Statutory Redundancy Pay (2026): How It's Calculated

Statutory redundancy pay is the legal minimum lump sum owed to an employee with at least 2 years' service who is dismissed for genuine redundancy, calculated from age, capped years of service and a capped week's pay under the Employment Rights Act 1996 and SI 2026/310.

Who Qualifies for Statutory Redundancy Pay

An employee qualifies for statutory redundancy pay if they have at least 2 years' continuous service with the same employer and are dismissed because their job is genuinely redundant, for example the employer's business closes, a workplace relocates, or the need for that role reduces or disappears. The dismissal must be by reason of redundancy rather than conduct, capability or another reason. Only employees qualify, not self-employed contractors or most agency workers. An employee who unreasonably refuses a suitable alternative role offered by the same employer can lose their entitlement. Continuous service is generally counted from the start date to the date the employer gives notice, and short breaks such as sick leave or maternity leave usually do not break continuity. Full detail on qualifying reasons and process sits on the redundancy pay page.

How Statutory Redundancy Pay Is Calculated

Three figures drive the statutory formula: the employee's age during each year worked, the number of complete years of service (capped at 20), and their week's pay (capped at £751 from 6 April 2026). Multiply the age-banded weeks for each qualifying year by the capped week's pay to reach the total. The table below shows the weeks awarded per full year of service by age band under SI 2026/310.

Where an employee's service spans more than one age band, each year is credited at the rate for the employee's age in that particular year, not their age at the redundancy date. Only a maximum of 20 years counts, taken from the most recent years worked backwards.

What Counts as a Week's Pay

A week's pay for redundancy purposes is gross average weekly pay calculated over the 12 weeks immediately before the date the employer gives notice of redundancy, not the date employment actually ends. This figure is capped by law: from 6 April 2026 the cap is £751 a week, up from £719 in 2025/26 under the earlier limits order. If an employee's actual average weekly pay is higher than £751, the calculation still uses £751. If it is lower, the calculation uses the employee's real average weekly pay. This cap is reviewed and uprated most years, so always check the current figure on gov.uk before relying on it for a live calculation.

Worked Examples

These examples show the mechanics of the statutory formula using the verified 2026/27 figures. They illustrate how the calculation works; they do not predict what any specific employer or tribunal will award.

Example 1: Reaching the statutory maximum

1. Employee is 61 years old with 20 years' qualifying service (so every one of those 20 years was served at age 41 or over).
2. Gross average weekly pay over the last 12 weeks is £900, which is above the cap, so £751 applies.
3. Weeks awarded: 20 years × 1.5 weeks = 30 weeks.
4. Payment: 30 × £751 = £22,530, the statutory maximum.

Example 2: Mid-career, single age band

1. Employee is 35 years old with 8 years' qualifying service, all served between ages 27 and 35 (the 22 to 40 band).
2. Gross average weekly pay over the last 12 weeks is £550, below the cap, so the real figure applies.
3. Weeks awarded: 8 years × 1.0 week = 8 weeks.
4. Payment: 8 × £550 = £4,400.

Example 3: Service split across two age bands

1. Employee joined aged 21 and is made redundant 4 years later, aged 25.
2. Year 1 of service falls in the under-22 band: 1 × 0.5 = 0.5 week. Years 2 to 4 fall in the 22 to 40 band: 3 × 1.0 = 3 weeks. Total: 3.5 weeks.
3. Gross average weekly pay over the last 12 weeks is £480, below the cap.
4. Payment: 3.5 × £480 = £1,680.

The 20-Year Service Cap

Only the most recent 20 years of continuous service count towards statutory redundancy pay, even if an employee has worked for the same employer for longer. Years are counted backwards from the redundancy-notice date, so an employee with 25 years' service is treated as having 20 qualifying years, and the years dropped are the earliest ones, not the most recent. Combined with the £751 week's pay cap and the 1.5-week rate for the 41-and-over band, this cap is what produces the £22,530 statutory maximum; no combination of age, service and pay can exceed it under the statutory formula.

Tax Treatment

Statutory redundancy pay is paid tax-free, with no Income Tax or National Insurance deducted. Where an employer tops up the statutory amount with an enhanced or contractual redundancy payment, the combined statutory and contractual total remains tax-free up to £30,000. Any amount above £30,000 is generally taxable. This tax treatment applies to the redundancy element only; other sums often paid alongside redundancy, such as notice pay, holiday pay or bonuses, are taxed as normal earnings.

Statutory Minimum vs Enhanced Redundancy Pay

The figures on this page are the legal minimum an eligible employee must receive; an employer's contract, company policy or a collective agreement can offer more generous enhanced redundancy pay, but can never offer less than the statutory formula produces. Enhanced schemes commonly pay more weeks per year of service, remove the 20-year cap, or use actual salary instead of the capped week's pay. For a full comparison of statutory and enhanced redundancy pay, along with the consultation process employers must follow, see redundancy pay: statutory vs enhanced.

Redundancy Pay and Unfair Dismissal

A genuine redundancy that follows a fair process is a fair reason for dismissal. If the redundancy itself is not genuine, or the selection or consultation process was unfair, an employee may have a separate unfair dismissal claim in addition to their statutory redundancy pay. The basic award in a successful unfair dismissal claim uses the same age-banded, capped formula described above. See unfair dismissal for qualifying periods, fair reasons and remedies, and notice periods for the separate statutory notice an employer must give on top of any redundancy payment.

Northern Ireland

Northern Ireland has its own redundancy pay legislation, separate from the Employment Rights Act 1996 and set by the Department for the Economy rather than Westminster. NI's limits are set independently and are currently HIGHER than the Great Britain figures on this page: a week's pay is capped at £783 (not £751) and the maximum statutory redundancy payment is £23,490 (not £22,530). The age bands, the 20-year service cap and the rest of the formula work the same way, so an NI redundancy uses this method with the NI figures. Always check nidirect.gov.uk for the current NI limits. Redundancy pay disputes in Northern Ireland are heard by the Industrial Tribunal (and, for religious or political discrimination claims, the Fair Employment Tribunal), not the Employment Tribunal used in Great Britain, and NI's enforcement body is the Labour Relations Agency (LRA) rather than ACAS.

Use the Redundancy Pay Calculator

To apply this formula to a specific age, length of service and weekly pay, use the UK redundancy pay calculator, which mirrors the statutory formula on this page including the age bands, the 20-year cap and the £751 week's pay cap. The calculator gives an estimate only; your employer or, if there is a dispute, an employment tribunal makes the binding calculation. For the wider employment rights picture, see the UK employment law hub and the United Kingdom country hub.

This page provides general information about statutory redundancy pay in Great Britain and is not legal advice. Redundancy calculations can involve disputed facts, such as continuous service, age bands spanning several years, or what counts as a week's pay, and only an employer, ACAS or an employment tribunal can make a binding determination in an individual case. If you are facing redundancy, check the current figures on gov.uk and consider contacting ACAS or a solicitor for advice specific to your circumstances.