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Disclaimer: Statutory minimum estimate. Does not include enhanced contractual redundancy, notice pay, holiday pay, payment in lieu of notice, or tax treatment. Verify the April 2026 cap with gov.uk before issuing any redundancy letter. For a proper redundancy process, book a call.
How statutory redundancy pay is calculated in the UK
The statutory formula uses three things: the employee’s age, their complete years of continuous service, and their weekly pay (capped at the statutory limit).
Age bands per year of service:
- Age 18 to 21: half a week’s pay for each year
- Age 22 to 40: one week’s pay for each year
- Age 41 and over: one and a half week’s pay for each year
Caps that apply:
- Maximum 20 years of service counted
- Weekly pay capped at £751 from April 2026 (subject to government confirmation)
- Maximum statutory payment: £22,530
- First £30,000 of redundancy pay is tax-free
Common questions
What is not in the calculation? Notice pay, accrued unused holiday, contractual enhanced redundancy, payment in lieu of notice, and settlement payments.
Do I have to pay enhanced redundancy? Only if your contracts or policies say you do. Many businesses pay enhanced redundancy as a goodwill gesture or to secure a settlement agreement.
Running a real redundancy process? The procedure matters more than the maths. Wrongful or unfair dismissal claims start at £6,000 for the simplest cases.
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