If you've just been told you're being made redundant, the first thing you want to know is how much you'll get.
Your statutory redundancy pay is based on three things: your age, how long you've been there, and your weekly pay. Weekly pay is capped at £751 from 6 April 2026. You need at least 2 years' continuous service to qualify.
But here's the thing most people don't realise. Statutory redundancy is just the legal minimum. A lot of people are entitled to significantly more.
How is statutory redundancy pay calculated?
The law (Employment Rights Act 1996) gives you a set amount based on your completed years of service, up to a maximum of 20 years. You can also check your figure on GOV.UK.
- Under 22: half a week's pay per year
- 22 to 40: one week's pay per year
- 41 and over: one and a half weeks' pay per year
If you earn more than £751 a week, the calculation still uses £751. That's the cap.
The most you can get in statutory redundancy pay is £22,530. That's 20 years at the 41+ rate.
How much would I get?
Example 1. Age 35, 6 years' service, earning £600 a week. All 6 years are in the 22 to 40 band. That's 6 x £600 = £3,600.
Example 2. Age 48, 12 years' service, earning £900 a week (capped at £751). The 7 years from age 41 to 48 are at the higher rate: 7 x 1.5 x £751 = £7,885.50. The 5 years from 36 to 40 are at one week: 5 x £751 = £3,755. Total: £11,640.50.
Example 3. Age 24, 4 years' service, earning £450 a week. Two years at the 22+ rate: 2 x £450 = £900. Two years at the under-22 rate: 2 x 0.5 x £450 = £450. Total: £1,350.
Could I be owed more than statutory?
Statutory redundancy is the floor, not the ceiling. There are several reasons your employer might owe you more than the basic calculation.
Enhanced redundancy scheme. Some employers offer a multiplier above the statutory formula. Check your contract and staff handbook because they don't always tell you about this. See our guide to statutory vs enhanced redundancy pay for more detail.
Process failures. If your employer cut corners on the redundancy process, that's leverage. Things like skipping consultation, using dodgy selection criteria, or not offering you alternative roles. These failures can form the basis of an unfair dismissal claim, which means your employer has a reason to offer you more to make the problem go away.
Notice pay. You're owed your full contractual notice period on top of redundancy pay. Some employers quietly try to bundle these together. Don't let them. If they're paying you off instead of making you work your notice, that's called PILON and it's taxed differently.
Untaken holiday. Any holiday you've built up but not taken must be paid out.
Bonus or commission. If your contract includes a bonus, you may be owed a proportion of it based on how much of the year you've worked. Even bonuses described as "discretionary" can count if they've been paid consistently.
Settlement agreement. If your employer puts a settlement agreement in front of you, the number is almost always negotiable. And the first £30,000 is normally tax-free.
How do I work out my weekly pay?
Your weekly pay for redundancy purposes is your basic pay before tax (what's sometimes called your gross pay). If you're paid monthly, divide your annual salary by 52.
If your pay varies because of overtime or commission, your employer should average it over the 12 weeks before your redundancy notice was given.
Bonuses, benefits and pension contributions don't count towards the statutory calculation. But they can absolutely be negotiated separately as part of a bigger package.
Is redundancy pay taxed?
Statutory redundancy pay is tax-free. It sits within the £30,000 tax-free allowance for termination payments.
If your total package goes above £30,000, only the bit above that threshold gets taxed at your normal rate.
Notice pay is always taxed as normal earnings, whether you work your notice or get paid off instead of working it (sometimes called PILON, which stands for "pay in lieu of notice").
What should I do next?
- Work out your statutory minimum so you know what you're guaranteed.
- Check your contract for any enhanced redundancy terms.
- Look at how your employer handled the process. Any failures give you negotiating power.
- Don't sign anything yet. If you're offered a settlement agreement, you must get independent advice from a solicitor for it to be valid (ERA 1996, s.203). Your employer pays for this. The typical contribution is £250 to £500 plus VAT.
This article is general guidance about redundancy rights in England, Scotland and Wales (not Northern Ireland). It's not legal advice and shouldn't be treated as a substitute for advice from a qualified employment solicitor.