Statutory Redundancy Pay
Compensation due under section 162 Employment Rights Act 1996 to employees made redundant with 2+ years' continuous service. Calculated as 1.5 weeks' pay per year over age 41, 1 week per year aged 22-41, 0.5 weeks per year under 22. Weekly pay capped at £700 (2025-26); maximum 20 years' service counted.
The maximum statutory redundancy payment in 2025-26 is therefore £21,000 (1.5 × £700 × 20 years). The employer must give a written statement showing how the payment was calculated. Payment must be made on or shortly after the dismissal date. Statutory redundancy is tax-free under section 401 ITEPA 2003 up to £30,000. Some employers offer contractual redundancy pay higher than statutory. If the employer is insolvent, the National Insurance Fund pays statutory redundancy under section 166 ERA.
Related terms
Related guides
Redundancy Basics
Redundancy occurs when your employer needs fewer people to do a particular type of work. If you are made redundant lawfully, you may be entitled to statutory redundancy pay, proper consultation, and your full notice entitlement. Knowing your rights helps you challenge a flawed process.
8 min
Redundancy Pay Calculation
If you are made redundant and have at least two years' continuous service, you are entitled to statutory redundancy pay (SRP). The calculation depends on your age, weekly pay (subject to a cap), and length of service. Some employers pay enhanced redundancy above the statutory minimum. Understanding the calculation ensures you receive what you are owed.
6 min read