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Summary
Statutory redundancy pay in the UK is based on your age, length of service, and weekly pay (capped at £719/week for 2025-26). The maximum statutory payout is £21,570. The first £30,000 of redundancy pay is tax-free. Many employers offer enhanced redundancy terms above the statutory minimum.
How it works
Eligibility
You must have at least 2 years’ continuous service with your employer to qualify for statutory redundancy pay.
The calculation
Weekly pay is capped at £719 (2025-26). Your redundancy entitlement depends on your age for each year of service:
| Age during year of service | Entitlement per year |
|---|---|
| Under 22 | 0.5 weeks’ pay |
| 22-40 | 1 week’s pay |
| 41 and over | 1.5 weeks’ pay |
Maximum service counted: 20 years (the most recent 20 years if you have served longer).
The formula
Redundancy pay = Sum of (weekly pay x multiplier) for each qualifying year
Each year of service is assessed at the age you were during that year, with the most recent years counted first.
Tax treatment
- The first £30,000 of redundancy pay is tax-free (this includes statutory and any enhanced payment)
- Any amount above £30,000 is taxed as income at your marginal rate
- Pay in lieu of notice (PILON) is always taxable and subject to NI, even if it falls within the redundancy package
Notice period
Statutory notice entitlement is:
- 1 week per year of service (up to 12 weeks maximum)
- Minimum 1 week (for 1 month to 2 years’ service)
Worked example
Age: 45, Service: 12 years, Weekly salary: £800 (capped at £719)
Year-by-year calculation (most recent 12 years, current age going backward):
- Age 45: 1.5 weeks = £1,078.50
- Age 44: 1.5 weeks = £1,078.50
- Age 43: 1.5 weeks = £1,078.50
- Age 42: 1.5 weeks = £1,078.50
- Age 41: 1.5 weeks = £1,078.50
- Age 40: 1 week = £719.00
- Age 39: 1 week = £719.00
- Age 38: 1 week = £719.00
- Age 37: 1 week = £719.00
- Age 36: 1 week = £719.00
- Age 35: 1 week = £719.00
- Age 34: 1 week = £719.00
Total: (5 x £1,078.50) + (7 x £719) = £5,392.50 + £5,033 = £10,425.50
This is below £30,000, so it is entirely tax-free.
Notice: 12 years = 12 weeks’ statutory notice.
Inputs explained
- Age — your current age (determines the multiplier for each year)
- Years of service — continuous employment with this employer
- Weekly salary — your gross weekly pay (capped at £719 for statutory calculation)
- Enhanced terms — if your employer offers more than statutory (e.g., 2 weeks per year)
Outputs explained
- Statutory redundancy pay — the legal minimum your employer must pay
- Enhanced redundancy — the total if enhanced terms apply
- Tax-free amount — the portion within the £30,000 exemption
- Taxable amount — anything above £30,000
- Notice entitlement — statutory notice period in weeks
Assumptions & limitations
- The weekly pay cap (£719 for 2025-26) applies to statutory redundancy only. Enhanced schemes may use actual salary.
- Fixed-term contracts that expire without renewal may count as redundancy.
- Service before age 18 does not count for statutory redundancy.
- The calculator does not model compromise agreements or settlement agreements, which may include additional payments.
- Northern Ireland has a slightly higher statutory redundancy cap (£22,470 for 2025-26).