How is statutory redundancy pay calculated in the UK?

Statutory redundancy pay is based on your age during each full year of service (counting backwards from dismissal), your gross weekly pay (capped at £751 for 2026/27), and a maximum of 20 years' service. You get 0.5 weeks' pay per year under age 22, 1 week per year aged 22-40, and 1.5 weeks per year aged 41+. The first £30,000 is tax-free.

Do I qualify for statutory redundancy pay?

You qualify if you are an employee (not self-employed or a worker), have worked for your employer for at least 2 full years, and are being made redundant. You do NOT qualify if you are dismissed for misconduct, if your employer offers suitable alternative employment that you refuse without good reason, or if you are on a fixed-term contract that expires and is not renewed (unless you have 2+ years' service).

Is redundancy pay tax-free?

The first £30,000 of your total redundancy payment is tax-free and National Insurance-free. Any amount above £30,000 is taxable as earnings, but not subject to National Insurance. Your employer should handle this through PAYE. Enhanced or contractual redundancy payments above the statutory amount count towards the £30,000 tax-free limit.

UK Redundancy Pay Calculator 2026/27

Calculate your statutory redundancy entitlement based on your age, years of service and weekly pay. Includes the £751 weekly cap, 20-year service limit, and tax-free up to £30,000.

👤 Your Details

Age at Dismissal

Your age when your job ends. Affects weeks per year.

Full Years of Service

Only complete years count. Maximum 20 years for statutory pay.

Gross Weekly Pay

Capped at £751/week for 2026/27. Use average of last 12 weeks.

💰 Enhanced Redundancy (Optional)

Extra Weeks Payable

Additional weeks your employer offers above statutory minimum.

Enhanced Weekly Rate (£)

Leave 0 to use your normal weekly rate. Some employers use uncapped rates.

Other Lump Sum (£)

Ex gratia or notice pay in lieu (PILON) if not contractual.

⚙️ Options

Notice Period (weeks)

Statutory minimum is 1 week per year (max 12). Check your contract.

Untaken Holiday (days)

Days of annual leave you have accrued but not taken.

📊 Your Redundancy Pay

Total Payout

£0

Statutory + enhanced + notice + holiday

Statutory Weeks

£0

Weekly Pay Used

Years Counted

Statutory Calculation

Enter your details above and click Calculate.

💰 Breakdown

✅ Tax-Free Amount

£0

First £30,000 of total redundancy is tax and NI free.

Note: 2026/27 rates: weekly cap £751, max statutory £22,530. Tax-free limit £30,000 applies to the total of statutory + enhanced + ex gratia. Contractual PILON is taxable. Notice pay and holiday pay are taxable as normal earnings.

Who Qualifies for Statutory Redundancy Pay?

You must be an employee (not a worker or self-employed contractor) and have worked for your employer for at least 2 full years (730 days) to qualify for statutory redundancy pay.

You qualify if: You're made redundant, your fixed-term contract of 2+ years isn't renewed, you're laid off or put on short-time working for 4+ consecutive weeks (or 6+ weeks in 13 weeks).
You do NOT qualify if: You're dismissed for misconduct, you resign voluntarily, you refuse suitable alternative employment without good reason, or you're on a fixed-term contract of less than 2 years that isn't renewed.

Part-time employees qualify equally — the calculation uses your actual weekly pay and years of service, regardless of hours.

How Statutory Redundancy Is Calculated

For each full year of service (counting backwards from your dismissal date), you receive:

Age During That Year	Weeks' Pay Per Year
Under 22	0.5 weeks
22 to 40	1.0 week
41 and over	1.5 weeks

Your gross weekly pay is capped at £751 for 2026/27, and only 20 years of service count towards statutory redundancy.

Example

You're 45 with 15 years' service and earn £800/week. Your statutory pay is calculated on £751 (the cap). Counting backwards from age 45: 4 years at 1.5 weeks (ages 45-42) = 6 weeks, plus 11 years at 1.0 week (ages 41-31, but wait — age 41 year gets 1.5) = actually 1 year at 1.5 (age 41) + 10 years at 1.0 (ages 40-31) = 11.5 weeks. Total = 17.5 weeks × £751 = £13,143.

Tax on Redundancy Pay

The first £30,000 of your total redundancy payment is completely tax-free and National Insurance-free.

Statutory redundancy is always tax-free up to the £30,000 limit.
Enhanced redundancy (extra weeks above statutory) also counts towards the £30,000 tax-free limit.
Ex gratia payments (non-contractual lump sums) also use the £30,000 allowance.
Notice pay and holiday pay are taxable as normal earnings through PAYE.
PILON (Pay in Lieu of Notice) is taxable if your contract allows it. If not contractual, it may be treated as taxable earnings.

Important: If your total redundancy package (statutory + enhanced + ex gratia) exceeds £30,000, the amount above £30,000 is taxed through PAYE at your marginal income tax rate. It is not subject to National Insurance.

Notice Period Rights

Your employer must give you a minimum notice period before your employment ends, or pay you in lieu:

Service Length	Minimum Notice
1 month to 2 years	1 week
2 years to 12 years	1 week per year
12+ years	12 weeks (maximum)

Your employment contract may give you more than the statutory minimum. If your employer makes you redundant without proper notice, you may have a claim for wrongful dismissal.

Frequently Asked Questions

What is the maximum statutory redundancy pay?

For 2026/27, the maximum is £22,530. This is reached with 20 years of service where all years are at the 1.5-week rate (age 41+) multiplied by the £751 weekly cap: 20 × 1.5 × £751 = £22,530.

Can I negotiate more than statutory redundancy?

Yes. Many employers offer enhanced redundancy packages, especially for long-serving employees or during voluntary redundancy programmes. You can also negotiate a Settlement Agreement (formerly Compromise Agreement) which may include a tax-efficient ex gratia payment up to the £30,000 tax-free limit. Always take independent legal advice on Settlement Agreements — your employer must pay for this by law.

Does redundancy pay affect Universal Credit?

Redundancy pay is treated as capital/savings for Universal Credit purposes, not income. If your total savings (including redundancy pay) exceed £16,000, you are not eligible for Universal Credit. Savings between £6,000 and £16,000 reduce your Universal Credit amount through a "tariff income" deduction. The first £6,000 is ignored.

What if my employer can't afford to pay redundancy?

If your employer is insolvent (in liquidation or administration), you can claim your statutory redundancy pay from the Redundancy Payments Service (part of the Insolvency Service). You must apply online through GOV.UK. You'll also claim for unpaid wages, holiday pay and notice pay up to statutory limits. Enhanced or contractual redundancy is not covered — you become an unsecured creditor for that amount.

When should I receive my redundancy pay?

Your employer should pay your redundancy on or before your last working day, or on an agreed date shortly after. If they don't pay within the contractual timeframe, you can take them to an employment tribunal. You have 6 months from the date your employment ended to make a claim to an employment tribunal for unpaid statutory redundancy pay.