UK Statutory Redundancy Pay Calculator 2025 - GOV.UK Rates

What is Statutory Redundancy Pay?

Statutory redundancy pay is a legal entitlement for employees who have been made redundant and have worked continuously for their employer for at least two years. This payment is calculated based on three key factors: your age, your length of continuous service, and your average weekly gross pay over the 12 weeks before receiving redundancy notice. The UK Government sets minimum statutory rates that all employers must follow, though many offer enhanced redundancy packages that exceed these minimums.

Under UK employment law, statutory redundancy pay provides financial support to help employees transition between jobs when their position is no longer needed due to business restructuring, closure, or workforce reduction. The payment is designed to recognize your years of service and provide a financial buffer during your job search. As of 6 April 2025, the weekly pay cap is £719, with a maximum total statutory payment of £21,570 for eligible employees.

UK Statutory Redundancy Pay Calculation Formula

Mathematical Expression of Redundancy Formula

The complete statutory redundancy pay formula can be expressed mathematically as:

Eligibility Criteria for Statutory Redundancy

To qualify for statutory redundancy pay in the United Kingdom, employees must meet specific eligibility requirements as established under the Employment Rights Act 1996:

• Minimum Service Requirement: You must have at least two years of continuous employment with your employer. Service periods of less than two years do not qualify for statutory redundancy pay, though enhanced company schemes may offer payments for shorter service.
• Employee Status: Statutory redundancy pay applies to employees only. Workers, contractors, agency staff, casual workers, and those on zero-hours contracts typically do not qualify unless they can demonstrate employee status.
• Genuine Redundancy: Your job role must no longer exist due to business closure, workplace closure, reduced workforce needs, or role elimination. Dismissals for misconduct, poor performance, or other disciplinary reasons do not qualify as redundancy.
• Continuous Employment: Your service must be continuous with the same employer. Certain breaks may not affect continuity, such as temporary layoffs (up to 26 weeks), maternity/paternity leave, or TUPE transfers where employment continues with a new employer.
• Age and Notice Date: Your age on the date you receive redundancy notice determines which multiplier applies for each year of service. You cannot claim statutory redundancy if you've already reached state pension age, though enhanced schemes may still apply.
• UK Employment: The employment must be governed by UK law with work primarily carried out in Great Britain or Northern Ireland. Different rules apply to offshore workers and seafarers.

How to Calculate Statutory Redundancy Pay

Step-by-Step Calculation Process

Follow these detailed steps to accurately calculate your statutory redundancy entitlement:

1. Determine Your Average Weekly Pay: Calculate your average gross weekly pay (before tax and deductions) over the 12 weeks immediately before you received redundancy notice. Include regular overtime, bonuses paid in this period, and statutory payments. If you were furloughed, use your normal pay, not furlough rates.
2. Apply the Weekly Pay Cap: If your average weekly pay exceeds £719 (2025 rate), you must use £719 for the calculation. If your weekly pay is below £719, use your actual average.
3. Calculate Years of Continuous Service: Count complete years of service from your employment start date to the date you received redundancy notice. Only complete years count; partial years are not included in statutory calculations.
4. Determine Age Brackets: Work backwards from your age on redundancy notice date, calculating how many complete years you worked in each age bracket (under 22, 22-40, 41+).
5. Calculate Payment for Each Bracket: Multiply your capped weekly pay by the appropriate multiplier (0.5, 1.0, or 1.5) and by the number of years in each bracket.
6. Apply 20-Year Service Cap: If you've worked more than 20 years, only the most recent 20 years count. Work backwards from the redundancy notice date.
7. Sum Total Payment: Add together the payments from all age brackets to determine your total statutory redundancy pay, which cannot exceed £21,570.

Detailed Redundancy Pay Calculation Example

Statutory Redundancy Pay Calculation Table

This reference table shows statutory redundancy entitlements based on age and years of service, using the maximum weekly pay cap of £719 (2025 rate):

Statutory Redundancy Notice Periods

In addition to redundancy pay, employees are entitled to statutory minimum notice periods based on their length of continuous service. Your employer must give you written notice before your employment ends:

Statutory Minimum Notice Periods

Redundancy Consultation Requirements

Individual Consultation

If your employer is making fewer than 20 redundancies, they must consult with you individually. There's no set timeframe for individual consultations, but the process must be meaningful and fair. During consultation, your employer should explain the reasons for redundancy, discuss alternatives, explain the selection process, and consider your suggestions for avoiding redundancy.

Collective Consultation (20+ Redundancies)

When 20 or more employees are being made redundant at the same establishment within a 90-day period, collective consultation rules apply. Your employer must consult with employee representatives or recognized trade union representatives:

Failure to consult properly can result in protective awards of up to 90 days' pay per affected employee. Employers must also notify the Insolvency Service (not ACAS or tribunals) when making 20 or more redundancies.

Enhanced Redundancy Packages

Many UK employers offer enhanced redundancy packages that exceed statutory minimums. These voluntary schemes can significantly increase your redundancy payment:

Common Enhanced Redundancy Features

• Increased Multipliers: Some employers pay 2 weeks per year for ages 22-40, or 2-3 weeks per year for ages 41+, compared to statutory 1.0 and 1.5 weeks respectively.
• No Weekly Pay Cap: Enhanced schemes often use actual salary without applying the £719 weekly cap, resulting in much higher payments for well-paid employees.
• Extended Service Recognition: While statutory redundancy caps at 20 years, enhanced schemes may pay for 25, 30, or unlimited years of service.
• Flat-Rate Payments: Some employers offer fixed amounts (e.g., 1 month's salary per year of service) regardless of age, though this can raise age discrimination concerns.
• Additional Ex-Gratia Payments: Employers may add discretionary payments on top of statutory or contractual entitlements as goodwill gestures.
• Voluntary Redundancy Premiums: Employees who volunteer for redundancy may receive additional payments as incentives.

Tax and National Insurance on Redundancy Pay

Tax-Free Redundancy Payments

The first £30,000 of genuine redundancy payments is tax-free and exempt from National Insurance contributions. This £30,000 threshold applies to the combined total of statutory redundancy pay, enhanced redundancy payments, and any ex-gratia termination payments. However, certain payments don't count toward the £30,000 tax-free allowance:

• Payments in Lieu of Notice (PILON): If you're paid instead of working your notice period, this is usually taxable as earnings and subject to full income tax and NI contributions.
• Accrued Holiday Pay: Payment for unused annual leave is taxable as normal earnings.
• Outstanding Salary: Any salary owed for work already done is taxed normally.
• Bonuses and Commission: Contractual bonuses or commission earned before redundancy are taxable.

Taxation Above £30,000

Any redundancy payment amount exceeding £30,000 is subject to income tax at your marginal rate (20%, 40%, or 45%) but remains exempt from National Insurance contributions. Your employer will deduct tax through PAYE before paying you. If you receive redundancy pay in one tax year that pushes you into a higher tax bracket, it only affects the portion above the threshold.

Special Cases and Considerations

Part-Time and Variable Hours Workers

Part-time employees have the same redundancy rights as full-time staff. Your statutory redundancy pay is calculated using your actual average weekly pay (capped at £719). For employees with variable hours, calculate the average over the 12 weeks before redundancy notice, including weeks with no work (counted as zero pay) but excluding weeks not under contract.

Pregnancy and Maternity Leave

You cannot be selected for redundancy because you're pregnant or on maternity leave—this is automatic unfair dismissal. If genuine redundancy occurs during pregnancy or maternity leave, you have the right to be offered any suitable alternative vacancies before other employees. Your redundancy pay calculation should use your normal pay, not statutory maternity pay rates.

Furlough and Coronavirus Impact

If you were on furlough (Coronavirus Job Retention Scheme) when made redundant, your redundancy pay should be calculated using your normal pre-furlough wage, not the reduced furlough rate. This government guidance protects employees from reduced redundancy entitlements due to temporary wage reductions during the pandemic.

Company Insolvency and Administration

If your employer becomes insolvent and cannot pay your redundancy entitlement, you can claim unpaid statutory redundancy pay, notice pay, holiday pay, and arrears of wages (up to limits) from the National Insurance Fund through the Insolvency Service. You must apply within 6 months of your employment ending.

Voluntary vs Compulsory Redundancy

Employees who volunteer for redundancy have the same statutory redundancy rights as those in compulsory redundancy situations. However, employers often offer enhanced terms to voluntary redundancies as an incentive. If you volunteer, ensure all terms are clearly documented before accepting, as you may have limited grounds to challenge the decision later.

Redundancy at State Pension Age

Employees cannot claim statutory redundancy pay if they've reached state pension age (currently 66, rising to 67 by 2028). However, you may still have claims for unfair dismissal, discrimination, or breach of contract. Enhanced company redundancy schemes may still apply beyond state pension age if contractual.

Common Mistakes in Redundancy Pay Calculation

Avoid these frequent errors when calculating or verifying your UK statutory redundancy entitlement:

1. Including Only Basic Salary: Your average weekly pay should include regular overtime, shift allowances, commission, and other regular payments, not just basic salary. Check payslips for the 12 weeks before redundancy notice.
2. Forgetting the Weekly Pay Cap: Even if you earn £2,000 per week, you must cap at £719 for statutory calculations. Enhanced schemes may not apply this cap.
3. Counting Partial Years: Only complete years of service count for statutory redundancy. If you've worked 5 years and 11 months, you only count 5 complete years.
4. Incorrect Age Bracket Allocation: Work backwards from your age on the redundancy notice date, not your current age or age when employment started. Each year of service is allocated to the age bracket you were in during that year.
5. Exceeding the 20-Year Service Cap: If you've worked 25 years, only the most recent 20 years count for statutory calculations, even if all were with the same employer.
6. Confusing Notice Pay with Redundancy Pay: These are separate entitlements. You receive both statutory notice pay (or payment in lieu) and redundancy pay.
7. Not Challenging Incorrect Calculations: If your employer's calculation seems wrong, challenge it immediately. Request a detailed breakdown showing age brackets, years counted, and weekly pay used.
8. Missing the Tax-Free Threshold: Don't assume all redundancy pay is tax-free. Only the first £30,000 of genuine redundancy payments is exempt from income tax.
9. Accepting Alternatives Without Understanding Rights: Before accepting alternative employment or compromise agreements, fully understand your redundancy entitlements and what you're giving up.

Your Rights During Redundancy

Right to Paid Time Off

If you've been employed for at least 2 years and are under redundancy notice, you're entitled to reasonable paid time off to look for new work or arrange training. Your employer cannot unreasonably refuse this right, though they can ask for evidence of job interviews or training appointments.

Right to Appeal

You have the right to appeal against your redundancy selection. Your employer should have a clear appeals process outlined in their redundancy policy or during consultation. Appeals must be based on valid grounds such as unfair selection, failure to consult properly, or availability of alternative roles not considered.

Right to Written Reasons

If you've been employed for at least 2 years, you can request written reasons for your dismissal. Your employer must provide these within 14 days. These reasons can be crucial evidence if you later claim unfair dismissal.

Unfair Dismissal Claims

Even if redundancy is genuine, the dismissal can be unfair if the selection process was unfair, consultation was inadequate, suitable alternative employment wasn't offered, or the procedure wasn't followed properly. You can claim unfair dismissal at an Employment Tribunal within 3 months (less one day) of your employment ending.

Discrimination Protection

Selection for redundancy cannot be based on protected characteristics including age, sex, race, disability, religion, sexual orientation, pregnancy, or trade union membership. If you believe you've been discriminated against, seek legal advice immediately as discrimination claims have different rules than standard unfair dismissal.

Using the Official GOV.UK Redundancy Calculator

The UK Government provides an official redundancy calculator on GOV.UK that you can use to verify your statutory entitlement. While our calculator above provides instant results with detailed breakdowns, the official government calculator offers additional guidance on notice periods and next steps:

How to Use the GOV.UK Calculator

1. Visit gov.uk and search for "calculate redundancy pay"
2. Select "Calculate your statutory redundancy pay"
3. Enter your date of birth
4. Enter your employment start date
5. Enter the date you received (or will receive) redundancy notice
6. Enter your average weekly gross pay over the last 12 weeks
7. Review your calculated statutory redundancy entitlement

The official calculator uses the exact same formula and caps as our calculator above. Both tools are updated annually with new rates. The current rates (from 6 April 2025) include the £719 weekly pay cap and £21,570 maximum payment.

Tips for Employees Facing Redundancy

• Request Everything in Writing: Ask for redundancy consultation information, selection criteria, scoring matrices, and final redundancy calculations in writing. These documents are crucial if you need to challenge decisions later.
• Check Your Contract Carefully: Review your employment contract for enhanced redundancy provisions, notice period terms, and any restrictive covenants that might affect future employment.
• Calculate Independently: Use multiple calculators (ours, GOV.UK's, and manual calculations) to verify your employer's redundancy pay calculation before signing any documents.
• Consider Alternatives: During consultation, suggest alternatives such as reduced hours, voluntary pay reductions, job sharing, or redeployment to other roles. Document all suggestions made.
• Understand Suitable Alternative Employment: If offered an alternative role, you have a four-week trial period to assess whether it's genuinely suitable. If you reasonably reject it during this period, you keep your redundancy rights.
• Seek Professional Advice Early: Contact ACAS, Citizens Advice, or an employment solicitor as soon as you know redundancy is proposed. Early advice can help you maximize entitlements and avoid mistakes.
• Keep Detailed Records: Document all meetings, conversations, emails, and decisions related to your redundancy. These records can be invaluable for appeals or tribunal claims.
• Don't Rush to Sign: Never sign settlement agreements, COT3 agreements, or final redundancy paperwork without fully understanding the terms and getting independent advice. You're entitled to ACAS early conciliation before accepting.
• Claim Benefits Promptly: Apply for Universal Credit, Jobseeker's Allowance, or other benefits immediately after redundancy. Delays can result in lost entitlements during the assessment period.
• Update Your CV and LinkedIn: Use your paid time off entitlement during notice to prepare job applications, update professional profiles, and network actively in your industry.

Employer Obligations and Best Practices

UK employers conducting redundancies must comply with strict legal obligations to avoid claims and penalties:

• Genuine Redundancy Reason: Ensure redundancy is genuine (business closure, workplace closure, reduced workforce needs, or role elimination) and not a disguise for other dismissal reasons.
• Fair Selection Process: Use objective, measurable selection criteria applied consistently. Common criteria include skills, qualifications, performance records, disciplinary records, and attendance (with appropriate disability considerations).
• Proper Consultation: Consult meaningfully before making final decisions. Consultation must be genuine, with time for employees to respond and consideration of alternatives suggested.
• Alternative Employment Search: Actively search for suitable alternative vacancies within the organization or group companies. Offer these to affected employees before finalizing redundancies.
• Accurate Calculations: Calculate statutory redundancy pay correctly using the employee's age, service, and average weekly pay. Provide detailed breakdowns in writing.
• Written Notification: Provide written notice of redundancy, including the reasons, effective date, redundancy pay amount, notice period or PILON, and appeal rights.
• Timely Payment: Pay statutory redundancy pay, notice pay (or PILON), and accrued holiday pay on or before the termination date. Delays can result in tribunal claims for unlawful deductions.
• Collective Consultation Compliance: For 20+ redundancies, consult with employee representatives for at least 30 days (20-99 redundancies) or 45 days (100+ redundancies), and notify the Insolvency Service.
• Avoid Discrimination: Ensure selection criteria and decisions don't directly or indirectly discriminate against protected characteristics. Document how criteria were applied to demonstrate fairness.
• Support Outplacement Services: Consider providing CV writing support, interview training, job search assistance, or career counseling to help redundant employees transition.

Frequently Asked Questions (FAQ)

How much is statutory redundancy pay in the UK?

Statutory redundancy pay from 6 April 2025 is calculated as 0.5 week's pay for each full year under age 22, 1 week's pay for each full year age 22-40, and 1.5 weeks' pay for each full year age 41 or over. Weekly pay is capped at £719, with a maximum payment of £21,570. You must have at least 2 years' continuous service to qualify.

What is the minimum statutory redundancy pay?

The minimum statutory redundancy pay for an employee with exactly 2 years' service is 1 week's pay (if aged 22-40) or 0.5 week's pay (if under 22) or 1.5 weeks' pay (if 41 or over). With the 2025 cap of £719 per week, the absolute minimum is £719 for an under-22 employee with 2 years' service earning at least £719 weekly.

How do I calculate my statutory redundancy pay manually?

Calculate your average gross weekly pay over the last 12 weeks (capped at £719). Count your complete years of continuous service (maximum 20 years). Work backwards from your age at redundancy notice date: multiply £719 (or lower actual pay) by 0.5 for years under 22, by 1.0 for years 22-40, and by 1.5 for years 41+. Add all amounts together. Maximum payment is £21,570.

What is the statutory notice pay calculation?

Statutory notice pay is your normal weekly pay multiplied by the number of weeks' notice you're entitled to: 1 week if employed 1 month to 2 years, 1 week per year if employed 2-12 years (so 5 years = 5 weeks' notice), or 12 weeks if employed 12+ years (maximum). Payment in lieu of notice (PILON) is usually taxable as normal earnings.

Is redundancy pay taxable in the UK?

The first £30,000 of genuine redundancy payments (statutory and enhanced combined) is tax-free and exempt from National Insurance. Any amount exceeding £30,000 is subject to income tax at your marginal rate but remains NI-exempt. Payment in lieu of notice (PILON), holiday pay, and outstanding salary are taxable as normal earnings even within the £30,000 limit.

Can I get redundancy pay if I've worked less than 2 years?

No, statutory redundancy pay requires at least 2 years of continuous employment. However, your employer may offer enhanced redundancy payments or ex-gratia payments even for shorter service. You're still entitled to statutory notice pay (1 week minimum if employed over 1 month) and payment for accrued holiday. Check your contract for non-statutory provisions.

What is compulsory redundancy vs voluntary redundancy?

Compulsory redundancy occurs when your employer selects you for redundancy without your agreement, following a selection process. Voluntary redundancy means you volunteer to leave when your employer seeks volunteers, often with enhanced terms as an incentive. Both qualify for statutory redundancy pay, but voluntary redundancies typically receive better overall packages and have more time to consider the decision.

How long does my employer have to pay redundancy money?

Your employer should pay statutory redundancy pay, notice pay, and holiday pay on your last working day or final salary payment date. There's no specific statutory deadline, but unreasonable delays constitute unlawful deductions from wages, which you can claim at an Employment Tribunal. If your employer becomes insolvent, you can claim from the National Insurance Fund through the Insolvency Service.

Can I challenge my redundancy pay calculation?

Yes, if you believe your employer calculated your redundancy pay incorrectly, request a detailed written breakdown showing the formula used, your weekly pay figure, years counted, and age brackets applied. If the calculation is wrong, raise this through your employer's grievance procedure. If unresolved, you can claim unlawful deductions at an Employment Tribunal within 3 months (less one day) of the underpayment.

What is the statutory redundancy pay rate for 2025-2026?

From 6 April 2025, the statutory weekly pay cap is £719, and the maximum total statutory redundancy payment is £21,570. These rates apply to employees made redundant on or after 6 April 2025. For redundancies before this date, lower caps applied (£700 weekly cap and £21,000 maximum for 2024-2025). The rates are reviewed and typically increased each April.