Statutory redundancy pay: how to calculate it (2026 rates)
Statutory redundancy pay is based on age, length of service and weekly pay (capped at £751/week from April 2026, max £22,530). First £30,000 is tax-free.
Statutory redundancy pay is calculated using a formula based on age, length of service, and weekly pay (capped). The 2026/27 figures (effective 6 April 2026) are below.
The formula
Statutory redundancy pay = Age factor × years of service × weekly pay
Age factors
- Under 22: 0.5 week's pay per year of service.
- 22 to 40: 1 week's pay per year of service.
- 41 and over: 1.5 weeks' pay per year of service.
Where an employee crosses age bands during their service, the calculation is split — the higher rate applies only to years served at the higher age.
Caps (from 6 April 2026)
- Maximum weekly pay counted in the calculation: £751 (uprated from £719 on 6 April 2026).
- Maximum years of service counted: 20 years.
- Maximum statutory redundancy pay: £22,530 (20 × £751 × 1.5).
The cap on weekly pay applies regardless of actual earnings. An employee earning £1,500/week is treated as earning £751/week for the calculation.
Eligibility
- Minimum 2 years' continuous service as at the date of dismissal.
- Must be an employee (not a worker or self-employed).
- Must have been dismissed by reason of redundancy as legally defined.
Worked example
A 47-year-old employee with 15 years' service earning £900/week:
- Weekly pay used = £751 (capped).
- Years between 41 and 47 = 6 years × 1.5 weeks = 9 weeks.
- Years between 33 and 40 = 7 years × 1 week = 7 weeks.
- Years between 32 and 33 = 2 years × 1 week = 2 weeks (note: only 15 years of service, so we work backwards from 47).
Total: 18 weeks × £751 = £13,518.
Tax treatment
The combined total of statutory redundancy pay plus any enhanced (contractual) redundancy pay is tax-free up to £30,000. Amounts above £30,000 are subject to income tax but not National Insurance contributions.
Payments in lieu of notice (PILON) are fully taxable (income tax and NICs) regardless of contract terms — this has been the position since April 2018 under the post-employment notice pay (PENP) rules.
Use the official calculator
GOV.UK provides a free, official redundancy pay calculator that produces exact figures for any case: GOV.UK — Calculate Your Redundancy Pay.
This article is verified against guidance published by GOV.UK.
Read the official sourceRun a fair redundancy process end-to-end
At-risk letters, consultation records, outcome notices, settlement letters — generated with the correct statutory periods, the right caps, and the right process.
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Read articleThis article is reference content, not legal advice. UK employment law changes frequently; while we verify articles regularly against the named source, you should always check the current position with a qualified employment solicitor for any specific decision. Complyer Editorial Team · Updated May 2026.