Statutory Redundancy Pay Calculator (UK 2026)

Redundancy Pay Guide

What should I know about Statutory Redundancy Pay Formula?

Statutory redundancy pay is based on: weekly pay (capped at £643/week for 2024), years of service (max 20 years count), and age. Rate per year of service: under 22: 0.5 weeks' pay per year. Age 22-40: 1 week's pay per year. Age 41 or over: 1.5 weeks' pay per year. Maximum: 30 weeks × £643 = £19,290 (statutory maximum for 2024). The weekly pay cap means high earners do not receive more than the cap regardless of actual salary. Minimum service: you need at least 2 complete years of continuous service with the same employer to qualify for statutory redundancy pay at all.

What should I know about Calculation Example?

Age 42, 8 years' service, £500/week. Years under 22 in service: 0 (started aged 34). Years aged 22-40: 6 years (aged 34-40). Years aged 41+: 2 years (aged 40-42). Calculation: 6 × 1 × 500 = £3,000. Plus: 2 × 1.5 × 500 = £1,500. Total: £4,500. Note: if service predates age 22 or 41, those years are calculated at the rate for the age band they occurred in. Online calculator at gov.uk/calculate-your-redundancy-pay handles this automatically.

What should I know about Tax on Redundancy Pay?

First £30,000 of statutory (and contractual) redundancy pay is tax-free. Above £30,000: taxed as normal income. Payments in lieu of notice (PILON): fully taxable (income tax + NI) even if described as 'redundancy'. Statutory notice worked: taxable as normal pay. Non-cash benefits (company car, private medical etc.): included in the £30,000 limit if paid as part of termination. Settlement agreements (formerly compromise agreements): any payment above the statutory redundancy entitlement should be treated carefully for tax purposes — only the first £30,000 of the TOTAL termination payment (statutory plus any ex-gratia payment) is tax-free, not £30,000 on top of the statutory amount.

What's the key thing to understand about Your Rights in Redundancy?

Qualifying period: 2 complete years of continuous employment. Individual consultation: minimum. Collective redundancy (20+ employees): 30 or 45 days' collective consultation required. Collective redundancy without consultation: protective award of up to 90 days' pay. Selection criteria: must not discriminate (age, disability, sex, race, religion). Trial periods in new roles: 4-week trial period — can claim redundancy if new role unsuitable. Time off to look for work: reasonable paid time off to look for a new job or arrange training, capped at 40% of one week's pay if your employer unreasonably refuses time off.

What's the key thing to understand about Statutory vs Enhanced Redundancy Pay?

Statutory redundancy pay in the UK is a legal minimum, calculated using age, length of continuous service (capped at a maximum number of years), and weekly pay (capped at a maximum figure that's reviewed periodically), and is only payable to employees with at least two years of continuous service. Many employers offer enhanced redundancy pay that's more generous than the statutory minimum — sometimes a multiple of statutory pay, sometimes a separate formula entirely (such as a fixed number of weeks' pay per year of service with no cap), set out in a contract, staff handbook, or collective agreement. Checking whether your employer has an enhanced scheme, rather than assuming only the statutory minimum applies, is worth doing by reviewing your contract and any staff handbook, since enhanced schemes are common in larger organisations and the public sector but far from universal. It's also worth noting that redundancy pay is separate from, and in addition to, any notice pay you're entitled to (either worked or paid in lieu) and any outstanding holiday pay owed at the point of leaving — all three are distinct entitlements that should appear separately on a final settlement, not bundled together as a single figure.

What should I know about the Tax Treatment of Redundancy Payments?

In the UK, the first £30,000 of a genuine redundancy payment is generally free of income tax and National Insurance, which is a notably favourable treatment compared with ordinary salary — though this £30,000 exemption applies to the redundancy element specifically, not to everything included in a final settlement. Payments in lieu of notice (PILON), accrued holiday pay, and any contractual bonus owed are typically taxed as normal earnings regardless of the £30,000 exemption, since they're compensation for work or notice already due rather than compensation for job loss itself — this distinction matters because a settlement that bundles several payment types together needs to be broken down correctly to work out what portion genuinely benefits from the exemption. Amounts above £30,000 (where the redundancy element itself exceeds that threshold) are taxed as income, though typically not subject to employee National Insurance even above £30,000 (employer NI may apply above that threshold under current rules). Because the correct tax treatment of a settlement depends on exactly how each component is structured and documented, it's worth checking a settlement agreement's breakdown carefully, ideally with advice from the free guidance many settlement agreements require you to take before signing, rather than assuming the entire headline figure is tax-free.

Worked Example: Statutory Redundancy for a 42-Year-Old With 8 Years' Service

Statutory redundancy pay in Great Britain is based on three things: age, complete years of service (capped at 20 years), and weekly pay (capped at a statutory maximum that is reviewed each year, currently a few hundred pounds). It is calculated backwards from the employee's leaving date in bands by age, and only full years of service in each band count. For a 42-year-old with exactly 8 complete years of service, all of which were served between ages 34 and 42 (i.e., entirely within the 'age 22 to 40' and 'age 41+' statutory bands, split appropriately), and a weekly pay of GBP520 (within, assuming it's below, the statutory weekly cap):

8.5 weeks x GBP520 = GBP4,420 statutory redundancy pay, before any tax (statutory redundancy pay is tax-free up to GBP30,000) and before any enhanced contractual redundancy scheme the employer may offer on top. Note that if weekly pay had exceeded the statutory cap, the calculation would use the capped figure, not the employee's actual higher pay, for the statutory calculation specifically — though an enhanced scheme often uses uncapped actual pay, which is one of the main reasons enhanced redundancy terms are worth significantly more than the statutory minimum for higher earners.

Consultation Rights and Notice Pay Alongside Redundancy Pay

Redundancy pay is only one part of what an employee is entitled to when being made redundant, and it is commonly confused with, or assumed to replace, other separate entitlements. Collective consultation rules apply when an employer proposes making 20 or more employees redundant at one establishment within a 90-day period: the employer must consult with recognised trade unions or elected employee representatives for a minimum period (currently at least 30 days before the first dismissal takes effect for 20-99 proposed redundancies, or at least 45 days for 100 or more) before any dismissals can take effect. Failing to consult properly can lead to a protective award of up to 90 days' pay per affected employee, entirely separate from and on top of redundancy pay itself. Notice pay (statutory minimum notice, or longer contractual notice if the contract specifies it) is also owed on top of redundancy pay, either by the employee working their notice period as normal or receiving pay in lieu of notice (PILON) if the employer chooses to end employment immediately instead. An employee should not see a redundancy payment that looks lower than expected and assume notice pay has been folded into it without checking — the two are legally distinct entitlements, and a termination statement or settlement letter should itemise them separately. Employees who believe they were unfairly selected for redundancy, or that proper consultation did not happen, generally have three months less one day from the dismissal date to bring an employment tribunal claim, a tight window that makes early advice (from Citizens Advice, ACAS, or a solicitor) worth seeking promptly rather than after the fact.