Redundancy Pay

Redundancy pay is compensation employers provide to employees whose jobs are eliminated due to business restructuring, downsizing, or closure. It is a statutory or contractual payment that helps workers transition financially when their positions become unnecessary through no fault of their own. Most countries mandate minimum redundancy payments based on length of service, age, and weekly earnings.

Redundancy pay is triggered when employers permanently remove positions from their organizational structure. Companies typically use specific formulas that factor in years of service, current salary, and legal requirements, and many rely on a redundancy cost calculator to budget for these expenses while staying compliant with employment laws and collective agreements.