Redundancy Pay Calculator UK

How statutory redundancy pay is worked out

The formula has three ingredients: your age during each year of service, your number of complete years of continuous service, and your weekly pay. The age bands apply year by year — not to your age today. That is the mistake almost everyone makes. A 45-year-old with 10 years’ service did not work all 10 years at 45. They worked them between the ages of 35 and 45, so only the years after they turned 41 attract the 1.5-week rate.

The correct method works backwards from your redundancy date. Each year is banded by the age you had already reached when that year of service began. If you are 41 on the day the job ends, the most recent year is still one week — 1.5 weeks starts at leaving-age 42. If you are 22, the most recent year is still half a week; one week starts at leaving-age 23. A birthday just before the leaving date can genuinely move the figure by half a week.

Worked example: age 45, 10 years, £800 a week

Counting backwards from 45, the years of service were worked at ages 44 down to 35. Four of them were at 41 or over and six were at 40 or under. Weekly pay is capped at £751, so the £800 wage is cut down to £751 for the calculation.

Someone on £39,052 a year (£751 a week) gets exactly the same as someone on £156,000 a year. Every pound above the cap is invisible to the calculation. That is why the statutory payment often feels small compared with the salary — it is a legal floor, and many employers pay an enhanced package on top.

The caps and the maximum

The maximum of £22,530 needs 20 counted years all at 1.5 weeks — that is 30 weeks at the £751 cap. In practice that means being at least 62 when made redundant with 20 or more years of service. The caps are uprated each April by the Employment Rights (Increase of Limits) Order, so check the current figure if your redundancy date is in a different tax year.

Who qualifies?

You normally qualify if you are an employee (not a worker, not self-employed, not an agency worker supplied to the business), you have worked for your current employer for at least 2 years of continuous service, and you are dismissed because the job is genuinely redundant — the business has closed, the workplace has closed, or the need for employees to do that kind of work has fallen. Part years do not count: 1 year and 11 months is not enough, and 19 years and 11 months counts as 19 years. You have 6 months less one day from the date your employment ends to claim statutory redundancy pay in an employment tribunal if your employer does not pay it.

The Employment Rights Act 2025 reduces the qualifying period for unfair dismissal protection from 2 years to 6 months, for dismissals on or after 1 January 2027. That is a change to unfair dismissal, not to statutory redundancy pay: GOV.UK still lists 2 years for the redundancy payment itself. The Act is being brought in in stages, so check GOV.UK for which changes are in force on the date you read this.

Tax on redundancy pay

The first £30,000 of a genuine redundancy payment is usually tax-free — that covers statutory redundancy pay and any additional severance or enhanced redundancy payment combined. Notice pay and holiday pay are taxed like normal wages and are not part of the £30,000. So a £9,012 statutory payment is entirely tax-free, and so is a £25,000 enhanced package. If the total goes over £30,000, the excess is taxed as income in the year you receive it. National Insurance is not charged on the tax-free part. Your employer should give you a breakdown showing which parts are tax-free and which are taxed.

Statutory notice is separate from redundancy pay and is not subject to the £751 cap: one week per year of service, minimum one week, maximum twelve weeks, paid at your actual week’s pay. If you are made redundant, check the whole package — statutory redundancy pay, notice, holiday pay, any enhanced payment and your pension — before you sign a settlement agreement, and take advice if the numbers do not look right.

What else should be in your leaving package

Statutory redundancy pay is only one part of what you leave with. Check each of these before you agree anything. First, notice: your contract may give you more than the statutory minimum, and payment in lieu of notice (PILON) is taxed differently from notice worked — ask for the breakdown. Second, accrued holiday: any holiday you have earned but not taken must be paid, at your normal daily rate. Third, your pension: employer contributions usually stop on your last day, but check whether the redundancy package includes any pension top-up, because some employers offer one instead of a larger cash payment.

Fourth, enhanced redundancy pay. Many employers — particularly in the public sector, banking and large companies — pay more than the statutory minimum, often one or two weeks’ pay per year of service without the £751 cap, or a fixed number of months’ salary. It is usually set out in a redundancy policy or a collective agreement, and it is negotiable in a settlement agreement. Fifth, practical support: outplacement help, a reference, and time off to look for work or attend interviews — employees with 2 or more years’ service are entitled to reasonable time off with pay during the notice period to look for a new job or arrange training. Finally, if you are offered a settlement agreement, the employer normally pays for independent legal advice on it. Take it: the agreement usually waives your right to bring an employment tribunal claim, so the advice is not a formality.

Related: Take Home Pay Calculator · Maternity Pay Calculator · Statutory Sick Pay UK

Sources: GOV.UK “Redundancy: your rights” (statutory redundancy pay, age bands, 2 years, 20 years); GOV.UK “Explaining your redundancy payments” (£751 cap and £22,530 maximum from 6 April 2026); GOV.UK redundancy pay calculator (year-by-year walk-back method). Checked 13 November 2026.