Statutory redundancy pay

The minimum lump sum most employees are entitled to after two years' service when their job is genuinely made redundant — calculated by a fixed formula, not whatever an employer feels like offering.

How many years of service do I need before I qualify?

You generally need at least two years of continuous employment with the same employer to qualify for statutory redundancy pay. Length of service below that does not attract a statutory entitlement, though your contract or a settlement agreement could still provide something separately.

Is my redundancy pay based on my actual salary?

Only up to a cap. Your weekly pay is used in the calculation, but it is capped at a maximum figure set by the government and reviewed each April — for redundancies on or after 6 April 2026, the cap is £751 a week, even if your actual weekly pay is higher.

Is there a maximum total amount of statutory redundancy pay?

Yes. Because both the weekly pay figure and the number of years counted are capped, there is an overall maximum. For redundancies on or after 6 April 2026, the maximum statutory redundancy payment is £22,530.

Does age affect how much I get?

Yes. The formula gives half a week's pay for each full year worked under age 22, one week's pay for each full year worked between 22 and 40, and one and a half week's pay for each full year worked at 41 or over. Only a maximum of 20 years' service can be counted, generally counting back from the most recent years.

Is statutory redundancy pay taxable?

Statutory redundancy pay is generally paid tax-free up to £30,000, along with any other genuine termination payments, when added together. Amounts above £30,000 are usually taxable, so if your employer is also paying an enhanced or contractual redundancy sum, the combined figure matters.

What if my employer refuses to pay, or the business has become insolvent?

If your employer refuses to pay statutory redundancy pay you are entitled to, you can bring an employment tribunal claim. If the employer is insolvent and cannot pay, you can usually claim the statutory amount from the Insolvency Service instead, using the relevant government scheme.

How the calculation actually works

Statutory redundancy pay is not a single fixed amount — it is calculated using three inputs: your age for each full year of service, your length of continuous service up to a maximum of 20 years, and your weekly pay, capped at a maximum figure that is reviewed each April. For redundancies on or after 6 April 2026, weekly pay is capped at £751, which produces an overall maximum statutory redundancy payment of £22,530.

The age-banded formula means a longer-serving, older employee generally receives more than a shorter-serving, younger colleague on the same salary, even though both may be made redundant on the same day for the same underlying business reason.

The formula, step by step

An employee aged 45 is made redundant after 12 years' continuous service, with a normal weekly pay of £900, which exceeds the statutory cap. The redundancy takes effect after 6 April 2026.

Capped weekly pay used

Qualifying years (all age 41+)

Statutory redundancy pay

Although the employee's actual weekly pay was £900, the calculation uses the £751 statutory cap. All 12 years fall in the 41-and-over band, so each year counts at one and a half week's capped pay, giving a total of 18 weeks' pay at £751, which comes to £13,518.

Continuous employment

Employment Rights Act 1996, Part XI

Redundancy: your rights — redundancy pay

Statutory Redundancy Pay — Employment Tribunal Glossary

How statutory redundancy pay is calculated, the current weekly pay cap and maximum payment, and a worked example.