Redundancy Pay Calculator
Eligibility Criteria
To qualify for statutory redundancy pay, you must meet these requirements:
- At least 2 years of continuous employment with your employer
- Employee status (not self-employed or independent contractor)
- Genuine redundancy situation (role no longer required)
- Dismissal due to redundancy, not other reasons
Workers on zero-hours contracts without employee status typically do not qualify for statutory redundancy pay.
Calculation Method
Statutory redundancy pay is calculated using a formula based on three factors:
- Age: Determines the multiplier applied
- Weekly Pay: Average gross pay from last 12 weeks
- Service Length: Complete years worked (capped at 20)
The formula applies different rates depending on your age during each year of service.
Age-Based Multipliers
| Age Range | Multiplier per Year | Example (5 years at £500/week) |
|---|---|---|
| Under 22 | 0.5 week’s pay | 5 × 0.5 × £500 = £1,250 |
| 22 to 40 | 1 week’s pay | 5 × 1 × £500 = £2,500 |
| 41 and over | 1.5 week’s pay | 5 × 1.5 × £500 = £3,750 |
Statutory Caps and Limits
| Tax Year | Weekly Pay Cap | Maximum Payment | Effective From |
|---|---|---|---|
| 2025/26 | £719 | £21,570 | 6 April 2025 |
| 2024/25 | £700 | £21,000 | 6 April 2024 |
Even if your actual weekly pay exceeds the cap, calculations use the capped amount. The maximum payment of £21,570 represents 20 years of service at age 41+ with the maximum weekly cap (20 × 1.5 × £719).
How to Use This Calculator
- Enter Your Age: Provide your age on the date your redundancy takes effect, not your current age if different.
- Complete Years: Count only full years of continuous service. Partial years are not included in statutory calculations.
- Weekly Pay: Calculate by averaging your gross pay over the 12 weeks before receiving redundancy notice. Include regular overtime and bonuses but exclude irregular payments.
- Select Tax Year: Choose the tax year when your redundancy dismissal takes effect, as caps differ between years.
- Review Results: The calculator shows your statutory entitlement with a detailed breakdown by age band.
Weekly Pay Calculation
Your weekly pay is determined by averaging the gross pay from the 12 weeks before you receive redundancy notice:
- Include: Regular salary, guaranteed overtime, shift allowances, regular bonuses
- Exclude: Non-cash benefits, irregular bonuses, expenses, one-off payments
- Furlough Note: If you were on furlough, use your normal pay, not reduced furlough pay
Example: If you earned £7,200 over 12 weeks, your average weekly pay is £600 (£7,200 ÷ 12).
Worked Examples
Example 1: Age 28, 6 years service, £550/week
- All 6 years fall in the 22-40 age band
- Calculation: 6 years × 1 week × £550 = £3,300
Example 2: Age 45, 12 years service, £800/week (capped at £719)
- All 12 years at age 41+ rate
- Calculation: 12 years × 1.5 weeks × £719 = £12,942
Example 3: Age 43, 15 years service (started age 28), £650/week
- Years 1-13 (age 28-40): 13 × 1 × £650 = £8,450
- Years 14-15 (age 41-43): 2 × 1.5 × £650 = £1,950
- Total: £10,400
Common Questions
What if I have more than 20 years of service?
Only the most recent 20 years count towards statutory redundancy pay. Earlier years of service are disregarded in the calculation.
Can my employer pay more than the statutory amount?
Yes. The statutory amount is the legal minimum. Many employers offer enhanced redundancy packages that exceed statutory requirements. Check your employment contract or company redundancy policy.
Is redundancy pay taxable?
Statutory redundancy pay up to £30,000 is tax-free. Amounts above £30,000 are subject to income tax but not National Insurance contributions. Enhanced payments from employers follow the same rule.
What if my hours vary each week?
Calculate the average weekly pay over the 12-week reference period. Add up your total gross earnings for those 12 weeks and divide by 12 to get your average weekly pay.
Does redundancy pay include notice pay?
No. Statutory redundancy pay and notice pay are separate entitlements. You should receive both your statutory redundancy payment and either notice pay or the opportunity to work your notice period.
What happens to my pension when made redundant?
Your pension pot remains yours. You can transfer it to a new employer’s scheme, leave it where it is, or consolidate multiple pensions. Consider seeking independent financial advice before making decisions.
Am I entitled to redundancy pay if I find a new job before leaving?
Yes, provided your redundancy is genuine and you meet the eligibility criteria. Finding alternative employment does not affect your entitlement to statutory redundancy pay from your current employer.
What if my employer offers suitable alternative employment?
If your employer offers you suitable alternative work and you unreasonably refuse it, you may lose your right to redundancy pay. The role must be suitable considering factors like location, pay, and job type.
Employment Rights During Redundancy
Beyond statutory redundancy pay, employees have additional rights:
- Consultation Period: Employers must consult with you before confirming redundancy
- Notice Period: Entitled to statutory minimum notice or contractual notice, whichever is longer
- Time Off: Reasonable time off to look for new work or arrange training
- Selection Criteria: Redundancy selection must be fair and non-discriminatory
- Trial Periods: Four-week trial period for alternative roles without losing redundancy rights
- Holiday Pay: Payment for unused holiday entitlement
Collective Redundancies
Different rules apply when 20 or more employees face redundancy at one establishment within 90 days:
| Number of Redundancies | Minimum Consultation Period | Additional Requirement |
|---|---|---|
| 20-99 employees | 30 days | Notify Secretary of State (HR1 form) |
| 100+ employees | 45 days | Notify Secretary of State (HR1 form) |
Employers must consult with employee representatives or recognised trade unions during collective redundancy situations.
Alternatives to Redundancy
Employers should consider alternatives before proceeding with redundancies:
- Recruitment freeze for non-essential positions
- Reduction in overtime opportunities
- Voluntary redundancy or early retirement schemes
- Temporary lay-offs or short-time working arrangements
- Redeployment to different roles or departments
- Job sharing or reduced working hours
Tax Implications
Redundancy payments have specific tax treatment:
- First £30,000: Tax-free (includes statutory and enhanced payments)
- Above £30,000: Subject to income tax at your marginal rate
- National Insurance: Not payable on redundancy payments
- Pension Contributions: Not deducted from redundancy pay
- Notice Pay: Always taxable as normal earnings
Payment in lieu of notice (PILON) is treated as taxable earnings, separate from redundancy pay.
Challenging Unfair Redundancy
You may challenge your redundancy if:
- The redundancy situation is not genuine
- Selection criteria were unfair or discriminatory
- Proper consultation procedures were not followed
- Suitable alternative roles were not offered
- Selection was based on protected characteristics
Seek advice from ACAS (Advisory, Conciliation and Arbitration Service) or an employment solicitor if you believe your redundancy is unfair. You typically have three months less one day from your dismissal date to lodge an employment tribunal claim.
References
- GOV.UK (2025). Calculate your statutory redundancy pay. Available at: https://www.gov.uk/calculate-your-redundancy-pay
- GOV.UK (2024). Redundancy: your rights – Statutory redundancy pay. Available at: https://www.gov.uk/redundancy-your-rights/redundancy-pay
- Advisory, Conciliation and Arbitration Service (ACAS) (2025). Redundancy pay. Available at: https://www.acas.org.uk/your-rights-during-redundancy/redundancy-pay
- Harper James Solicitors (2025). How is redundancy pay calculated? Available at: https://harperjames.co.uk/article/how-to-calculate-redundancy-pay/
- MoneyHelper (2025). Redundancy pay calculator. Available at: https://www.moneyhelper.org.uk/en/work/losing-your-job/redundancy-pay-calculator
- Chartered Institute of Payroll Professionals (CIPP) (2025). The Employment Rights (Increase of Limits) Order 2025. Available at: https://www.cipp.org.uk/resources/news/the-employment-rights-increase-limits-order-2025.html