that they were over the age of 18 but under the age of 22.
• The employee receives one week's pay for each year of their employment that they were over the age of 22 but under the age of 41.
• The employee receives one and a half week's pay for each year in which the employee was over the age of 41 during their employment.

Sometimes disputes over the proper amount of compensation arise. In the case of such disputes, the employee must make an application for rectification to the Employment Tribunal. It is important to act quickly because the application must be submitted within 6 months of the date of dismissal. In response to the application, the employer must present a detailed explanation of the calculations performed to arrive at the amount of the redundancy payment.

The dismissed employee cannot bring a claim for redundancy payments if the employee refused an offer of alternative employment with no reasonable justification. However, the employee can still make a claim if the employment was refused in light of personal circumstances, such as the state of the employee's health and family commitments. Should the employee choose to accept the job, there is still a possibility that a claim can be made. The employee is allowed a 4-week trial period during which time he can assess the suitability of the alternative job. If the employee finds that the new position is unacceptable, he can resign and still be eligible to bring forth a claim.

Unfortunately, there are times when an employer makes false claims of redundancy. Employers may try to use redundancy as a cover for terminating an employee when no reasonable grounds for the termination actually exist. These employers are trying to avoid the higher statutory compensation they would have to make for an unfair dismissal claim as opposed to one for redundancy. Should you find yourself in this situation, you can make an application to the Employment Tribunal for unfair dismissal. The compensation awarded for unfair dismissal claims are typically much higher than that awarded in cases of redundancy.