Statutory Redundancy Pay Explained: What You're Owed in 2026

Being told your role is at risk is stressful enough without having to decode a complex entitlement calculation. This guide sets out exactly how statutory redundancy pay works in 2026, so you can check any figure your employer offers against the legal minimum. Try your own numbers in our redundancy pay calculator.

Who qualifies

To qualify for statutory redundancy pay in the UK, you need:

• To be classed as an employee (workers and self-employed contractors do not qualify).
• Two years' continuous service with the same employer by your last day of employment.
• To have been dismissed by reason of redundancy — either because the workplace is closing, the type of work you do is no longer needed, or fewer people are needed to do it.

If you volunteer for redundancy in a formal scheme, you're still eligible. But if you resign before you're formally made redundant, you generally lose the right to statutory redundancy pay.

The formula

Statutory redundancy pay is calculated as a number of "weeks' pay". The number of weeks depends on your age during each year of service:

• 0.5 weeks per full year of service when you were under 22
• 1 week per full year when you were 22 to 40
• 1.5 weeks per full year when you were 41 or older

Then two caps apply:

• Only your first 20 years of service count.
• Weekly pay is capped at the statutory maximum — £751 in 2026/27.

That gives an absolute maximum statutory payout of 20 × 1.5 × £751 = £22,530.

Worked example 1: 30 years old, 5 years service, £500/week

You were between 22 and 40 for the whole 5 years, so you get 1 week per year: 5 × £500 = £2,500.

Worked example 2: 45 years old, 10 years service, £900/week

Your weekly pay is above the cap, so use £751. During those 10 years you were 41+ for the last 5 and 22–40 for the first 5: - 5 years × 1 week × £751 = £3,755 - 5 years × 1.5 weeks × £751 = £5,632.50 - Total: £9,387.50

Worked example 3: 60 years old, 25 years service, £600/week

Only 20 years count. All 20 were spent at 41+, so multiplier is 1.5 weeks per year: 20 × 1.5 × £600 = £18,000.

What counts as weekly pay

For statutory purposes, weekly pay is your normal contracted gross weekly pay — usually your basic pay before tax and NI, averaged over the 12 weeks before you were given notice for workers with irregular hours. Bonuses and overtime are only included if they're a contractual entitlement, not discretionary.

Tax treatment

The first £30,000 of a redundancy package is tax-free — that applies to statutory pay, contractual enhanced redundancy pay and any ex-gratia payment on top. Anything above £30,000 is taxable as income (but usually free of National Insurance).

Money paid for: - Untaken holiday — fully taxable through payroll - Notice pay — fully taxable - Contractual bonuses — fully taxable

...is separate from the £30,000 exemption and taxed as normal earnings. Only genuine redundancy compensation counts toward the exemption.

Contractual (enhanced) redundancy pay

Many larger employers pay more than the statutory minimum — for example, one month per year of service. Check your contract, staff handbook and any collective agreement. The whole combined package still uses the same £30,000 tax-free cap. If your enhanced package is significantly above £30,000, ask HR to model the tax explicitly so there are no surprises. You can estimate your normal take-home pay for comparison with the take-home pay calculator.

Redundancy pay eligibility checklist

• Have you completed two full years of continuous service?
• Are you an employee (not an agency worker, contractor or genuinely self-employed)?
• Is the reason for dismissal genuinely redundancy, rather than performance or conduct?
• Has your employer given you a written statement showing how the figure was calculated?
• Does the weekly pay figure used match your actual contracted or averaged pay?
• Has the £30,000 tax exemption been applied correctly on your final payslip?

What if you're not offered enough?

Employers sometimes get the calculation wrong — especially where age or service history is complex, or where a business has changed hands under TUPE and continuity of employment needs to be honoured. If your employer offers less than the statutory minimum, you can:

1. Raise the issue in writing, quoting the statutory formula.
2. Contact Acas for early conciliation.
3. Bring an employment tribunal claim (usually within three months of dismissal).

Government guidance and our redundancy calculator both use the same statutory formula, so any mismatch with what your employer offers is worth investigating.

Practical steps before your last day

• Get an itemised statement of redundancy pay in writing.
• Check your payslip carefully — the £30,000 exemption should be applied at source.
• Consider using some of the payment to boost your pension (fully tax-efficient if you have available allowance).
• If you have a company car, phone or other benefits, confirm the wind-down dates.
• Check whether notice pay is being paid separately or worked, as this changes your last effective earnings date and any student loan or tax calculations for that period.

Redundancy is rarely a happy circumstance, but knowing exactly what you're entitled to takes one big variable off your plate.