How is statutory redundancy pay calculated?

0.5 week per year of service under age 22, 1 week per year aged 22-40, 1.5 weeks per year from age 41. Maximum 20 years of service. Weekly pay capped at statutory maximum (£700 in 2024-25). Maximum award: £21,000.

Who qualifies for statutory redundancy pay?

Employees with 2 years continuous service where dismissal is for redundancy (section 139 ERA 1996). Workers, self-employed contractors and employees with under 2 years service do not qualify (though may get enhanced contractual pay).

What is the maximum statutory redundancy pay?

£21,000 in 2024-25 (30 weeks maximum service credit x £700 statutory weekly pay cap). Uprated annually in line with inflation.

Is statutory redundancy pay taxable?

The first £30,000 of statutory redundancy plus qualifying ex gratia is tax-free under section 401 ITEPA 2003. Above £30,000 taxable as earnings. PILON is fully taxable and outside the £30k allowance.

What if my employer pays more than statutory?

Enhanced schemes are common. Enhanced amounts get the same tax treatment as statutory (tax-free up to £30k combined with statutory plus any ex gratia). Take advice on package structure before signing settlement paperwork.

Statutory Redundancy Pay Calculator Guide UK (2026): Formula + Worked Examples

The formula

Age band	Weeks per year of service
Under 22	0.5
22-40	1
41 and over	1.5

Maximum service counted: 20 years. Maximum weekly pay: statutory cap (£700 in 2024-25, uprated annually).

Worked example 1 - mid-career professional

Employee aged 45, 12 years service, £800 gross weekly pay (capped at £700 for statutory purposes):

Years 22-40 (from age 33 to 40 = 8 years at age band 22-40 rate, but the whole calculation goes by service years worked in each age band).

Practical: use the redundancy pay calculator. It applies the age bands to each year of service correctly. For this example, statutory redundancy is approximately £8,750 (12 years x weighted 1.04 weeks x £700).

Worked example 2 - long-serving senior

Employee aged 58, 22 years service (capped at 20), £1,200 weekly pay (capped at £700):

Age 41+ bands apply for the last 17 years of the capped 20 years of service.

Statutory redundancy = approximately £18,900. The 20-year cap and £700 weekly-pay cap both bite.

Worked example 3 - younger employee

Employee aged 24, 4 years service, £500 weekly pay:

2 years counted at 0.5 weeks (aged 18-19-20-21).
2 years counted at 1 week (aged 22-23).

Statutory redundancy = (2 x 0.5 + 2 x 1) x £500 = 3 weeks x £500 = £1,500.

Qualifying conditions

Employee (not worker or self-employed).
2 years continuous service at the effective date of termination.
Dismissal must be for redundancy (as defined in section 139 ERA 1996).
Under age 65 (age discrimination provisions have removed the upper age limit for eligibility since 2011).

Weekly pay for statutory purposes

Gross weekly pay for the last complete pay week before the trigger date. Includes contractual bonuses accrued on that basis; excludes discretionary bonuses. For variable-hours workers, the average of the last 12 weeks. Capped at the statutory maximum.

Enhanced redundancy pay

Many employers offer enhanced redundancy above statutory. Enhanced typically doubles or triples the statutory formula, or removes the £700 weekly-pay cap. Take advice on the tax treatment - enhanced sums may push into the £30k s.401 allowance calculation.

Tax on statutory redundancy

The first £30,000 of statutory redundancy and any qualifying ex gratia payment is tax-free under section 401 ITEPA 2003. Amounts above £30,000 are taxable as earnings. PILON is fully taxable under PENP and does NOT fall within the £30,000. See redundancy pay tax explained.

Where the money goes - practical planning

The statutory lump sum is the floor. Enhanced schemes, PILON, holiday pay and any pension top-up can add significantly. Use the redundancy runway calculator to model how long the total package will last against monthly outgoings. For household budgeting and lump-sum management guidance, the sister site PennyWise Finance covers the practical after-redundancy money questions in depth.

Useful calculators

Related guides

Authority pages

Frequently asked questions

How is statutory redundancy pay calculated?: 0.5 week per year of service under age 22, 1 week per year aged 22-40, 1.5 weeks per year from age 41. Maximum 20 years of service. Weekly pay capped at statutory maximum (£700 in 2024-25). Maximum award: £21,000.
Who qualifies for statutory redundancy pay?: Employees with 2 years continuous service where dismissal is for redundancy (section 139 ERA 1996). Workers, self-employed contractors and employees with under 2 years service do not qualify (though may get enhanced contractual pay).
What is the maximum statutory redundancy pay?: £21,000 in 2024-25 (30 weeks maximum service credit x £700 statutory weekly pay cap). Uprated annually in line with inflation.
Is statutory redundancy pay taxable?: The first £30,000 of statutory redundancy plus qualifying ex gratia is tax-free under section 401 ITEPA 2003. Above £30,000 taxable as earnings. PILON is fully taxable and outside the £30k allowance.
What if my employer pays more than statutory?: Enhanced schemes are common. Enhanced amounts get the same tax treatment as statutory (tax-free up to £30k combined with statutory plus any ex gratia). Take advice on package structure before signing settlement paperwork.

Sources and further reading

Employment Rights Act 1996, sections 135-165 — Statutory redundancy pay framework.
GOV.UK: Redundancy pay — Government guidance.
ACAS — Free, impartial UK employment advice.
ACAS: Redundancy pay — Guidance on statutory pay.
Employment Rights Act 1996, section 86 — Statutory minimum notice.

General information about UK employment law, not legal advice. For your situation, contact ACAS or an employment-law solicitor.