Redundancy Pay Calculator

Statutory redundancy pay is based on age, length of service, and weekly pay, capped at £751 from 6 April 2026. Half a week's pay per year of service under 22, one week's pay for ages 22-40, and 1.5 weeks for each year aged 41+. Maximum 20 years service counts.

Last updated: July 2026

£751

Weekly pay cap

20 years

Maximum service

£22,530

Maximum statutory payment

What the Law Says

Part XI of the Employment Rights Act 1996 provides the right to statutory redundancy pay for employees with 2+ years continuous service. The calculation uses a statutory formula based on age bands and weekly pay, subject to a weekly cap reviewed annually. From 6 April 2026 the weekly pay cap is £751, making the maximum statutory redundancy payment £22,530 (20 years x £751 x 1.5).

Your Obligations as an Employer

  • Pay statutory redundancy to employees with 2+ years service
  • Calculate using the correct weekly pay cap and age bands
  • Provide a written statement showing how redundancy pay was calculated
  • Make payment on or before the last day of employment or shortly after

What to Include in Contracts

Specify whether the company offers enhanced redundancy pay above statutory, the formula for calculation, and confirm the employee's right to statutory redundancy pay after 2 years of continuous service.

View related contract template

Common Mistakes

  • Using actual weekly pay instead of the statutory cap
  • Not counting continuous service correctly including TUPE transfers
  • Forgetting that the first £30,000 of redundancy pay is tax-free

FAQ

Is redundancy pay taxable?

The first £30,000 of redundancy pay (both statutory and contractual) is tax-free under s.403 ITEPA 2003. Amounts above £30,000 are subject to income tax. Statutory redundancy pay always falls within the £30,000 exemption as the maximum is £22,530.

Do fixed-term contract employees get redundancy pay?

Yes. If a fixed-term contract is not renewed and the employee has 2+ years continuous service, the non-renewal counts as a dismissal by reason of redundancy and statutory redundancy pay is due.

Related Topics

Redundancy Process

Statutory Redundancy Pay

Notice Period Requirements

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This is guidance for UK employers, not legal advice. For complex employment law matters, consult a qualified employment solicitor or ACAS.

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