Redundancy Pay Calculator UK

Redundancy is stressful enough without having to decode how your payout is calculated. The statutory formula is actually quite mechanical, three inputs (age, service, weekly pay), two caps, one multiplication, but the caps and age bands trip people up, and it's common to either underestimate or wildly overestimate what's coming. This calculator works out your statutory entitlement using the 2026/27 figures.

The formula

For each full year of continuous service, you receive:

• 0.5 week's pay for each full year worked while under 22
• 1 week's pay for each full year worked between 22 and 40
• 1.5 weeks' pay for each full year worked at 41 or over

Two caps apply for 2026/27:

• Weekly pay is capped at £751 (up from £719 in 2025/26), if you earn more, the calculation still uses £751
• Service is capped at 20 years, longer service doesn't add more

The maximum possible statutory payment is therefore £22,530: 20 years, all at the 1.5 multiplier, at the £751 cap (20 x 1.5 x £751).

Worked examples

Example 1: Priya is 45, earns £600 a week, and has 10 full years of service, 6 of them at age 41 or over, 4 between 22 and 40:

• 6 years x 1.5 weeks x £600 = £5,400
• 4 years x 1 week x £600 = £2,400
• Total statutory redundancy pay: £7,800

Example 2: James is 58, earns £1,100 a week, and has 25 years of service. His pay is capped at £751 and his service at 20 years. Counting back from his most recent years (the calculation works backwards from the dismissal date), all 20 counted years fall at age 41+:

• 20 years x 1.5 weeks x £751 = £22,530, the statutory maximum

Who qualifies

You need at least 2 years of continuous service as an employee with the same employer, and the dismissal must be a genuine redundancy, the role disappearing, the workplace closing, or the need for that work reducing. It applies equally to full-time and part-time employees. It doesn't cover the genuinely self-employed, most agency workers, or anyone dismissed for a reason other than redundancy. If you unreasonably refuse an offer of suitable alternative employment from your employer, you can lose the entitlement.

What counts as a week's pay

For fixed pay, it's your normal gross weekly wage at the calculation date. For variable pay, it's averaged over the previous 12 weeks. Either way, the £751 cap then applies on top.

Statutory vs enhanced redundancy

Everything above is the legal minimum. Many employers, particularly larger ones and those with collective agreements, offer enhanced redundancy: uncapped weekly pay, higher multipliers, or extra lump sums. Check your contract, staff handbook, or any redundancy policy before assuming the statutory figure is what you'll get. An employer's enhanced scheme can't take you below the statutory minimum.

Tax treatment

Redundancy payments, statutory and enhanced combined, are tax-free up to £30,000. Above that, the excess is taxed as income. Be careful with what's bundled into a settlement, though: pay in lieu of notice (PILON), accrued holiday pay, and bonuses are always taxed as normal earnings, they don't share the £30,000 exemption even if paid in the same lump sum.

What you're owed alongside redundancy pay

Redundancy pay isn't the whole package. Separately, you're entitled to:

• Notice — worked, or paid in lieu (statutory minimum: one week per year of service, up to 12 weeks)
• Accrued holiday — payment for untaken leave
• Time off to job hunt — reasonable paid time off if you've 2+ years' service
• Consultation — collective consultation rules apply where 20+ redundancies are proposed at one establishment

If your employer is insolvent

If your employer can't pay because it's gone insolvent, you can claim statutory redundancy pay, plus capped arrears of wages, notice and holiday, from the government's Insolvency Service through the Redundancy Payments Service.

This is general guidance, not legal or financial advice. For your specific situation, check gov.uk or contact Acas, and consider legal advice before signing any settlement agreement.