Statutory Redundancy Pay Explained
If you're being made redundant, you may be entitled to a statutory redundancy payment — a lump sum calculated by law that your employer must pay you on top of your final wages and any notice pay. This guide explains exactly how the figure is calculated, who qualifies, and what to do if your employer won't pay.
The rules haven't changed fundamentally for many years, but the weekly pay cap increases each April. From 6 April 2026 the cap is £751 per week, giving a maximum statutory payment of £22,530.
Statutory Redundancy Pay Calculator
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Calculate My Pay →Do You Qualify?
To be entitled to statutory redundancy pay you must meet all three of these conditions:
- Employee status — you must be an employee, not a worker or self-employed contractor. Zero-hours workers with employee status do qualify.
- 2 years' continuous service — you must have worked for your employer for at least 2 complete years without a break that would break continuity.
- Dismissed by reason of redundancy — your employer must have reduced their need for employees to do your type of work. Redundancy does not include dismissal for performance, conduct, or any other reason.
Some groups are excluded regardless of service length — including share fishermen, members of the armed forces, and employees on fixed-term contracts where a redundancy waiver was properly agreed before 2002. Most employees do not fall into these categories.
How the Calculation Works
Statutory redundancy pay is calculated year by year, working back through your service from your redundancy date. For each complete year of service, a multiplier is applied based on your age during that year:
| Your age during that year of service | Multiplier | What you receive |
|---|---|---|
| Under 22 | ½ | Half a week's pay per year |
| 22 to 40 | 1 | One week's pay per year |
| 41 or over | 1½ | One and a half week's pay per year |
Three limits apply to the overall calculation:
- Only the most recent 20 complete years of service count
- Weekly pay is capped at £751 (from 6 April 2026)
- The maximum total payment is £22,530
A Worked Example
Suppose you are 47 years old, have worked for your employer for 14 years, and earn £900 per week gross. Your redundancy date is after 6 April 2026.
Your weekly pay is capped at £751. Working back through 14 years of service:
| Years of service (most recent first) | Age during those years | Multiplier | Weeks' pay | Amount (at £751) |
|---|---|---|---|---|
| Years 1–7 (most recent) | 41–47 | 1½× | 10.5 weeks | £7,885.50 |
| Years 8–14 | 34–40 | 1× | 7 weeks | £5,257.00 |
| Total | 17.5 weeks | £13,142.50 |
Despite earning £900 per week, only £751 is used. The total statutory entitlement is £13,142.50 — tax-free.
What Counts as a Week's Pay?
For employees with fixed hours and a consistent salary, a week's pay is simply your gross weekly earnings before tax and National Insurance.
For employees with variable pay or hours — including those on zero-hours contracts, commission, or shift patterns — a week's pay is calculated as the average of your earnings over the 12 weeks immediately before the redundancy notice was given. Any weeks where you received no pay are skipped and earlier weeks substituted.
The figure used is always gross pay — before any deductions. It includes contractual elements such as guaranteed overtime and regular commission, but excludes genuinely discretionary bonuses.
When Redundancy Pay Is Tax-Free
Statutory redundancy pay is entirely tax-free. It falls within the £30,000 tax-free threshold for qualifying termination payments. Since the maximum statutory amount is £22,530, you will never pay Income Tax or National Insurance on the statutory element of your redundancy payment.
However, other parts of a redundancy package are treated differently:
- Pay in lieu of notice (PILON) — always fully taxable as employment income, regardless of what your contract says
- Enhanced redundancy pay above statutory — tax-free up to the combined £30,000 threshold (including the statutory element)
- Accrued holiday pay — fully taxable as earnings
If your total package including enhanced pay, PILON and holiday pay exceeds £30,000, you will pay tax on the excess. The Settlement Agreement Tax Estimator can help you work out the tax on a larger package.
Enhanced Redundancy Pay
Statutory redundancy pay is the legal minimum. Many employers — particularly larger organisations with formal redundancy policies — offer enhanced terms above the statutory floor. Common enhancements include:
- A higher weekly pay cap (for example, using your actual salary with no cap)
- A higher multiplier (for example, 2 weeks' pay per year regardless of age)
- Counting more than 20 years of service
- Paying enhanced amounts for longer-serving employees
Always check your employment contract and your employer's redundancy policy before accepting a figure. If a contractual enhanced scheme exists, your employer must honour it.
What Happens During the Redundancy Process
Before making you redundant, your employer must follow a fair procedure. The key steps are:
- Individual consultation — your employer must meet with you and meaningfully consult about the redundancy before a decision is finalised
- Collective consultation — if 20 or more redundancies are proposed within 90 days, your employer must notify the government and collectively consult with employee representatives for at least 30 days (45 days for 100 or more)
- Fair selection — if your employer is selecting from a pool of employees, selection criteria must be objective and consistently applied
- Alternative employment — your employer must consider whether any suitable alternative roles exist and offer them to you
Failure to follow a fair procedure may give you grounds for an unfair dismissal claim in addition to statutory redundancy pay. See the Redundancy Consultation Rights guide for full details.
Trial Periods for Alternative Roles
If your employer offers you an alternative role, you are entitled to a statutory trial period of 4 weeks in the new position. During the trial you can decide whether the role is suitable. If you reasonably conclude it isn't, you can still claim your statutory redundancy pay. If you unreasonably turn down a suitable alternative role — either before or during a trial period — you may lose your entitlement.
When Your Employer Won't Pay
If your employer refuses to pay statutory redundancy pay, or pays less than you're entitled to, you have the following options:
- Write to your employer — a formal written demand is often enough to prompt payment
- Contact Acas — Acas (acas.org.uk) provides free guidance and early conciliation to resolve disputes before tribunal
- Employment tribunal claim — you must apply within 6 months of your employment ending. Acas early conciliation is a required step before filing.
- Insolvency — if your employer is insolvent and cannot pay, you can claim through the government's Redundancy Payments Service at GOV.UK
Redundancy Pay and Benefits
Receiving a redundancy payment may affect your entitlement to means-tested benefits such as Universal Credit. Redundancy pay is treated as capital, and if your total savings exceed certain thresholds it can reduce or stop your benefit entitlement temporarily. Seek advice from Citizens Advice or your local Jobcentre Plus if this applies to you.
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Frequently Asked Questions
How much statutory redundancy pay am I entitled to?
It depends on your age, service length and weekly pay. Use the Redundancy Pay Calculator for an exact figure. The maximum is £22,530 (from April 2026).
Do I qualify?
You need at least 2 complete years of continuous service as an employee, dismissed by reason of redundancy. Workers, contractors, and the self-employed generally do not qualify for statutory redundancy pay.
Is redundancy pay taxable?
Statutory redundancy pay is tax-free. It falls within the £30,000 tax-free threshold for termination payments. Pay in lieu of notice is always taxable as earnings regardless of the redundancy.
When must my employer pay?
On or before your final day of employment, or within a reasonable time thereafter. If they don't pay, you can claim through an employment tribunal within 6 months of your employment ending.
Can I lose my right to redundancy pay?
Yes — if you unreasonably refuse a suitable alternative role offered by your employer, or if you are dismissed for gross misconduct during the notice period. Simply leaving before your notice expires does not automatically forfeit your right, but timing and procedure matter.
Summary
- You need at least 2 complete years of continuous service as an employee to qualify
- Pay is calculated year by year: ½ week's pay under 22, 1 week aged 22–40, 1½ weeks aged 41 and over
- Weekly pay is capped at £751 from 6 April 2026; the maximum payment is £22,530
- Statutory redundancy pay is always tax-free — it falls within the £30,000 termination payment threshold
- Pay in lieu of notice is separate and always taxable as earnings
- Your employer must follow a fair consultation process — failure to do so may give grounds for unfair dismissal
- If your employer won't pay, contact Acas and consider an employment tribunal claim within 6 months
- Use the Redundancy Pay Calculator → to see your exact entitlement broken down year by year