Statutory Redundancy Pay

Statutory Redundancy Pay (SRP) is calculated using a formula based on age, length of service (up to 20 years), and weekly pay (capped at £751/week from April 2026). Employees get 0.5 week's pay for each year worked under age 22; 1 week's pay for each year aged 22–40; and 1.5 weeks' pay for each year aged 41 or over. The maximum SRP is £22,530 (20 years × 1.5 × £751). Entitlement starts after 2 years' continuous employment. SRP is tax-free. Employees are also entitled to notice pay and accrued holiday pay. Employers who claim not to have the funds to pay SRP can be reported to the Insolvency Service's Redundancy Payments Service. Dismissal selection criteria must not be discriminatory — selecting part-time or pregnant workers for redundancy first can constitute automatic unfair dismissal.

What it means in practice. Statutory redundancy pay is a floor, not a negotiation. Your employer cannot offer less, though many contracts and collective agreements provide enhanced terms above it. Three variables decide the figure: your age in each year of service, your completed years of continuous employment up to twenty, and your gross weekly pay capped at £751 from 6 April 2026. Service beyond twenty years is ignored, and only complete years count, so a leaving date a few weeks either side of an anniversary can change the total.

A worked example. Ruth is 44 and has worked for the same firm for 11 complete years, earning £900 a week gross. Her weekly pay is capped at £751 for the calculation. Three of those years were worked while she was aged 41 or over, so they attract 1.5 weeks each — 4.5 weeks. The other eight years fall in the 22 to 40 band at 1 week each — 8 weeks. That is 12.5 weeks at £751, giving £9,387.50, paid tax-free. On top of that she is owed notice pay and any accrued but untaken holiday.

Common pitfalls. A genuine redundancy still has to be handled fairly: there must be a real diminishing need for work of a particular kind, objective selection criteria, meaningful individual consultation, and a search for suitable alternative employment. Skipping those steps turns a lawful redundancy into an unfair dismissal. Employees also lose money by unreasonably refusing a suitable alternative role, which can forfeit the payment entirely, and by not realising there is a four-week statutory trial period in a new role. If the employer is insolvent, do not write the money off — claim from the Insolvency Service's Redundancy Payments Service.

How it relates to other terms. The same formula produces the basic award in an unfair dismissal claim, described under statutory redundancy pay. Your notice period is a separate entitlement paid in addition. Where the work transfers to another employer rather than disappearing, TUPE may mean there is no redundancy at all. If you are offered money to go quietly, that is a settlement agreement and needs independent legal advice to be valid.

What to do next. Read our redundancy guide for the consultation your employer must carry out, then check the arithmetic against calculating redundancy pay. Before you sign anything, use final pay to confirm notice, holiday, and any bonus or commission owed are all included.