Redundancy Pay Calculator (UK)
Updated August 2026 · Free · No sign-up
Calculate your UK statutory redundancy pay: age-weighted weeks per year of service, the 20-year service cap, the weekly pay cap, and the £30,000 tax-free rule — plus what a fair enhanced package looks like.
Quick answer: UK statutory redundancy = age-weighted weeks × capped weekly pay: 0.5 week per year under 22, 1 week per year at 22-40, 1.5 weeks per year at 41+ — max 20 years counted, weekly pay capped (~£700, revised each April), maximum 30 weeks. Requires 2 years of continuous service.
How Statutory Redundancy Pay Works
UK law (Employment Rights Act 1996) guarantees a minimum payment when your role is made redundant, built from three age-weighted rates:
- 0.5 week's pay for each full year of service while under 22
- 1 week's pay for each full year aged 22-40
- 1.5 weeks' pay for each full year aged 41+
Three caps apply: only the last 20 years of service count; weekly pay counts only up to the statutory cap (revised every 6 April — around £700; enter the current figure); and the overall maximum is therefore 30 weeks of capped pay. Years are allocated by your age during each year of service, counting backwards from your redundancy date.
Worked Examples
Example 1 — mid-career. Age 45, 8 full years, £650/week (under cap): the last 8 years span ages 37-45 → 4 years at 41+ (1.5) + 4 years at 22-40 (1.0) = 10 weeks × £650 = £6,500, tax-free.
Example 2 — high earner hits the cap. Age 52, 12 years, £1,200/week: 12 years all at 41+ = 18 weeks — but paid at the ~£700 cap, not £1,200 → ~£12,600. The cap is why senior staff focus negotiation on the enhanced package, not the statutory floor.
Example 3 — maximum possible. Age 61+, 20+ years all at 41+: 30 weeks × cap ≈ £21,000 — the statutory ceiling.
Eligibility Checklist
| Condition | Rule |
|---|---|
| Employee status | Employees only — not contractors or most casual workers |
| 2 years continuous service | Hard requirement for statutory redundancy pay |
| Genuine redundancy | Role disappearing (closure, restructure, less work) — not performance dismissal in disguise |
| Suitable alternative offered? | Unreasonably refusing a suitable alternative role can forfeit the payment (4-week trial periods protect you) |
| Tax | Redundancy payments (statutory + enhanced) are tax-free up to £30,000; the excess, and all notice pay/holiday pay, is taxed normally |
What Statutory Pay Doesn't Include (Your Full Package)
- Notice pay: separate and additional — statutory minimum 1 week per year of service (max 12), or your contractual notice if longer. Worked, garden leave, or paid in lieu (PILON — always taxed as normal pay). Dates via the notice period calculator.
- Accrued holiday: untaken statutory leave must be paid out — check your entitlement with the holiday pay calculator.
- Enhanced redundancy: many employers pay above the floor — common patterns: uncapped actual weekly pay, 2-4 weeks per year, or month-per-year schemes. Enhanced terms must not discriminate by age beyond mirroring the statutory structure.
- Pension and benefits: contributions to your leaving date; some schemes allow redundancy-linked early retirement from 55 — check before signing anything.
Settlement Agreements: The Real Negotiation
Employers frequently wrap redundancy into a settlement agreement — extra money for waiving tribunal claims. Know your leverage: the agreement is only valid after you've had independent legal advice (employer customarily pays £350-500 toward it); consultation failures (no meaningful consultation, unfair selection scoring, missed collective-consultation rules for 20+ redundancies) create claim risk that funds better offers; and the £30,000 tax-free wrapper means an extra £5,000 of ex-gratia payment is worth exactly £5,000 to you but deductible to them — efficient to give. Never sign in the meeting; take the document away, use the advice, and counter once with specifics.
After Redundancy: The Money Sequence
- Check the calculation against this page — age-band allocation errors (counting years at the wrong rate) are the most common employer mistake.
- Claim what exists: new-style Jobseeker's Allowance (contribution-based, not means-tested for 6 months) and possibly Universal Credit; redundancy pay itself doesn't block new-style JSA.
- Insolvent employer? The government's Redundancy Payments Service pays statutory redundancy, notice, and holiday from the National Insurance Fund — capped but reliable.
- Tax planning: redundancy pay above £30k can sometimes be sacrificed into your pension pre-tax — significant for large enhanced packages; take advice.
US comparison: nothing statutory exists — see the severance pay calculator for the negotiated-weeks world, and the severance tax calculator for how differently the US taxes it.
Frequently Asked Questions
How is redundancy pay calculated in the UK?
Age-weighted weeks (0.5/week per year under 22, 1 at 22-40, 1.5 at 41+) × your gross weekly pay up to the statutory cap — last 20 years of service only, maximum 30 weeks.
What is the redundancy weekly pay cap?
A statutory ceiling on the weekly pay used in the calculation, revised every 6 April — around £700 recently. Earnings above it simply don't count for statutory purposes.
Is redundancy pay tax-free?
Yes up to £30,000 (statutory + enhanced combined). Notice pay, PILON, holiday pay, and bonuses are always taxed as normal earnings.
Do I qualify for redundancy pay with 18 months of service?
No — statutory redundancy pay requires 2 full years of continuous service. Your contractual notice and accrued holiday are still owed.
What is the maximum statutory redundancy payment?
30 weeks × the weekly cap — roughly £21,000 at recent cap levels. Enhanced employer schemes can pay much more.
How are the age bands applied?
Year by year, counting back from the redundancy date: each service year takes the rate for your age during it. Turning 41 mid-career means later years earn 1.5 weeks while earlier ones earned 1.
Can I lose redundancy pay by refusing another role?
Unreasonably refusing a suitable alternative role can forfeit statutory pay. A statutory 4-week trial period lets you test the role without risking the payment.
What if my employer is insolvent?
The Redundancy Payments Service pays your statutory redundancy, notice, and holiday from the National Insurance Fund — apply via gov.uk with your case reference.
Is notice pay part of redundancy pay?
No — it is separate and additional: at least 1 week per year of service (max 12) or your contractual notice, worked or paid in lieu, and always taxable.
Should I sign a settlement agreement?
Only after the independent legal advice that makes it valid (employer usually funds it). Consultation or selection flaws are negotiating leverage — counter once, with specifics, before signing.
✓ Formula verified • Last updated: August 20, 2026