Statutory Redundancy Pay 2026: How to Calculate It, With Worked Examples

Employees with 2 years’ continuous service get statutory redundancy pay. It is half a week’s pay per full year worked under 22, a week’s pay per year aged 22 to 40, and one and a half weeks’ pay per year aged 41 or over. From 6 April 2026, weekly pay is capped at £751 and the maximum is £22,530.

That is the statutory minimum. Your contracts or a redundancy policy may promise more, and that is what you’ll owe if so.

Who is entitled to statutory redundancy pay?

GOV.UK’s employer guide to making staff redundant says the individual must:

• be an employee working under a contract of employment
• have at least 2 years’ continuous service
• have been dismissed, laid off or put on short-time working (people who opted for early retirement don’t qualify)

An employee loses the right if you offer to keep them on, or if they unreasonably refuse a suitable alternative job. Someone dismissed for misconduct isn’t redundant and gets no redundancy pay.

The 2-year rule for redundancy pay is separate from unfair dismissal. The government’s timeline expects the unfair dismissal qualifying period to fall to 6 months for dismissals from 1 January 2027. That doesn’t change the redundancy pay threshold, but it does mean more employees will be able to challenge an unfair redundancy process. See our Employment Rights Act 2025 timeline.

How is statutory redundancy pay calculated?

Three things drive it: the employee’s age, their full years of service, and their weekly pay. Service is counted back from the date of dismissal, and only full years count.

Age during each full year of service	Weeks’ pay per year
Under 22	0.5
22 to 40	1
41 and over	1.5

The caps

• Weekly pay is capped at £751 for redundancies on or after 6 April 2026.
• Service is capped at 20 years, counting the most recent 20.
• The maximum payment is therefore 20 × 1.5 × £751 = £22,530.

Weekly pay is the employee’s average weekly pay over the 12 weeks before the day they got their redundancy notice. For staff who were furloughed, it is based on what they would normally have earned.

Worked examples: a redundancy pay calculator by hand

Example 1. Age 45 at dismissal, 12 full years’ service, earning £900 a week.

• Weekly pay is capped at £751.
• The 4 years worked aged 41, 42, 43 and 44 earn 1.5 weeks each: 6 weeks.
• The 8 years worked aged 33 to 40 earn 1 week each: 8 weeks.
• Total 14 weeks × £751 = £10,514.

Example 2. Age 30, 5 full years’ service, earning £500 a week. All 5 years were worked aged 22 or over: 5 weeks × £500 = £2,500.

Example 3. Age 24, 4 full years’ service, earning £450 a week. Two years worked aged 20 and 21 earn 0.5 weeks each (1 week); two years aged 22 and 23 earn 1 week each (2 weeks). Total 3 weeks × £450 = £1,350.

Example 4. Age 62, 25 years’ service, earning £1,200 a week. Service caps at the most recent 20 years, all worked aged 41 or over: 20 × 1.5 = 30 weeks × £751 = £22,530, the maximum.

GOV.UK’s redundancy pay calculator does the same arithmetic from age, weekly pay and years of service. It is a good check on your own figures.

You must give the employee a written statement showing the amount and how you worked it out, and make the payment when you dismiss them or soon after. If you don’t pay, or they disagree with the amount, they have 6 months from the end of their employment to claim at an employment tribunal.

Is redundancy pay taxed?

You don’t deduct tax on the first £30,000 of statutory redundancy pay. Other payments on termination, such as notice pay, holiday pay and unpaid wages, are taxed in the usual way. Any untaken holiday must be paid on leaving; our holiday pay guide explains how to calculate it.

What notice must you give?

Statutory minimum notice is separate from redundancy pay:

Length of service	Minimum notice
1 month to 2 years	At least 1 week
2 to 12 years	1 week per full year
12 years or more	12 weeks

Notice pay is based on average weekly earnings over the 12 weeks before notice starts. If the contract has a payment in lieu of notice (PILON) clause you can end employment immediately and pay for the notice period instead; PILON is taxable. Employees with 2 years’ service by the end of their notice are also entitled to reasonable paid time off to look for work, but the most you must pay is 40% of a week’s pay.

What are the consultation rules?

You should always consult. Without it, redundancies will almost certainly be unfair.

Fewer than 20 redundancies

There is no fixed process, but you should still consult the affected employees individually about the reasons and alternatives.

20 or more redundancies: collective consultation

If you propose to make 20 or more employees redundant within any 90-day period at a single establishment, collective consultation rules apply. GOV.UK’s consultation guidance sets these minimums:

Proposed redundancies	Notify the RPS (form HR1)	Minimum consultation before first dismissal
20 to 99	30 days before	30 days
100 or more	45 days before	45 days

You consult trade union representatives, or elected employee representatives where there is no recognised union, and give them written details of the reasons, numbers and categories affected, selection method, how dismissals will be carried out and how redundancy pay will be worked out. Not notifying the Redundancy Payments Service can bring an unlimited fine.

From 6 April 2026 the maximum period of the protective award (the compensation a tribunal can order for failing to consult collectively) was doubled. The government also lists changes to the collective consultation threshold for 2027.

Fair selection and special protections

Selection criteria must be fair and objective: skills, performance, attendance and disciplinary record are typical. Relying on length of service alone is likely to be age discrimination. Pregnancy, maternity and family leave, part-time or fixed-term status, and acting as an employee or union representative are automatically unfair reasons.

Employees on maternity, adoption or shared parental leave must be offered a suitable alternative vacancy where one exists (see our statutory maternity pay guide). If an employee accepts alternative work, they get a 4-week trial period without losing their right to redundancy pay.

Redundancy is an area where process mistakes are expensive. For anything beyond a straightforward single redundancy, take advice on your specific situation.

Handling the final payroll

Redundancy pay, notice pay, PILON and accrued holiday all land in the final pay run, each with different tax treatment. Our payroll services calculate and process leavers’ final pay correctly and keep the records you’ll need if a payment is ever questioned.