Redundancy Pay Calculator UK 2026

How Statutory Redundancy Pay Is Calculated

Statutory redundancy pay is a legal entitlement for employees who have been continuously employed for at least 2 years and are being made genuinely redundant. The amount depends on three factors: your age, your length of service, and your weekly pay (subject to a cap).

The calculation works backwards from your age at the date of redundancy, considering each complete year of service:

Qualifying Criteria

To be entitled to statutory redundancy pay, you must:

• Be an employee (not a contractor, freelancer, or agency worker employed by the agency)
• Have worked continuously for the same employer for at least 2 years
• Be genuinely redundant — your role no longer exists due to business closure, workplace closure, or reduced need for employees doing your type of work

Who Does NOT Qualify?

• Workers with less than 2 years' continuous service
• Self-employed contractors and freelancers
• Agency workers (unless employed directly by the client)
• Members of the armed forces, police, and some other categories
• Employees dismissed for misconduct
• Employees who unreasonably refuse a suitable alternative role

Notice Periods

In addition to redundancy pay, you are entitled to a statutory notice period:

• 1 month to 2 years' service: 1 week's notice
• 2 to 12 years' service: 1 week per year of service (e.g., 5 years = 5 weeks)
• 12+ years' service: 12 weeks' notice (maximum)

Your contract may specify a longer notice period, in which case the contractual period applies. Employers can pay in lieu of notice (PILON) rather than requiring you to work through it.

Collective Consultation

If your employer plans to make 20 or more employees redundant at one establishment within 90 days, they must follow a collective consultation process:

• 20–99 redundancies: Consultation must begin at least 30 days before dismissals
• 100+ redundancies: Consultation must begin at least 45 days before dismissals

Employers must consult with employee representatives or trade unions about ways to avoid redundancies, reduce numbers, and mitigate the effects.

Enhanced Redundancy Pay and Settlement Agreements

Many employers offer enhanced redundancy pay above the statutory minimum. This is common in larger organisations and the public sector. Enhanced packages might offer 1 month's pay per year of service (uncapped), or a fixed multiplier above the statutory amount.

Employers sometimes offer settlement agreements (formerly compromise agreements) alongside redundancy. These are legally binding contracts where you agree not to bring an employment tribunal claim in exchange for a financial package. Key points:

• You must receive independent legal advice (your employer usually pays for this)
• The first £30,000 of any redundancy/termination payment is tax-free
• Amounts above £30,000 are taxed as income
• Payments in lieu of notice (PILON) are taxable if your contract includes a PILON clause

Is Redundancy Pay Taxable?

Statutory redundancy pay is always tax-free. Enhanced redundancy payments are also tax-free up to a combined total of £30,000. Any amount above £30,000 is taxed as income and may also be subject to National Insurance.

What to Do If You Are Made Redundant

1. Check your contract for enhanced redundancy terms, notice period, and any restrictive covenants.
2. Verify the calculation using this calculator. Employers sometimes make errors, particularly with age bands and service dates.
3. Ask about alternatives before accepting redundancy — redeployment, reduced hours, or voluntary redundancy may be available.
4. Negotiate if offered a settlement agreement. The initial offer is rarely the final one.
5. Claim benefits quickly if needed. Apply for Universal Credit or Jobseeker's Allowance as soon as you know your end date.
6. Get advice from ACAS (0300 123 1100), Citizens Advice, or a solicitor if you believe the redundancy process was unfair.