Should commission payments be included in the calculation of a week’s pay for the purpose of determining an employee’s statutory redundancy payment?

When it comes to calculating a statutory Redundancy payment, see generally, Practice Note: Entitlement to statutory redundancy payment, in particular the main section dealing with ‘How the payment is calculated’.

The amount of a statutory redundancy payment is calculated by reference to a week’s pay, in accordance with sections 220–229 of the Employment Rights Act 1996 (ERA 1996) (see ERA 1996, s 162). In relation to a statutory redundancy payment, a week’s pay is currently capped at £544 (from 6 April 2021).

The method of calculating a week’s pay depends upon the type of hours the individual works and the pay structure that applies to them. The statutory provisions set out four alternative categories of employee for the purpose of the calculation:

1. •

   employees with fixed normal working hours and paid at a flat rate (ERA 1996, s 221(2))

2. •

   employees with fixed normal working hours but paid at variable rates, including piece work