How much redundancy pay will I get?
Short answer
Half a week’s pay for each year worked under 22, one week from 22 to 40, and one and a half weeks at 41 or over — capped at 20 years’ service and at £751 a week from 6 April 2026, giving a £22,530 maximum. The first £30,000 is tax-free.
Statutory redundancy pay is a formula, not a negotiation. You qualify with at least two years’ continuous service, and the calculation multiplies three things: your age during each year worked, your length of service, and a capped week’s pay.
The formula
- 1.5 weeks’ pay for each complete year of service in which you were aged 41 or over
- 1 week’s pay for each year aged 22 to 40
- Half a week’s pay for each year aged under 22
Only the most recent 20 years count, and a week’s pay is capped at £751 for redundancies on or after 6 April 2026. That produces a statutory maximum of £22,530 — 30 weeks at the cap. The cap is reviewed every April, so check the figure that applies to your termination date, not to today.
What counts as a week’s pay
It is your normal gross pay for a normal working week. Regular contractual overtime and shift premiums that form part of normal pay are included; purely discretionary bonuses and irregular overtime are not. If your pay varies, a 12-week average is used. If your actual weekly pay exceeds the cap, the excess is simply ignored for the statutory calculation.
Check your contract and staff handbook for enhanced redundancy pay, which many employers offer above the statutory floor, and which is often the part worth negotiating.
Tax, insolvency and voluntary offers
The first £30,000 of redundancy pay — statutory and enhanced combined — is free of income tax. Anything above that is taxable, and payment in lieu of notice is taxable in full regardless of the total. If your employer is insolvent and cannot pay, claim your statutory entitlement from the Redundancy Payments Service.
Think carefully before accepting voluntary redundancy: you will normally receive at least the statutory sum, but you give up the ability to challenge the selection as unfair. If the criteria look discriminatory, or you are pregnant or on maternity leave — where you must be offered any suitable alternative vacancy before being made redundant — take advice from Acas or a solicitor before signing.
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