The formula in plain English
Statutory redundancy pay is calculated year by year. For each complete year of continuous employment — up to a maximum of 20, counting back from your last day — you earn a number of weeks' pay based on how old you were in that year:
- 1.5 weeks' pay for each year you were 41 or older
- 1 week's pay for each year you were 22 to 40
- 0.5 week's pay for each year you were 18 to 21
Years before your 18th birthday don't count at all. Your weekly pay is then capped — more on that below — and the years are added up. For four more worked examples, see how redundancy pay is calculated.
Worked example
Take Sarah, 45, who worked for the same employer for 12 years earning £600 a week. Counting back: 4 years aged 41+ (4 × 1.5 = 6 weeks) and 8 years aged 22–40 (8 × 1 = 8 weeks) — 14 weeks total. At £600/week (under the cap), her statutory redundancy pay is £8,400, tax-free.
Now take James, 52, with 22 years' service earning £1,200 a week. Only the most recent 20 years count, and his weekly pay is capped at £751. Roughly: 11 years at 1.5 weeks and 9 years at 1 week = 25.5 weeks × £751 = £19,150.50 — well under the £22,530 maximum, because the cap bit into his high salary.
2026/27 rates
| Item | Great Britain | Northern Ireland |
|---|---|---|
| Weekly pay cap | £751 | £783 |
| Maximum payout | £22,530 | £23,490 |
| Tax-free allowance | £30,000 (UK-wide) | |
The cap rises each April. If you're reading an older guide quoting £719 or £700, its figures are out of date for dismissals on or after 6 April 2026.
Who qualifies?
Three conditions, all must hold:
- You're an employee — contractors, freelancers and most agency workers don't qualify.
- You have at least 2 years' continuous service with the same employer.
- You're being made redundant — your role is no longer needed — not resigning or being dismissed for misconduct.
How is it taxed?
Genuine redundancy payments are free of income tax and National Insurance up to £30,000, combined with any other termination payments (but excluding notice pay). Because the statutory maximum is £22,530, statutory redundancy pay on its own is effectively always tax-free.
Watch out for two things that are not covered by the £30,000 allowance: pay in lieu of notice (PILON), taxed as earnings since April 2018, and accrued holiday pay, also taxed as earnings. If you're getting either, read our notice pay & PILON guide and run the notice pay calculator alongside the redundancy pay calculator.
What to do next
Get your figure from the redundancy pay calculator, then check whether your employer's scheme beats the statutory minimum — many do. If anything looks short, Acas offers free, confidential advice, and you generally have six months less a day to bring a tribunal claim for unpaid redundancy pay.