Statutory Redundancy Pay UK: The Complete 2026 Guide

What is statutory redundancy pay?

Statutory redundancy pay is a legal entitlement — not a discretionary payment — for employees who have been made redundant after at least two years of continuous service. Your employer is required by law to pay it. It is calculated using a fixed formula set by the government, and the rates are reviewed every April.

The law governing statutory redundancy pay is the Employment Rights Act 1996 (sections 135–162). These provisions have been in place for decades, and they set a floor below which no employer can legally go.

Who qualifies?

To qualify for statutory redundancy pay you must:

• Have been continuously employed by the same employer for at least two years (103 weeks)
• Have been made redundant — not dismissed for misconduct or resigned
• Be classed as an employee (not self-employed or a worker)

If you are on a zero-hours contract, you may still qualify — continuity of service is assessed differently and absence from work does not automatically break continuity. See our guide on zero-hours contracts and redundancy for the full picture.

Agency workers and genuinely self-employed contractors do not qualify for statutory redundancy pay from the end client. However, if you were engaged through a contract that effectively made you an employee in practice, this is worth examining.

How is it calculated?

The calculation uses three factors: your age, your length of service, and your weekly pay — subject to a statutory cap.

The age band multipliers are:

• Under 22: half a week's pay per complete year of service
• Age 22–40: one week's pay per complete year of service
• Age 41 and over: one and a half weeks' pay per complete year of service

Only complete years of service count. Partial years are discarded. Service is capped at 20 years, so someone with 25 years of service uses 20 for the calculation.

The weekly pay cap from 6 April 2026 is £751. This means even if you earn significantly more, only £751 per week is used in the calculation. The maximum statutory redundancy payment is therefore £22,530 (20 years × 1.5 weeks × £751).

The cap that applies is determined by your last day of employment — not the date your employer told you, and not the date they process the payment.

A worked example

Say you are 45 years old, earned £50,000 a year, and worked for the same employer for 12 years. Your weekly pay is £50,000 ÷ 52 = £961.54 — but this is capped at £751.

Working backwards from your dismissal date through 12 years of service:

• 4 years worked while aged 41 or over: 4 × 1.5 = 6 weeks
• 8 years worked while aged between 22 and 40: 8 × 1.0 = 8 weeks
• Total: 14 weeks × £751 = £10,514

The calculation always works backwards from the dismissal date, applying the age you were in each year of service. This matters when you have passed an age band boundary during your employment.

What if my employer offers less?

Your employer cannot legally pay you less than your statutory entitlement. If they have, you have the right to claim the difference — initially through ACAS Early Conciliation (free, 0300 123 1100), and if unresolved, through an Employment Tribunal.

You have six months less one day from your last day of employment to bring a redundancy pay claim. This deadline is strict. See our guide on how long you have to claim redundancy pay for the full picture on time limits and how ACAS Early Conciliation affects them.

Enhanced redundancy pay

Some employers offer more than the statutory minimum — this is called enhanced redundancy pay. It might be expressed as:

• A higher weekly pay figure (without the statutory cap)
• A higher multiplier per year of service
• A fixed lump sum
• A combination of the above

Check your employment contract and any staff handbook carefully. If an enhanced policy exists and your employer is not honouring it, that is a separate contractual claim on top of the statutory one.

Tax treatment

The first £30,000 of your total redundancy payment — statutory and enhanced combined — is tax-free. Anything above that is taxed as income at your marginal rate. Importantly, there is no National Insurance due on the amount above £30,000 either.

Notice pay (PILON) is taxed differently — it sits entirely outside the £30,000 exemption and is always taxable as normal earnings. See our guide on PILON vs working your notice for how each option affects your tax position.

What about notice pay and holiday?

Redundancy pay is separate from your notice pay and any accrued holiday pay. These are additional entitlements, not part of the redundancy calculation.

• Notice pay: statutory minimum is 1 week per complete year of service, capped at 12 weeks. Your contract may provide more.
• Holiday pay: any untaken statutory or contractual holiday must be paid in full on termination.

If your employer has not provided these, they are additional amounts owed on top of your redundancy pay — not instead of it.