A payment to compensate an employee for the loss of his job. It is calculated with reference to the length of time the employee had worked for that employer, their age and the amount they were earning. The payment is worked out as follows:
• period of work aged 18 to 21: half a week’s pay per year of work;
• period of work aged 22 to 40: one week’s pay per year of work;
• period of work aged 41 or above: one and a half week’s pay per year of work.
However, there are limitations, as the maximum number of years’ work counted is 20 and the maximum amount of weekly earnings is £380 (2010 amount – it will be increased in 2011).