Statutory redundancy pay is the minimum compensation the law requires employers to pay when they make an employee redundant. The amount is calculated using your age, your complete years of service (up to 20 years), and your gross weekly pay, capped at £751 per week from 6 April 2026. The maximum statutory award is £22,530. You need at least two years of continuous employment to qualify (Employment Rights Act 1996, s.155). Statutory redundancy pay is always paid free of income tax and National Insurance. The £30,000 tax-free threshold in ITEPA 2003, s.403 applies to your total termination package; other elements such as notice pay or compensation that form part of that package may be taxable. Updated June 2026.
Source: Employment Rights Act 1996, s.155 (qualifying period), s.162 (calculation formula) (as amended); Employment Rights (Increase of Limits) Order 2026; acas.org.uk/your-rights-during-redundancy/redundancy-pay.
What the law says
Statutory redundancy pay is provided for by the Employment Rights Act 1996, sections 135 to 162. Every employee who has at least two years of continuous employment and is dismissed by reason of redundancy is entitled to a statutory redundancy payment calculated by the formula in section 162.
The weekly pay cap is set by secondary legislation — the Employment Rights (Increase of Limits) Order — and is reviewed annually, usually from 6 April each year. From 6 April 2026 the cap is £751 per week. Source: gov.uk/redundancy-your-rights/redundancy-pay.
How the formula works
The calculation has three components:
1. Age band multiplier
Each complete year of service is worth a number of weeks' pay based on your age during that year:
| Age during that year of service | Weeks' pay per year |
|---|---|
| Under 22 | 0.5 weeks |
| 22–40 | 1 week |
| 41 and over | 1.5 weeks |
2. Complete years of service
Only complete years count — a period of 2 years and 11 months is treated as 2 years. Service is capped at 20 years. Service before your 18th birthday is disregarded entirely.
3. Weekly pay cap
Your gross weekly pay is used in the calculation up to the statutory cap of £751 per week from 6 April 2026. If you earn more than £751 gross per week, the calculation uses £751. If you earn less, your actual weekly pay is used.
Worked examples
Example 1: 35 years old, 8 years' service, £600/week gross.
- All service falls in the 22–40 band: 8 × 1 week = 8 weeks.
- Pay used: £600 (below the cap).
- Statutory redundancy pay: 8 × £600 = £4,800.
Example 2: 50 years old, 20 years' service, £900/week gross.
- Service in 41+ band (years from age 41–50): 10 × 1.5 = 15 weeks.
- Service in 22–40 band (years from age 22–40, but capped at 20 years total): 10 × 1 = 10 weeks.
- Total: 25 weeks — but service is capped at 20 years. Apply capped total: 20 × 1.25 (blended rate) — see calculator for precise age-banded result.
- Pay used: £751 (capped).
- Maximum statutory redundancy pay: £22,530.
Use the statutory redundancy pay calculator for an exact result based on your exact age and service dates.
Who qualifies
You qualify for statutory redundancy pay if:
- You are an employee (not a worker or self-employed person).
- You have at least two complete years of continuous employment with the same employer at the date your employment ends.
- Your employment is ending because of a genuine redundancy (the employer needs fewer employees to do that work, or the workplace is closing).
Who does not qualify:
- Workers or self-employed contractors.
- Employees with fewer than two years' qualifying service.
- Employees dismissed for misconduct (unless they also face a genuine redundancy situation).
- Employees who resign — unless they resign during a redundancy notice period under specific procedures, or claim constructive dismissal.
Source: acas.org.uk/your-rights-during-redundancy.
The £30,000 tax-free limit
Statutory redundancy pay is free from income tax and National Insurance up to £30,000. This limit covers the total of statutory pay and any enhanced redundancy pay your employer adds on top. Only amounts above £30,000 are taxable as income, and they are subject to income tax only — not employee National Insurance. Source: Income Tax (Earnings and Pensions) Act 2003, s.403.
Calculate your entitlement
Use the free statutory redundancy pay calculator to work out your exact entitlement. Enter your date of birth, employment start date, and weekly pay. The calculator applies the age-band formula and the £751 weekly pay cap automatically.
Frequently asked questions
See the FAQ below. For specific advice — including disputes about whether a dismissal counts as redundancy, or whether enhanced pay applies — see ACAS.
Back to redundancy rights.