How statutory redundancy pay is calculated
In England, Scotland and Wales, employees with at least 2 full years of continuous service who are made redundant are entitled to statutory redundancy pay under the Employment Rights Act 1996. Continuous service is capped at the most recent 20 years, counted backwards from the date your employment officially ends.
For each full year of service counted, you receive a multiplier based on your age during that year: 0.5 week's pay for each full year worked under age 22; 1.0 week's pay for each full year worked aged 22 to 40; and 1.5 weeks' pay for each full year worked aged 41 or older.
Your weekly pay used in the calculation is capped at the statutory limit in force on your redundancy date. For redundancies taking place on or after 6 April 2026, the statutory weekly pay cap is £751, making the maximum possible statutory redundancy payment £22,530 (20 years × 1.5 weeks × £751).
Worked example
Consider an employee aged 42 who has completed 5 full years of continuous service with an employer, earning £650 per week.
Counting backwards 5 years from their termination date: the most recent 2 years were worked while aged 41 or older (giving 2 × 1.5 = 3 weeks' pay), and the preceding 3 years were worked while aged 22 to 40 (giving 3 × 1.0 = 3 weeks' pay). This produces a total entitlement of 6 weeks of pay.
Because their weekly pay of £650 is below the statutory cap of £751, their statutory redundancy payout is 6 × £650 = £3,900. Because this amount is well below the £30,000 threshold, the full £3,900 is paid free of income tax and National Insurance.
Tax rules and enhanced severance payments
Under Section 401 of the Income Tax (Earnings and Pensions) Act 2003, genuine redundancy payments are tax-free up to £30,000. Statutory redundancy pay is always well under this limit (as the maximum statutory payout is £22,530) and is therefore paid completely free of income tax and employee National Insurance contributions.
Many employers offer contractual or voluntary enhanced redundancy packages beyond the statutory minimum. Any redundancy compensation up to £30,000 remains tax-free. Any portion of redundancy pay exceeding £30,000 is subject to income tax at your usual marginal rate, although employee National Insurance is generally not charged on termination payouts.
Inputs for the redundancy calculator
Age
Your age in completed whole years on the date your employment or statutory notice period ends.
Years of continuous service
Full completed years of continuous employment with your employer. You need at least 2 full years to qualify for statutory redundancy pay, and a maximum of the last 20 years are counted.
Pay frequency
Choose whether to enter gross pay as a weekly amount or as an annual salary. Annual salary is divided by 52 to establish your weekly pay.
Gross weekly pay
Your average gross weekly pay before tax and National Insurance. The statutory calculation caps weekly pay at £751 in Great Britain.
Gross annual salary
Your gross annual salary before deductions, divided by 52 weeks to determine average weekly earnings.
Additional employer redundancy pay (optional)
Any contractual severance, ex gratia or voluntary redundancy payment offered by your employer above the statutory minimum.
CALCULATOR QUESTIONS
Redundancy calculator questions
How many years of service do I need to qualify for redundancy pay?
Under UK law, you must have worked continuously for your employer for at least 2 full years (104 weeks) under an employment contract to be eligible for statutory redundancy pay.
What is the maximum statutory redundancy pay in the UK?
For redundancies on or after 6 April 2026, the maximum statutory redundancy payment is £22,530. This represents the maximum 20 years of service multiplied by 1.5 weeks at the highest age tier and the statutory weekly cap of £751.
Is redundancy pay taxable in the UK?
Statutory redundancy pay is completely tax-free. Redundancy payments (including contractual and voluntary lump sums) are exempt from income tax and employee National Insurance up to £30,000. Any amount above £30,000 is taxed as employment income.
How is weekly pay calculated if my hours or pay vary?
If you do not have normal working hours or your pay fluctuates with bonuses or overtime, your weekly pay is calculated as the average of your gross pay over the 12 weeks leading up to the day you received redundancy notice.