UK Redundancy Pay Calculator 2026/27 — Formula & Tax

Statutory redundancy pay is a legal minimum, not an upper limit. You will normally need to be an employee with at least 2 years of continuous service and be dismissed for redundancy, subject to exceptions. For redundancies on or after 6 April 2026, the calculation uses 0.5 weeks' pay for ages under 22, 1.0 for ages 22–40 and 1.5 for ages 41 and over, with a £751 weekly cap and a 20-year service limit. Run your own figures through the Redundancy Calculator→ to see the year-by-year breakdown.

This guide walks through the statutory formula, the weekly pay cap, enhanced and contractual packages, and how Pay in Lieu of Notice and the £30,000 tax-free threshold change what you actually receive.

The Statutory Redundancy Formula

The multiplier follows your age during each year of service, not your age at redundancy. Someone made redundant at 50 who started at 18 uses 0.5× for years under 22, 1.0× for years 22–40 and 1.5× for years 41–50. Only complete years of continuous service count, service before age 18 is ignored, and the total is capped at 20 years. The weekly cap of £751 applies to average weekly pay over the 12 weeks before the day the redundancy notice is given, so annual earnings above roughly £39,052 may be capped.

Worked Example 1 — The 40-Year-Old Manager

Amara is 40 with 10 years' service and a £50,000 salary. Her uncapped weekly pay is £961.54, capped to £751. All ten years fall in the 22–40 band at 1.0×, so her statutory pay is 10 × £751 = £7,510.

Worked Example 2 — The 55-Year-Old with Long Service

David is 55 with 25 years' service and an £80,000 salary. Service is capped at 20 years, and weekly pay at £751. For illustration, six counted years at ages 35–40 use 1.0× (£4,506), and fourteen counted years at ages 41–54 use 1.5× (£15,771). His statutory pay is £20,277; the 2026/27 maximum is £22,530 and requires all 20 counted years at 1.5×.

Worked Example 3 — Enhanced Packages and Tax

Many employers offer more than the statutory minimum — commonly 2× or 3× statutory — so always check your contract and staff handbook. The full picture also includes Pay in Lieu of Notice (PILON) and holiday pay. Statutory redundancy plus qualifying enhanced or ex-gratia payments are generally tax-free up to a combined £30,000, but PILON and holiday pay are taxable earnings and are not sheltered by that exemption. On Amara’s package above, statutory pay of £7,510 is within the exemption; if she also received £10,000 of PILON, that PILON is taxed through payroll and does not consume the £30,000 exemption in the same way.

Maximising Your Package

The statutory cap, the 20-year limit and the £30,000 termination-payment exemption are separate layers. A generous package must be broken into its legal components; PILON, holiday pay and other earnings can be taxable even when the qualifying redundancy elements are within £30,000.

Understanding Your Weekly Pay and the £751 Cap

Your weekly pay is the average of your gross earnings over the 12 weeks before the day you are given notice of redundancy, including items that count under the employment rules. The £751 cap for redundancies on or after 6 April 2026 means anyone earning above roughly £39,052 a year may be restricted to the cap. The cap is set by the government, so check the current figure for the date that applies to your redundancy.

The cap interacts with your service in a way that surprises people: because each year is valued separately at the capped weekly pay, long service at high pay is capped year after year. A worker with 20 counted years at 1.5× reaches the £22,530 ceiling only if every counted year falls in the 41+ band — anyone with younger years mixed in falls short of the maximum. Bonuses and commission may affect the relevant average, so verify the employer’s calculation against your payslips.

Part-Time Workers, Breaks in Service and Special Cases

Part-time workers have the same statutory formula as full-time workers, using their actual weekly pay; service years are not simply reduced because the role is part-time. A break in employment can affect continuous service, so check the exact start date and any gaps. Maternity, paternity and sick leave can count toward continuous service, and a qualifying business transfer may preserve service under TUPE.

The weekly pay test is based on the 12 weeks before redundancy. If you took unpaid leave or were on reduced hours in that window, your average falls — and the employer is entitled to use that lower average unless it was a temporary arrangement. Overtime counts only if it was regular, and commission counts if it was part of normal earnings. For anyone paid monthly, the weekly figure is the monthly gross divided by the number of weeks in the month, not a calendar-month assumption — a detail that changes the statutory amount by a few per cent and is worth checking on your own payslips.

Inputs a redundancy estimate must separate

Collect the employee's age, start date, leaving date, weekly pay, statutory cap used, notice, holiday pay, contractual redundancy, bonus, outstanding salary and pension treatment. Keep statutory redundancy pay separate from other termination payments because the tax rules and calculator inputs differ. A calculator can illustrate a result but cannot decide whether the dismissal qualifies or whether a contractual payment is due.

Check the pay reference period and the official statutory limits for the relevant leaving date. Reconcile the estimate to the employer's written calculation and payslip, then ask about any difference before signing a settlement. Keep the contract, redundancy letter, consultation record and payment breakdown for the tax year.

If the employee has more than one job, shares, a company car, restrictive covenants or an overseas connection, review the wider tax treatment separately. Do not treat the calculator output as legal advice or a promise of the final net payment.

Check the inputs against your written offer

Use your age at the relevant calculation date, complete service, normal weekly pay and the employer’s proposed termination date. Keep the employment contract, pay records and written offer beside the estimate. If your hours, pay or employment status changed, record the dates and use the current statutory guidance to decide which figure is relevant rather than averaging periods without a reason.

Enter statutory pay separately from an enhanced package, notice pay, holiday pay, bonus or settlement amount. Ask the employer for an itemised breakdown if the offer combines these items. The calculator can illustrate a statutory estimate from the inputs supplied; it cannot confirm the legal character of every payment or decide whether a contract or settlement is correct.

Frequently Asked Questions

Model your exact package with the Redundancy Calculator→, then read the Redundancy Pay Tax guide for the full rules on what is taxable, and the Termination Payments guide if a settlement agreement is on the table.

Official sources

• GOV.UK: redundancy pay
• GOV.UK: termination payments and tax
• HMRC: tax when making staff redundant
• GOV.UK: employee leaving

These GOV.UK and HMRC sources are the official references for statutory redundancy eligibility, age and service multipliers, weekly-pay limits, termination-payment tax and payroll treatment discussed in this guide.