Statutory redundancy pay looks complicated and is not. There are three inputs: your age across each year of service, how long you worked there, and a week's pay. The reason people get different answers from the same facts is almost always one of two things, the weekly cap or the way age bands are counted.
This walks through the formula with real numbers so you can check what your employer has offered. Figures are the ones applying to redundancies on or after 6 April 2026. It is general information, not legal or financial advice.
Do you qualify at all?
You normally need two years of continuous employment with the employer, and you need to be an employee. Below two years there is no statutory redundancy pay, though your contract may provide something and your notice entitlement still stands.
Continuity is about the employment relationship rather than the hours. Part-time counts. A TUPE transfer carries your service across. Short breaks do not automatically break it.
The Formula
For each complete year of service you get:
| Your age during that year | What that year is worth |
|---|---|
| Under 22 | Half a week's pay |
| 22 to 40 | One week's pay |
| 41 and over | One and a half weeks' pay |
Two caps then apply. Service is capped at 20 years, and where you have more than that, it is the most recent 20 years that count, which works in your favour because those are the years at the higher multiplier. And a week's pay is capped.
The weekly Pay cap
Your weekly pay for this calculation is the average you earned per week over the 12 weeks before the day you were given redundancy notice, using gross pay before tax.
It is then capped:
| Date of redundancy | Weekly pay cap | Maximum statutory payment |
|---|---|---|
| On or after 6 April 2026 | £751 | £22,530 |
| 6 April 2025 to 5 April 2026 | £719 | £21,570 |
The cap changes every April, and the date that matters is the date of the redundancy, not the date you were told about it or the date the money arrives. A redundancy on 3 April is calculated on the old cap, one on 8 April on the new one.
The maximum is the cap multiplied by 30, because 20 years at one and a half weeks each is 30 weeks, and that is the most the formula can produce.
Counting the age bands properly
This is where most miscalculations come from. You do not apply your age at redundancy to every year of service. You work backwards through the years and apply the band you were in during each one.
Someone made redundant at 45 with 12 years' service was 41 or over for four of those years and between 22 and 40 for the other eight. They do not get 12 years at one and a half weeks, and they do not get 12 at one week either. They get a mixture.
Five worked examples
1. Straightforward, under the cap
Age 35, six years' service, average gross pay £600 a week. That is under £751, so the actual figure is used.
All six years fall in the 22 to 40 band, so six years at one week each is six weeks. Six × £600 = £3,600.
2. Crossing the age bands, above the cap
Age 45, 12 years' service, average gross pay £900 a week. That is above £751, so the cap is used.
Four years aged 41 or over at one and a half weeks each is six weeks. Eight years aged 22 to 40 at one week each is eight weeks. Total 14 weeks.
14 × £751 = £10,514. Note what the cap costs here: at the real weekly pay of £900 it would have been £12,600, so the cap removes £2,086.
3. Long service, hitting the 20-year cap
Age 58, 25 years' service, average gross pay £820 a week. Both caps bite.
Only the most recent 20 years count, so the calculation runs from age 38 to 58. Seventeen years aged 41 or over at one and a half weeks each is 25.5 weeks. Three years aged 38 to 40 at one week each is three weeks. Total 28.5 weeks.
28.5 × £751 = £21,403.50.
4. The maximum possible
Age 61 or over with at least 20 years' service, all of them from age 41 onwards. Twenty years at one and a half weeks each is 30 weeks, which is the ceiling the formula allows.
30 × £751 = £22,530. No amount of extra service or salary produces more than this under the statutory scheme.
5. A young worker
Age 24, three years' service starting at 21, average gross pay £400 a week.
One year aged 21 at half a week is 0.5 weeks. Two years aged 22 to 24 at one week each is two weeks. Total 2.5 weeks.
2.5 × £400 = £1,000.
The redundancy pay calculator on this site does all of this from your dates and salary if you would rather not count years by hand.
What counts as a week's Pay
Gross pay before deductions, averaged over the 12 weeks before notice. That includes contractual overtime and shift allowances. Discretionary bonuses and expenses generally do not go in.
If your pay in those 12 weeks was lower than normal because you were on reduced pay, sick pay or family leave, do not accept a calculation based on the reduced figure without questioning it. A week's pay for this purpose is meant to reflect your normal contractual earnings, and this is a frequent source of understated offers.
Check the notice date, not the leaving date. The 12-week averaging period runs back from the day you were given notice. An employer who averages the 12 weeks before your last working day, when you spent part of that on garden leave or reduced hours, will produce a lower figure than the law requires.
Tax
Statutory redundancy pay is tax free. It counts towards the £30,000 threshold that applies to termination payments generally, but on its own it can never reach £30,000 because the statutory maximum is £22,530.
Where tax gets complicated is everything else in the package: notice pay, holiday pay, and any enhanced element your employer adds. Those are treated differently, and our article on redundancy pay and tax covers how the £30,000 threshold and the post-employment notice pay rules interact.
This is the floor, not the offer
Statutory redundancy pay is a legal minimum. Many employers pay more, either because the contract requires it or because they want a clean exit, and enhanced schemes commonly remove the weekly cap, remove the 20-year limit, or multiply the statutory figure.
So work out the statutory figure first, because that is what you are entitled to whatever happens. Then look at what has been offered. If the offer is the statutory amount and nothing more, there may be room to ask, and our article on negotiating a better package covers where the room to push usually is.
If the numbers do not match
Ask for the calculation in writing: the weekly pay figure used, the 12-week period it was averaged over, the years of service counted and the age band applied to each. Employers are generally willing to show this, and errors do turn up.
The recurring ones are using current age for every year, forgetting that the most recent 20 years are the ones that count, applying an out-of-date weekly cap, and averaging the wrong 12 weeks. All four are arithmetic rather than judgement, which makes them straightforward to correct once identified.
If you cannot resolve it, Acas offers free and impartial advice on 0300 123 1100. There are also time limits for taking a redundancy pay dispute further, so raise it promptly rather than leaving it.