Redundancy pay calculator 2026/27

How statutory redundancy pay works

If you've been employed for 2 or more years and you're being made redundant, your employer must pay you statutory redundancy. The amount depends on three things: your age, your length of service, and your weekly pay (capped at £751 from April 2026).

The formula is straightforward. For each complete year of service, you get:

• 0.5 week's pay for each year you were under 22
• 1 week's pay for each year you were aged 22 to 40
• 1.5 weeks' pay for each year you were 41 or older

The maximum service that counts is 20 years. And the weekly pay cap is £751 for the 2026/27 tax year, up from £700 in 2025/26. That means the absolute maximum statutory payout is £22,530 (20 years at 1.5 weeks, all above age 41, at the £751 cap).

Worked example: age 45, 12 years service, £600/week

Let's say you're 45 years old, you've worked for the same company for 12 years, and your weekly gross pay is £600. Since £600 is below the £751 cap, we use your actual weekly pay.

You started at age 33. Here's how the years break down:

Age range	Years	Rate	Subtotal
33 to 40	7 years	1 week × £600	£4,200
41 to 44	5 years	1.5 weeks × £600	£4,500

Total statutory redundancy: £8,700. This is paid tax-free because it's under the £30,000 threshold.

The £30,000 tax-free threshold

Statutory redundancy pay is always tax-free. But if your employer offers an enhanced package above the statutory minimum, the first £30,000 of the total payment (including statutory) is free of Income Tax and National Insurance. Anything above £30,000 gets taxed at your normal rate.

So if you receive a £45,000 redundancy package, you'd pay tax on £15,000 of it. At the basic rate (20%), that's £3,000 in tax. Higher-rate taxpayers pay 40% on the excess, which would be £6,000 on the same £15,000.

What changed in 2026

The Employment Rights Bill 2026 introduced several changes that affect workers being made redundant. Day-one sick pay is now a right (previously you needed to wait 3 days and have 4 months' service for SSP). Paternity leave is available from day one of employment. And the weekly pay cap rose to £751, reflecting inflation adjustments.

The redundancy formula itself hasn't changed. But the higher weekly cap means slightly larger payouts for anyone earning over £700 per week. For someone with 20 years' service all above age 41, the maximum went from £21,000 to £22,530.

Enhanced redundancy: what employers actually pay

Many employers pay more than statutory. A common enhanced formula is 1 month's actual salary per year of service, with no cap. In the public sector, the Civil Service Compensation Scheme pays up to 21 months' salary for compulsory redundancy (though reforms have reduced this).

In private sector firms, enhanced packages typically range from 1 to 4 weeks' actual salary per year of service. There's no legal requirement to offer more than statutory, but larger companies often do because it avoids tribunal claims and maintains morale among remaining staff.

You can sometimes negotiate your package. This is especially true if your employer hasn't followed proper consultation procedures, if there are questions about whether the redundancy is genuine, or if you're being asked to sign a settlement agreement. ACAS reports that around 35% of employees who negotiate receive a higher payment than initially offered.

Notice period and redundancy

Redundancy pay is separate from your notice period entitlement. If you've been employed for 12 years, you're entitled to 12 weeks' statutory notice (capped at 12 weeks maximum regardless of length of service). Your employer can either let you work your notice or pay you in lieu of notice (PILON).

Notice pay is taxed normally through PAYE. It doesn't count toward the £30,000 tax-free redundancy allowance. So in our example above, you'd receive £8,700 tax-free redundancy plus 12 weeks' taxable notice pay (£7,200 gross at £600/week).

Who qualifies for statutory redundancy

You need at least 2 years' continuous service with the same employer. You must be an employee (not a contractor or agency worker). And the redundancy must be genuine, meaning the role itself is disappearing, not just being given to someone else.

If you're on a fixed-term contract that isn't renewed because of redundancy, you still qualify. Part-time workers have exactly the same rights as full-time workers, and your weekly pay is calculated on your actual hours.

What to do if your employer won't pay

If your employer refuses to pay statutory redundancy, you have 6 months from your dismissal date to make a claim to an employment tribunal. There's no fee for this type of claim. You should first raise a formal grievance and contact ACAS for early conciliation, which is a mandatory step before tribunal proceedings.

If your employer has gone insolvent, you can claim statutory redundancy from the National Insurance Fund through the Redundancy Payments Service. Claims are processed within 6 weeks on average. The maximum payout from this route is the same as statutory: based on the £751 weekly cap, 20 years maximum service.

For more detail on the full calculation method, examples at different ages and service lengths, and negotiation strategies, read our complete guide: How redundancy pay is calculated in the UK.