How statutory redundancy pay is worked out
Statutory redundancy pay is set by section 162 of the Employment Rights Act 1996. It depends on three things: how many full years you have worked for your employer, how old you were in each of those years, and your weekly pay, up to a legal cap. You qualify if you are an employee with at least 2 years' continuous service ending on the date your employment ends.
For each full year of service you receive:
- Under 22. Half a week's pay for each full year;
- 22 to 40. One week's pay for each full year;
- 41 and over. One and a half weeks' pay for each full year.
Only the most recent 20 years count, so the most anyone can receive is 30 weeks' pay. Part years are ignored: 9 years and 11 months counts as 9 years.
The weekly pay cap from April 2026
A week's pay is your average gross weekly earnings over the 12 weeks before the day you received notice of redundancy. It is capped, and the cap rises each April. For redundancies where the relevant date is on or after 6 April 2026:
| Where you work | Weekly pay cap | Maximum statutory payment |
|---|---|---|
| England, Wales and Scotland | £751 | £22,530 |
| Northern Ireland | £783 | £23,490 |
The Great Britain figure comes from the Employment Rights (Increase of Limits) Order 2026, which raised the cap from £719. Northern Ireland sets its own limit under a separate order, which raised it from £749 to £783. If your redundancy date fell before 6 April 2026, the lower 2025/26 cap applies instead.
Worked example
Sam is 45 on the date of redundancy, has 12 full years of service and earns £800 a week. Counting back from the redundancy date, the four most recent years were worked entirely at age 41 or over, and the eight before that at ages 22 to 40.
| Service | Years | Weeks per year | Weeks |
|---|---|---|---|
| Aged 41 and over | 4 | 1.5 | 6 |
| Aged 22 to 40 | 8 | 1 | 8 |
| Total | 12 | 14 |
Sam's pay of £800 is above the cap, so £751 is used: 14 × £751 = £10,514. In Northern Ireland the same facts would give 14 × £783 = £10,962.
Why age is counted year by year
The law asks how old you were during each year of employment, counting backwards from the redundancy date, not how old you are now. A year only attracts one and a half weeks' pay if you were at least 41 for the whole of it. This calculator uses your age at the redundancy date and steps back one year at a time, the same method as the gov.uk calculator, so someone who turned 41 a few months ago gets no years at the higher rate yet.
Tax on redundancy pay
Statutory redundancy pay is free of income tax and National Insurance. It counts towards the £30,000 tax-free allowance for termination payments, which also covers enhanced (contractual) redundancy pay and other genuine compensation for losing your job. Anything above £30,000 is taxed as income. Because the statutory maximum is £22,530, statutory pay on its own never reaches the threshold. Enhanced packages can.
Some payments are taxed as normal earnings whatever the total:
- Notice pay. Pay for the notice period, whether worked or paid in lieu;
- Holiday pay. Payment for statutory or contractual leave you have not taken;
- Unpaid wages and bonuses. Anything you earned before leaving.
Notice and time limits
Statutory notice is at least one week for each full year of service between 2 and 12 years, and 12 weeks after 12 years or more. Notice pay is separate from redundancy pay. You have 6 months from the date your job ends to apply for statutory redundancy pay if your employer does not pay it.
What this calculator does not cover
- Enhanced redundancy schemes. Your contract or a company policy may pay more, for example using actual pay rather than the capped figure;
- Breaks in continuous employment. Transfers between associated employers, TUPE transfers and some gaps can preserve or break continuity;
- Excluded groups. Crown servants, armed forces and police, share fishermen and some others have no statutory right;
- Suitable alternative work. Unreasonably refusing a suitable alternative job offered by your employer can remove the right to a payment;
- Lay-off and short-time claims. These have their own notice and timing rules;
- Insolvency. If your employer cannot pay, the Redundancy Payments Service may pay statutory amounts instead.
Getting it right
For employers, redundancy payments, notice pay and holiday pay need to go through payroll correctly, with the right tax treatment for each element. Our employment tax team advises on termination packages above the £30,000 threshold, and our payroll management service processes final pay accurately. To check the statutory holiday a leaver is owed, use our holiday entitlement calculator.