Statutory redundancy pay is a formula, not a negotiation: years of service banded by age, multiplied by a week’s pay, with a cap that changes each April. This guide works the formula with the figures GOV.UK publishes, explains the notice and holiday pay that sit beside it, and shows how the £30,000 tax-free allowance applies to the whole final payment, line by line.

Who qualifies for statutory redundancy pay

Statutory redundancy pay is a legal minimum, not a favour and not a standard part of every leaving package. In England, Scotland and Wales you normally qualify if you are an employee, you have at least two years’ continuous service with your employer, and you are dismissed because your role itself has disappeared, through a business closure, a workplace closure, or a reduced need for work of a particular kind. Workers and self-employed contractors are not covered by the statutory scheme, however long they have worked for the business. If you have under two years’ service, the statutory entitlement is nothing, although your contract may still promise more, and notice pay and holiday pay may still be owed. Northern Ireland has its own rates and caps, which differ from the figures in this guide; the GOV.UK redundancy pay calculator gives the Northern Ireland figure for your date.

Three common situations do not qualify. Dismissal for misconduct is not redundancy, so no statutory redundancy pay is due. Refusing suitable alternative work without good reason can remove the entitlement. And a small number of excluded categories, including share fishermen, Crown servants, members of the armed forces and police services, and apprentices who are not employees at the end of their training, are covered by other arrangements. Volunteering for redundancy, by contrast, does not by itself remove the entitlement: an employee who volunteers and is selected is still dismissed for redundancy purposes. If you are unsure whether your situation counts, GOV.UK’s Redundancy: your rights pages and Acas set out the qualifying rules, and an employment adviser can apply them to your facts. This guide explains the calculation; it is information, not legal advice.

The formula, band by band

The statutory formula works backwards from the day your employment ends. Each complete year of service is matched to the age you were during it and earns a set number of weeks’ pay: half a week’s pay for each full year you were under 22, one week’s pay for each full year you were 22 to 40, and one and a half weeks’ pay for each full year you were 41 or over. At most 20 years of service count, however long you have worked there, and the years counted are the most recent 20. Total the weeks, then multiply by a week’s pay. A week’s pay is your average weekly earnings over the 12 weeks before you received your redundancy notice, and it is capped, as the next section explains.

The banding is why two people with identical service can receive different amounts. Consider three readers, all earning below the cap so the cap does not bite. A reader leaving at 30 after 5 years on £500 a week earns 5 weeks, all in the 22 to 40 band, and receives £2,500. A reader leaving at 20 after 3 years on £400 a week earns 1.5 weeks, all under 22, and receives £600. A reader leaving at 45 after 12 years on £600 a week earns 14.5 weeks, 5 years at the 1.5 rate and 7 years at the 1.0 rate, and receives £8,700. The same 12 years worked entirely between the ages of 22 and 40 would earn only 12 weeks. Age during each year of service, not just length of service, decides the total, which is why the calculator asks for your age at leaving and counts backwards year by year.

At the top end, a reader leaving at 50 with 25 years of service and £900 a week has only 20 years counted, 10 at the 1.5 rate and 10 at the 1.0 rate, 25 weeks in total, and the weekly pay is cut to the £751 cap, giving 25 x £751 = £18,775, rather than the £22,500 that uncapped pay and full service would suggest. Every limit in the scheme, the 20-year cap, the age bands, and the weekly pay cap, bites at once on long-serving, higher-paid, older employees. That is the design: a statutory floor that is generous to long service and modest in absolute terms, with contracts free to pay more, as the section on enhanced pay explains.

The cap, and which year’s cap applies

The weekly pay cap is reviewed each April, and the cap that matters is the one in force on the date your redundancy takes effect, not the cap in force when you were hired, when consultation started, or when you first read about it. For redundancies on or after 6 April 2026, a week’s pay is capped at £751 in England, Scotland and Wales, and the maximum statutory redundancy payment anyone can receive is 30 weeks x £751 = £22,530. For redundancies between 6 April 2025 and 5 April 2026, the cap was £719 and the maximum was £21,570. Redundancies before 6 April 2025 used lower caps again. If your leaving date sits near an April boundary, the date decides the figure, and a difference of days can be worth hundreds of pounds, as the worked comparison below shows.

Caps for England, Scotland and Wales, per GOV.UK. Northern Ireland caps differ. Use the cap in force on your redundancy date; the GOV.UK calculator applies the right cap for the date you enter.

Worked comparison, same person, two dates. A reader with 14.5 weeks earned, on £900 a week, is capped in both years, because £900 exceeds both caps. At the £719 cap the payment is 14.5 x £719 = £10,425.50. At the £751 cap it is 14.5 x £751 = £10,889.50, a difference of £464 for the same service, the same age bands, and the same pay, decided only by the leaving date. A reader earning £600 a week, below both caps, is unaffected by the change: the full £600 is used in either year, and the payment is identical. The cap only trims the excess above it. Below the cap, your real pay counts in full; above it, every extra pound of salary buys no more statutory pay, and only matters for any enhanced element or for notice pay, which is not capped in the same way.

Notice and holiday pay: paid on top, taxed differently

Statutory redundancy pay is only one line of a final payment. Notice pay and holiday pay come on top, they are calculated differently, and they are taxed differently, which is why a final payslip needs reading line by line rather than as a single lump sum. The statutory minimum notice your employer must give is at least one week’s notice if you have been employed between one month and two years, one week’s notice for each full year if you have been employed between two and 12 years, and 12 weeks’ notice if you have been employed for 12 years or more. Your contract may give you more than the statutory minimum; if so, the longer period applies. Your employer should either pay you through your notice period, pay you in lieu of notice, or use a mix of the two.

Notice pay is based on the average you earned per week over the 12 weeks before your notice period starts, at your normal rate, not capped at the £751 redundancy cap. Payment in lieu of notice gives you all the basic pay you would have received during the notice period, and may include extras such as pension contributions or private health care if they are in your contract. Holiday pay covers accrued but untaken holiday up to your leaving date and must be paid as well. Both are paid through payroll as earnings, with Income Tax and National Insurance deducted in the usual way. They do not count towards the £30,000 tax-free allowance for termination payments, which the next section explains. Confusing notice pay with redundancy pay, or adding them together before tax, is the commonest way a final payment is misread.

Tax: the £30,000 allowance

Statutory redundancy pay under £30,000 is not taxable, per GOV.UK. More precisely, statutory redundancy pay, together with other qualifying termination payments such as enhanced redundancy pay and ex-gratia payments, counts towards a combined £30,000 tax-free allowance. The first £30,000 of those payments combined is normally free of Income Tax, and no employee National Insurance is due on the excess either, although the excess is taxed as income. Notice pay, holiday pay, unpaid wages, and bonuses sit outside the allowance entirely: they are taxed as earnings, with National Insurance, whether or not the £30,000 allowance has been used up.

Illustration, using round figures. A reader receives £12,000 of statutory redundancy pay and £10,000 of enhanced redundancy pay, £22,000 combined, all within the £30,000 allowance, so none of it is taxed. The same reader also receives £6,000 of notice pay, which is taxed in full as earnings. A second reader receives £18,775 of statutory pay and £15,000 of ex-gratia pay, £33,775 combined, so £30,000 is tax-free and £3,775 is taxed as income. The allowance is per termination, not per payment line, and not per employer in any helpful sense for a single redundancy: adding a generous ex-gratia sum to an already large statutory payment can push the total over the allowance even though each line on its own looks modest. Your final payslip should show the split; if it shows only a single total, ask for the breakdown before accepting that the tax is right.

Process, consultation, and deadlines

Money is only half of a redundancy. Your employer must select you fairly, consult with you about why you are being made redundant and any alternatives, and offer you suitable alternative work if any is available. If your employer is making 20 or more redundancies at the same time, collective consultation rules apply: consultation must start at least 30 days before any dismissals take effect for 20 to 99 redundancies, and at least 45 days for 100 or more. If you are offered suitable alternative employment, you have a four-week trial period, which can be extended in writing if you need training; tell your employer during the trial if the new job is not suitable, or you may lose the right to statutory redundancy pay. Refusing suitable alternative work without good reason can have the same effect.

Two deadlines and one document deserve emphasis. You normally have 6 months from the date your job ends to apply for statutory redundancy pay, so do not let the date drift while other matters are sorted out. Your employer must give you a written statement setting out the amount of redundancy payment and how it was worked out; keep it with your redundancy letter and payslips, because it is the record you will need if any figure is disputed. And if you have been continuously employed for two years by the date your notice period ends, you are allowed a reasonable amount of time off during the notice period to look for another job or arrange training, with the most your employer has to pay for that time capped at 40% of one week’s pay. Help finding a new job is available from the Jobcentre Plus Rapid Response Service, and advice on the whole process from Acas and Citizens Advice. Check the figures with the GOV.UK redundancy pages and the official calculator for your own date, age, service, and pay, and take advice promptly if anything in your letter does not match the calculation in this guide.

Frequently asked questions

How is redundancy pay calculated in the UK?

Count complete years of service backwards from the leaving date, up to 20 years. Each year earns 0.5 weeks of pay if you were under 22, 1 week if you were 22 to 40, and 1.5 weeks if you were 41 or over. Multiply the total weeks by your average weekly pay over the 12 weeks before you got your redundancy notice, capped at 751 pounds for redundancies on or after 6 April 2026. The maximum statutory payment is 22,530 pounds.

Who qualifies for statutory redundancy pay?

In England, Scotland and Wales you normally qualify if you are an employee with at least 2 years of continuous service who is genuinely made redundant, meaning the role itself has disappeared. Workers and self-employed contractors are not covered. Dismissal for misconduct is not redundancy, and refusing suitable alternative work without good reason can remove the entitlement. Under 2 years of service the statutory entitlement is zero, although a contract may promise more.

What is the maximum statutory redundancy pay?

22,530 pounds, for redundancies on or after 6 April 2026. That is 20 years of service, all at the top rate of 1.5 weeks per year, giving 30 weeks, multiplied by the weekly pay cap of 751 pounds. For redundancies between 6 April 2025 and 5 April 2026 the cap was 719 pounds and the maximum was 21,570 pounds. An employer may pay more under your contract, but the statute never requires more than the maximum.

Is redundancy pay taxed in the UK?

Statutory redundancy pay under 30,000 pounds is not taxable. Together with other qualifying termination payments, such as enhanced redundancy pay and ex-gratia payments, it counts towards a combined 30,000 pound tax-free allowance. Anything above 30,000 pounds combined is taxed as income. Notice pay, holiday pay, and unpaid wages are taxed as earnings with National Insurance and do not use the allowance.

How much notice must my employer give me?

The statutory minimum is at least one week if you have been employed between one month and 2 years, one week for each full year if you have been employed between 2 and 12 years, and 12 weeks if you have been employed for 12 years or more. Your contract may give you more, and the longer period applies. Notice pay is based on your average weekly earnings over the 12 weeks before the notice period starts, at your normal rate, and it is taxed as earnings.

What is the difference between statutory and contractual redundancy pay?

Statutory redundancy pay is the legal minimum, calculated by the age-band formula with the weekly pay cap and the 20-year service cap. Contractual or enhanced redundancy pay is whatever your contract, staff handbook, or collective agreement promises above that minimum: it may use your uncapped pay, a higher multiplier, or a flat sum, and it is not calculated by the statutory formula. The two are added together for the 30,000 pound tax-free allowance, and the statutory figure is the floor your employer cannot go below.

Sources: GOV.UK, Redundancy: your rights (statutory pay, caps, notice periods, consultation, and deadlines), checked 31 October 2026. Figures are for England, Scotland and Wales. This guide is information only, not legal or financial advice.