Layoffs and exits · 5 min read
How is statutory redundancy pay worked out?
How UK statutory redundancy pay is calculated from your age, service and weekly pay, the 2026 cap of £751 a week, three worked examples and what's tax-free.
The short answer
Statutory redundancy pay in England, Scotland and Wales is worked out from three things: your age, your full years of continuous service (up to 20), and your weekly pay, capped at £751 for redundancies on or after 6 April 2026. For each full year you worked while under 22 you get half a week's pay, for each year aged 22 to 40 one week's pay, and for each year aged 41 or older one and a half weeks' pay. The maximum is £22,530. You need at least two years' continuous service to qualify. Your contract may promise more, and the first £30,000 of a redundancy payment is usually tax-free.
Key takeaways
- You qualify after two full years of continuous service with the same employer.
- Count back from your leaving date: each year is weighted by the age you were during it.
- Weekly pay is capped at £751 from 6 April 2026, so the most anyone gets is £22,530. Northern Ireland has its own, higher cap.
- Notice pay and holiday pay are paid on top, and are taxed. Statutory redundancy pay is usually tax-free up to £30,000.
On this pageThe formula
The formula
| Age during each year of service | Weeks' pay per full year | Notes |
|---|---|---|
| Under 22 | 0.5 | Only full years count |
| 22 to 40 | 1 | Most service falls here |
| 41 and over | 1.5 | The most valuable years |
| Weekly pay | Capped at £751 | Gross, before tax |
| Service | Capped at 20 years | Counted back from your leaving date |
Three worked examples
- Aged 24, four years' service, £450 a week: two years at 22 and 23 (1 week each) plus two at 20 and 21 (0.5 each) = 3 weeks × £450 = £1,350.
- Aged 35, eight years' service, £600 a week: all eight years between 27 and 34 at 1 week each = 8 weeks × £600 = £4,800.
- Aged 45, fifteen years' service, £900 a week: four years at 41 to 44 at 1.5 weeks (6 weeks) plus eleven years at 30 to 40 at 1 week (11 weeks) = 17 weeks × £751 (the cap) = £12,767.
Count only full years. If you've worked eight years and ten months, you have eight years. Age means the age you were during each year of service, which is why counting back from the leaving date matters: the most recent years are usually the ones at the highest rate.
What else you're owed when you leave
- Notice: at least one week per full year of service, up to 12 weeks, or your contractual notice if longer. It can be worked or paid in lieu.
- Holiday you've earned but not taken, paid at your normal rate.
- Any enhanced redundancy your contract, handbook or a collective agreement promises.
- Reasonable paid time off to look for work or train once you've been given notice, if you have two years' service. The pay for it is capped at 40% of a week's pay.
Checking your employer's figure
Ask for the calculation in writing, with your start date, date of birth, weekly pay and how each part was worked out. Run the same numbers through the GOV.UK calculator. Common errors are using the wrong start date after a transfer between companies (service usually carries across under TUPE), leaving out contractual overtime, and taxing the whole payment instead of only the parts above £30,000 and the notice pay. If your employer won't or can't pay, you can apply to the Redundancy Payments Service.
Questions people ask
- What is the maximum statutory redundancy pay in 2026?
- £22,530 in England, Scotland and Wales for redundancies on or after 6 April 2026. That's 20 years of service, all aged 41 or over, at 1.5 weeks each, multiplied by the weekly cap of £751. Very few people reach the maximum, because it needs 20 years' service after age 41 and pay above the cap.
- Is redundancy pay taxed?
- The first £30,000 of a genuine redundancy payment, statutory and any enhanced amount together, is normally free of income tax and National Insurance. Pay in lieu of notice, holiday pay, bonuses and anything you're contractually owed are taxed as normal earnings. Your payslip should show them separately.
- Do I get redundancy pay if I've worked less than two years?
- Not statutory redundancy pay. You may still get notice pay, holiday pay and anything your contract or a company scheme promises. Some employers pay enhanced redundancy from the first day, so check your contract and staff handbook.
- What counts as a week's pay?
- For people with normal working hours, it's your gross weekly pay under your contract, before tax, at the date you're given notice. If your hours or pay vary, it's the average over the last 12 weeks. Overtime only counts if it's contractual. Whatever the figure, it's capped at £751 for the calculation.
- Can I lose my redundancy pay?
- Yes, if you unreasonably turn down an offer of suitable alternative work with the same employer, or if you're dismissed for gross misconduct before the redundancy date. You keep it if you leave during a four-week trial of a new role because the role isn't suitable.
Exercises are practice, not evidence of career fit or a qualification. How to read our guides and report a correction.
Sources
- Redundancy: your rights, redundancy pay · GOV.UK
- Calculate your statutory redundancy pay · GOV.UK
- Termination payments and benefits · HMRC, GOV.UK
How this page is written
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