Calculate Your Redundancy Pay

What This Site Does

Purpose: Redundancy Pay Calculator is a free online tool that helps UK employees and employers calculate statutory redundancy payments accurately based on current UK employment law.

Who It's For:

• Employees facing redundancy who need to understand their entitlement
• Employers calculating redundancy payments for staff
• HR professionals managing redundancy processes
• Anyone who wants to understand UK statutory redundancy pay rules

How It Works:

• Enter your age, years of service, and weekly gross pay
• Get instant calculation of your statutory redundancy entitlement
• See detailed breakdown by age brackets (under 22, 22-40, 41+)
• Understand statutory caps (£700 weekly pay, 20 years service)
• View tax implications (£30,000 tax-free threshold)
• Learn about your redundancy rights and processes

All calculations are performed in your browser. We do not collect, store, or transmit any of your employment data. Results are estimates based on statutory rates - always verify with your employer or HR department.

How is Statutory Redundancy Pay Calculated?

Statutory redundancy pay is calculated based on three factors: your age, length of service, and weekly pay. The formula uses different multipliers depending on your age:

Important Limits

• Maximum weekly pay: £700 (as of April 2025)
• Maximum years counted: 20 years of service
• Maximum payment: £21,000 (20 years × £700 × 1.5)
• Minimum service: You must have worked for your employer for at least 2 years

Who is Entitled to Redundancy Pay?

You're entitled to statutory redundancy pay if:

• You're an employee (not self-employed or a contractor)
• You've worked continuously for your employer for at least 2 years
• You're being made redundant (your job is no longer needed)
• Your employer hasn't offered you suitable alternative work

When Don't You Get Redundancy Pay?

• You've been employed for less than 2 years
• You're offered suitable alternative employment with your employer
• You're dismissed for misconduct
• You're self-employed or a contractor
• You're a member of the police service or armed forces
• You're a domestic servant working in a private household

Tax and National Insurance

Statutory redundancy pay up to £30,000 is tax-free. You don't pay National Insurance on redundancy payments.

If your total redundancy package (including notice pay and any enhanced redundancy pay from your employer) exceeds £30,000, you'll pay income tax on the amount over £30,000.

Notice Period

Your employer must give you notice, or pay in lieu of notice (PILON), which is separate from redundancy pay. Minimum notice periods are:

• Less than 2 years: 1 week
• 2 to 12 years: 1 week per year of service
• 12+ years: 12 weeks

Enhanced Redundancy

Many employers offer enhanced redundancy packages that pay more than the statutory minimum. Check your employment contract or speak to HR about what your employer offers.

Your Rights During Redundancy

• Consultation: Your employer must consult with you about the redundancy
• Selection: The redundancy process must be fair and non-discriminatory
• Alternative work: Your employer should offer suitable alternative roles if available
• Time off: You can take reasonable time off to look for work or arrange training
• Appeal: You can appeal against your redundancy if you believe it's unfair

Understanding Your Redundancy: A Complete Guide

Facing redundancy can be stressful and uncertain. Understanding your rights, entitlements, and the process can help you navigate this challenging time with confidence. This comprehensive guide explains everything you need to know about redundancy in the UK.

What Actually Counts as Redundancy?

Redundancy is a form of dismissal from your job that happens when your employer needs to reduce their workforce. A genuine redundancy occurs when:

• The business closes down entirely: If your employer shuts down the business, all employees will be made redundant.
• The workplace closes: If your particular workplace or branch closes, but the business continues elsewhere.
• The business needs fewer employees: If there's a reduction in the need for employees to do work of a particular kind.
• Your role no longer exists: If your specific job role is no longer required due to business changes, restructuring, or technological advancement.

The Redundancy Consultation Process

Your employer must follow a fair redundancy process, which includes proper consultation. The consultation requirements depend on how many employees are being made redundant:

• Individual redundancy: Your employer must have individual consultations with you, giving you the chance to discuss the situation and explore alternatives.
• 20 to 99 redundancies: Collective consultation must start at least 30 days before the first dismissal.
• 100 or more redundancies: Collective consultation must start at least 45 days before the first dismissal.

During consultation, your employer should:

• Explain the reasons for the proposed redundancies
• Discuss ways to avoid redundancies
• Discuss ways to reduce the number of redundancies
• Explain how employees will be selected for redundancy
• Discuss alternative employment within the company

Fair Selection Criteria

If your employer needs to select which employees to make redundant, they must use fair and objective criteria. Common selection criteria include:

• Skills, qualifications, and experience relevant to the remaining roles
• Work performance and disciplinary records
• Attendance records (excluding absences related to disability, maternity, or family leave)
• Standard of work or aptitude for the work

Important: Selection criteria cannot be discriminatory based on age, sex, race, disability, religion, sexual orientation, pregnancy, or trade union membership. This would be automatically unfair dismissal.

Common Redundancy Scenarios Explained

Every redundancy situation is unique, but understanding common scenarios can help you know what to expect. Here are detailed examples of typical redundancy situations:

Scenario 1: Long-Service Employee in Their 40s

Scenario 2: Younger Employee with Short Service

Scenario 3: High Earner Affected by Statutory Cap

Scenario 4: Employee Just Under the 2-Year Threshold

Step-by-Step: What Happens During Redundancy

Understanding the redundancy process can help you know what to expect and ensure your employer follows proper procedures. Here's what typically happens:

Stage 1: Initial Announcement (Week 1)

• Employer announces redundancies: Your employer should explain why redundancies are necessary and how many roles are at risk.
• You receive written notification: You should get written confirmation that your role is at risk of redundancy.
• Consultation period begins: Your employer must begin individual or collective consultation depending on numbers affected.

Stage 2: Consultation Period (Weeks 2-4+)

• Consultation meetings: You'll have one or more meetings with your employer to discuss the redundancy, selection criteria, and alternatives.
• Ask questions: This is your opportunity to understand why your role is at risk and whether alternatives exist.
• Explore alternatives: Your employer should discuss alternative roles within the company. You have the right to trial alternative work for up to 4 weeks.
• Consider voluntary redundancy: Some employers offer voluntary redundancy with enhanced terms. Consider whether this suits your circumstances.

Stage 3: Selection and Notification (Week 4-6)

• Selection confirmed: Your employer confirms whether you're being made redundant based on fair selection criteria.
• Final redundancy meeting: You'll receive formal notification of redundancy, your notice period, and redundancy payment details.
• Right to appeal: You can appeal if you believe the redundancy is unfair or the process was flawed.
• Written confirmation: Get everything in writing, including your redundancy payment calculation and final employment date.

Stage 4: Notice Period (Varies)

• Work your notice: You'll typically work your notice period, though your employer may offer pay in lieu of notice (PILON).
• Time off to job hunt: You're entitled to reasonable time off during notice to look for work or arrange training.
• Handover responsibilities: Complete any necessary handover of your duties.

Stage 5: Final Payment and Leaving (Final Week)

• Final salary payment: Receive your final salary including notice pay.
• Redundancy payment: Your statutory redundancy pay is usually paid with your final salary or within a few weeks of leaving.
• Holiday pay: You'll be paid for any accrued but unused holiday.
• P45 form: Your employer must provide your P45 for tax purposes.
• References: Request a written reference before you leave.

What To Do If You're Made Redundant: Essential Action Steps

Being made redundant requires immediate action to protect your interests and plan your next steps. Here's your comprehensive checklist:

Immediate Actions (First Week)

• Request everything in writing: Get written confirmation of your redundancy, notice period, and payment details.
• Check your contract: Review your employment contract for enhanced redundancy terms, notice period requirements, and any restrictive covenants.
• Calculate your entitlement: Use this calculator to verify your statutory redundancy pay is correct.
• Check your pension: Understand what happens to your workplace pension and whether you can continue contributions.
• Document everything: Keep copies of all communications, meeting notes, and documents related to your redundancy.

Financial Planning (Week 1-2)

• Calculate your final payments: Work out your total final payment including salary, notice pay, redundancy pay, and holiday pay.
• Understand tax implications: Redundancy pay up to £30,000 is tax-free. Amounts over this threshold are taxable.
• Budget for transition: Create a budget for the period between jobs, accounting for your redundancy payment and any savings.
• Check benefit eligibility: You may be entitled to Universal Credit or Jobseeker's Allowance. Visit gov.uk for details.
• Contact creditors if needed: If you have concerns about meeting financial commitments, contact your mortgage provider, credit card companies, or loan providers early.

Job Search Preparation (Week 2-4)

• Update your CV: Refresh your CV with recent achievements and responsibilities. Consider professional CV review services.
• Activate your network: Inform trusted contacts about your situation and what you're looking for. LinkedIn is invaluable.
• Register with recruiters: Contact recruitment agencies specializing in your sector.
• Set up job alerts: Create alerts on job boards for roles matching your skills and experience.
• Consider training: Identify any skills gaps and explore training courses to improve your employability.

During Notice Period

• Use your time-off rights: You're legally entitled to reasonable time off during notice to attend interviews or training.
• Get references: Request written references from your manager and senior colleagues before you leave.
• Network internally: Speak to colleagues in other departments about potential opportunities within the wider organization.
• Professional goodbye: Leave on good terms - maintain professional relationships as they may help your future career.

After Redundancy

• Claim Universal Credit if eligible: If you're job hunting and need financial support, apply for Universal Credit through gov.uk.
• Register for National Insurance credits: This protects your state pension entitlement while you're between jobs.
• Consider self-employment: Redundancy can be an opportunity to start your own business. Research startup support available in your area.
• Invest in yourself: Use redundancy pay wisely - consider paying off high-interest debt, building emergency savings, or investing in career development.

Redundancy Payment Examples: Detailed Calculations

Understanding how redundancy pay is calculated can help you verify your entitlement. Here are comprehensive examples covering different scenarios:

Example 1: Basic Calculation for Middle-Aged Worker

Example 2: Older Worker with Maximum Service

Example 3: Part-Time Employee

Example 4: Variable Pay (Commission/Bonuses)

Example 5: Employee with Pay Rise During Service

Voluntary Redundancy vs Compulsory Redundancy

When employers need to reduce their workforce, they may offer voluntary redundancy before making compulsory redundancies. Understanding the difference can help you make an informed decision about your future.

What is Voluntary Redundancy?

Voluntary redundancy is when you choose to accept redundancy rather than being selected by your employer. Employers often offer this option first to avoid the need for compulsory redundancies. Key features include:

• You apply to leave: You volunteer to take redundancy rather than being selected.
• Enhanced packages: Employers typically offer better terms for voluntary redundancy to encourage uptake (e.g., higher multipliers, no weekly pay cap, additional benefits).
• Employer approval required: Your employer can refuse your application if they need to retain your specific skills or role.
• Same statutory minimum: If accepted, you're still entitled to at least the statutory redundancy payment (if you have 2+ years service).
• Tax treatment: The same £30,000 tax-free allowance applies to voluntary redundancy payments.

What is Compulsory Redundancy?

Compulsory redundancy is when your employer selects you for redundancy using fair selection criteria. This happens when:

• Not enough employees volunteer for redundancy
• Your specific role is being eliminated
• Your employer needs to reduce headcount in your department

Should You Apply for Voluntary Redundancy?

Consider volunteering for redundancy if:

Key Differences Summary

Redundancy During Special Circumstances

UK law provides additional protections if you're made redundant during certain circumstances. Understanding these protections is crucial to ensuring your rights are respected.

Redundancy During Pregnancy or Maternity Leave

If you're pregnant or on maternity leave, you have extra protection against redundancy:

• Suitable alternative employment: If a suitable alternative role exists anywhere in the business, your employer must offer it to you before anyone else. They cannot make you compete for it.
• Priority rights: This right takes precedence over other employees who might be better qualified or more experienced.
• Trial period protection: You have the right to a 4-week trial period in any alternative role.
• Automatically unfair dismissal: If you're made redundant primarily because of pregnancy or maternity leave, this is automatically unfair dismissal.
• Return to work rights: If made redundant during maternity leave, you keep your right to return if a suitable alternative role becomes available.

Redundancy When You're Off Sick or Disabled

Being off sick or having a disability doesn't prevent redundancy, but your employer must:

• Not discriminate: Your sickness or disability cannot be the reason for selecting you for redundancy.
• Make reasonable adjustments: During the consultation process, your employer must make reasonable adjustments to accommodate your disability.
• Consult properly: You must be fully consulted regardless of sickness absence. Your employer should arrange meetings at convenient times or locations.
• Consider capabilities realistically: If using capability as selection criteria, they must consider your abilities when well or with reasonable adjustments.
• Exclude disability-related absence: Absence due to disability should be excluded from attendance records used in selection.

Redundancy During Adoption Leave or Shared Parental Leave

Similar protections to maternity leave apply if you're on:

• Adoption leave: Same priority rights to suitable alternative employment.
• Shared parental leave: Protected against redundancy related to taking this leave.
• Paternity leave: Cannot be selected for redundancy because you took or intend to take paternity leave.

Age Discrimination

Your employer cannot select you for redundancy because of your age:

• Illegal selection criteria: "Last in, first out" (LIFO) may indirectly discriminate against younger workers and must be carefully justified.
• Retirement-related redundancies: Employers cannot use age as a factor unless they can objectively justify it.
• Enhanced packages: Age-related enhanced redundancy packages must be objectively justified to avoid discrimination.

Redundancy and Fixed-Term Contracts

If you're on a fixed-term contract:

• Same redundancy rights: You have the same rights as permanent employees if you've worked 2+ years continuously.
• Non-renewal counts as redundancy: If your contract isn't renewed because the work is no longer available, this counts as redundancy.
• Consultation required: Your employer must still consult with you about alternatives.

Settlement Agreements and Compromise Agreements

Your employer may offer you a settlement agreement (formerly called a compromise agreement) as part of your redundancy. Understanding these agreements is crucial before signing anything.

What is a Settlement Agreement?

A settlement agreement is a legally binding contract between you and your employer where you agree to waive your right to bring certain legal claims (such as unfair dismissal or discrimination) in exchange for a financial payment, typically more than statutory redundancy pay.

Key Features of Settlement Agreements

• Financial payment: Usually includes enhanced redundancy pay plus compensation for waiving your rights.
• Waiver of rights: You agree not to pursue claims against your employer (e.g., unfair dismissal, discrimination).
• Independent legal advice required: You must receive advice from an independent solicitor, and your employer typically pays for this (£250-£500).
• Voluntary: You're not obliged to accept a settlement agreement. You can negotiate or refuse it.
• Tax treatment: Up to £30,000 is usually tax-free (same as redundancy pay). Payments above this threshold are taxable.
• Confidentiality clause: Often includes confidentiality obligations about the terms and circumstances.
• Agreed reference: Usually includes a mutually agreed reference.

When Might Your Employer Offer a Settlement Agreement?

• Avoiding legal risk: If there's a risk you could claim unfair dismissal, discrimination, or other legal claims.
• Complex situations: When there are performance issues alongside redundancy.
• Quick resolution: To resolve the redundancy quickly and avoid lengthy processes.
• Workplace disputes: If there have been disputes or grievances.
• Senior positions: Often offered to senior employees with greater legal knowledge.

Should You Accept a Settlement Agreement?

Negotiating Settlement Agreements

Settlement agreements are negotiable. Consider negotiating:

• Higher payment: Especially if the redundancy process was questionable or you have strong legal claims.
• Extended notice period: Gives you more time to find alternative employment while still employed.
• Enhanced benefits: Continued health insurance, company car, or other benefits during notice.
• Outplacement support: Professional career coaching, CV writing, or job search assistance.
• Reference terms: Ensure the agreed reference is strongly positive.
• Confidentiality scope: Limit confidentiality to financial terms only, not the fact you were made redundant.

Alternatives to Redundancy: What Employers Should Consider

Before making redundancies, responsible employers should genuinely explore alternatives. Understanding these options helps you ask the right questions during consultation.

Alternatives Your Employer Should Consider

• Recruitment freeze: Stop hiring new staff and redeploy existing employees to fill vacancies.
• Reduced overtime: Cut overtime hours before reducing headcount.
• Pay freeze or reduction: Temporary salary reductions across the workforce (with employee agreement).
• Shorter working week: Reduce everyone's hours rather than making some redundant.
• Voluntary reduced hours: Offer part-time working to employees who want it.
• Retraining and redeployment: Train employees for different roles within the business.
• Early retirement: Offer enhanced early retirement packages to willing employees.
• Career breaks or sabbaticals: Unpaid leave for employees who want time away.
• Lay-offs or short-time working: Temporary measures with potential to return to full hours.
• Natural wastage: Not replacing employees who leave voluntarily.
• Stop using contractors/temps: End agency or temporary contracts before redundancies.

Questions to Ask During Consultation

During redundancy consultation, ask your employer:

Challenging Unfair Redundancy: Your Options

If you believe your redundancy is unfair or the process was flawed, you have options to challenge it. Acting quickly is crucial as strict time limits apply.

When Might Redundancy Be Unfair?

Your redundancy may be automatically unfair if you were selected because:

• You're pregnant or on maternity, adoption, or paternity leave
• You asked for flexible working or parental leave
• You're a trade union member or took part in union activities
• You acted as an employee representative
• You raised health and safety concerns
• You made a protected disclosure (whistleblowing)
• You asserted a statutory employment right
• You refused Sunday work (retail workers)

Your redundancy may be ordinarily unfair if:

• The selection criteria were applied unfairly or inconsistently
• Your employer didn't properly consult with you
• Your employer didn't look for alternative employment for you
• Your employer selected you for discriminatory reasons (age, sex, race, disability, etc.)
• There wasn't a genuine redundancy situation
• The selection criteria were discriminatory

Step 1: Internal Appeal

Most employers have an appeal process. You should:

• Appeal in writing: Set out clearly why you believe the redundancy is unfair.
• Be specific: Cite specific failures in process, unfair selection criteria application, or lack of consultation.
• Suggest remedies: What outcome are you seeking? (Reinstatement, alternative role, improved package)
• Act quickly: Most employers set tight deadlines for appeals (typically 5-10 working days).
• Prepare thoroughly: Gather evidence, documents, and witness statements supporting your case.

Step 2: Early Conciliation with ACAS

Before you can bring an employment tribunal claim, you must contact ACAS for early conciliation:

• Free service: ACAS offers free, impartial conciliation between you and your employer.
• Mandatory step: You must notify ACAS before bringing a tribunal claim (with very few exceptions).
• Time limit paused: The time limit for bringing a claim is paused while ACAS tries to conciliate.
• No obligation to settle: You can end conciliation at any time and proceed to tribunal.
• Confidential: What's discussed in conciliation can't be used as evidence in tribunal.
• Contact: 0300 123 1122 or visit www.acas.org.uk

Step 3: Employment Tribunal

If internal appeal and ACAS conciliation don't resolve the issue, you can bring an employment tribunal claim:

• Time limit: You must submit your claim within 3 months less one day of your dismissal date (minus time spent in ACAS early conciliation).
• Eligibility: For ordinary unfair dismissal, you need 2 years' continuous service. For automatically unfair dismissal, there's no qualifying period.
• Costs: No fee to bring a claim. You may represent yourself or hire a solicitor.
• Potential compensation: If successful, you may receive compensation for financial losses, which could include notice pay, redundancy pay, and compensation for future loss of earnings (subject to caps).
• Stress and complexity: Tribunal cases can be stressful and time-consuming. Consider whether it's worth pursuing.

Compensation Limits

If you win an unfair dismissal claim, compensation includes:

Benefits and Financial Support After Redundancy

After being made redundant, you may be entitled to financial support from the UK government while you look for new employment. Understanding what's available can help you bridge the gap between jobs.

Universal Credit

Universal Credit is the main benefit for working-age people who are on a low income or unemployed. Key points:

• Eligibility: Available if you're unemployed or on low income, aged 18+ (or 16-17 in certain circumstances).
• Means-tested: Takes into account your savings, partner's income, and redundancy payment.
• Capital limits: If you have over £16,000 in savings (including redundancy pay), you won't be eligible. Between £6,000-£16,000, your payment is reduced.
• Waiting period: First payment takes 5 weeks, but you can request an advance.
• Work search requirements: You must actively look for work and provide evidence of job search activities.
• Apply online: Visit www.gov.uk/universal-credit

New Style Jobseeker's Allowance (JSA)

New Style JSA is a fortnightly payment to support you while looking for work:

• Eligibility: You must have paid enough National Insurance contributions in the last 2-3 years.
• Not means-tested: Your savings, redundancy payment, and partner's income don't affect eligibility.
• Payment: Up to £84.80 per week (2026 rate) if you're 25 or over.
• Duration: Paid for up to 182 days (about 6 months).
• Can claim alongside Universal Credit: You may be able to claim both if eligible.
• Work search requirements: You must be actively looking for work.

National Insurance Credits

Even if you don't qualify for JSA or Universal Credit, protect your State Pension:

• Free credits: Get National Insurance credits to protect your State Pension entitlement while unemployed.
• Automatic in some cases: If you claim Universal Credit or JSA, you'll get credits automatically.
• Apply separately if needed: If you don't qualify for benefits but are looking for work, you can still apply for credits.
• Apply online: Visit www.gov.uk/national-insurance-credits

Other Support Available

• Council Tax Reduction: Your local council may reduce your council tax if you're on a low income or claiming benefits.
• Free school meals: If you have children and claim certain benefits, they may qualify for free school meals.
• Help with housing costs: Universal Credit can include help with rent payments.
• Budgeting loans and advances: If on certain benefits, you may be able to get an interest-free loan for essential costs.
• NHS prescription and dental help: You may qualify for free NHS prescriptions and dental treatment if on certain benefits.

Managing Your Redundancy Payment

Your redundancy payment can affect benefit eligibility, so manage it wisely:

Help with Job Searching

• National Careers Service: Free careers advice and coaching (0800 100 900 or www.nationalcareers.service.gov.uk).
• Jobcentre Plus: Local job search support, CV help, and access to training courses.
• Sector-based work academies: Free training and guaranteed job interview in sectors with vacancies.
• Apprenticeships: Not just for young people – apprenticeships available at all ages and levels.