Redundancy Calculator

If you’re facing redundancy, one of your first questions is likely to be: how much redundancy pay am I entitled to? Our redundancy calculator below will give you an estimate of your statutory entitlement based on the current rates from April 2025.

Statutory redundancy pay is a legal right under the Employment Rights Act 1996. Your employer must pay you at least the statutory minimum if you qualify, though many employers offer enhanced packages that exceed this amount.

Redundancy Calculator

Use our free redundancy calculator to work out your statutory entitlement. Enter your details below to see how much you should receive.

The calculator uses the official formula set out in section 162 of the Employment Rights Act 1996, with the latest weekly pay cap of £719 that came into effect on 6 April 2025.

How is Statutory Redundancy Pay Calculated?

Statutory redundancy pay depends on three factors: your age during each year of employment, how long you’ve worked for your employer, and your average weekly pay. The calculation works backwards from your leaving date, applying different multipliers based on your age during each year of service.

The formula under section 162 of the Employment Rights Act 1996 is:

• 0.5 week’s pay for each complete year of service when you were under 22
• 1 week’s pay for each complete year of service when you were aged 22 to 40
• 1.5 weeks’ pay for each complete year of service when you were 41 or over

Only complete years of service count. If you’ve worked for 5 years and 11 months, you’ll receive redundancy pay for 5 years, not 6.

Current Statutory Redundancy Pay Limits (April 2025)

The Employment Rights (Increase of Limits) Order 2025 updated the caps that apply from 6 April 2025:

Limit	Current Amount (from 6 April 2025)
Weekly pay cap	£719
Maximum total statutory redundancy pay	£21,570
Maximum years of service counted	20 years
Minimum service to qualify	2 years

If you earn more than £719 per week, your redundancy pay will still be calculated using the £719 cap. The maximum payment of £21,570 applies to someone aged 41 or over with 20 years’ service (20 × £719 × 1.5 = £21,570).

How to Calculate Your Weekly Pay

Your weekly pay is worked out by averaging your gross earnings (before tax and National Insurance) over the 12 weeks before you received your redundancy notice. This average should include:

• Your basic salary
• Regular overtime (if guaranteed under your contract)
• Regular bonuses or commission
• Any other regular payments

It does not include expenses, benefits in kind like a company car, non-guaranteed overtime, or one-off bonuses.

If you were on furlough during the coronavirus pandemic and received less than your normal pay during any of those 12 weeks, your employer must use your normal pre-furlough pay for the calculation.

Worked Example: Redundancy Pay Calculation

Let’s work through a practical example to show how the redundancy calculator formula works in practice.

Since Sarah’s weekly pay of £650 is below the £719 cap, we use her actual weekly pay. If her weekly pay had been £800, we would use £719 instead.

Who Qualifies for Statutory Redundancy Pay?

To qualify for statutory redundancy pay, you must:

• Be an employee (not a contractor or agency worker)
• Have at least 2 years’ continuous employment with your employer
• Be genuinely redundant (your role is no longer needed)

You won’t qualify if you’re dismissed for misconduct or if you unreasonably refuse a suitable alternative job offer from your employer.

Enhanced Redundancy Pay

Many employers offer enhanced redundancy packages that go beyond the statutory minimum. This is sometimes called “contractual redundancy pay” and may be set out in your employment contract or staff handbook.

Common enhancements include:

• Higher multipliers (for example, 2 weeks’ pay per year instead of 1)
• Removing the weekly pay cap (using your actual salary)
• Counting more than 20 years’ service
• Reducing or removing the 2-year qualifying period

Always check your contract and any redundancy policies your employer has in place. You’re entitled to whichever amount is higher: statutory or contractual.

Is Redundancy Pay Taxable?

Redundancy pay receives favourable tax treatment. The first £30,000 is completely tax-free, regardless of whether it’s statutory or enhanced redundancy pay.

If your total redundancy payment exceeds £30,000, your employer will deduct income tax from the amount above that threshold through PAYE. Redundancy pay is not subject to National Insurance contributions, even on amounts above £30,000.

However, other elements of your leaving package are taxed differently:

Payment Type	Tax Treatment
Redundancy pay (first £30,000)	Tax-free
Redundancy pay (above £30,000)	Taxed as income
Payment in lieu of notice (PILON)	Taxed as normal earnings
Outstanding holiday pay	Taxed as normal earnings
Bonus or commission owed	Taxed as normal earnings

What Else Are You Entitled To?

Redundancy pay isn’t the only payment you should receive when being made redundant. You’re also entitled to:

Notice pay: Either time to work your notice period, or payment in lieu of notice if your employer wants you to leave immediately. Statutory notice is one week per complete year of service, up to a maximum of 12 weeks. Your contract may give you longer notice.

Accrued holiday pay: Payment for any annual leave you’ve built up but not taken.

Any outstanding wages: Including salary, bonus or commission you’re owed.

Time off for job hunting: If you’ve worked for your employer for at least 2 years, you’re entitled to reasonable paid time off during your notice period to look for new work or arrange training.

Notice Period and the “Relevant Date”

The calculation of your redundancy pay depends on the “relevant date,” which is normally the date your employment ends. However, if your employer pays you in lieu of notice rather than letting you work your notice period, the relevant date can be extended.

For example, if you’ve worked for 8 years and 11 months and would be entitled to 8 weeks’ statutory notice, but your employer pays you in lieu of notice, those 8 weeks are added to your length of service for redundancy pay purposes. This would give you 9 years and 3 months of service, meaning you’d receive redundancy pay for 9 years rather than 8.

This rule only applies if you have payment in lieu of notice. If you work your notice period, the relevant date is simply your last day of employment.

What If Your Employer Doesn’t Pay?

Your employer should pay your statutory redundancy pay on your last working day or shortly after. If they don’t pay what you’re owed, you have several options:

Raise it with your employer first. Put your request in writing and include a breakdown of what you believe you’re entitled to. Many disputes arise from genuine calculation errors.

Use your employer’s grievance procedure. If informal approaches don’t work, submit a formal grievance.

Make a claim to an employment tribunal. You have 6 months minus 1 day from the date your employment ended to bring a claim for unpaid statutory redundancy pay. If you’re also claiming unfair dismissal, the time limit is 3 months minus 1 day.

Before making a tribunal claim, you must contact Acas to start early conciliation. This is a free service where Acas tries to help you and your employer reach agreement without going to tribunal.

If your employer is insolvent: You can claim your statutory redundancy pay (and other money owed like notice pay and holiday pay) from the government’s Redundancy Payments Service.

Common Mistakes We See

In our experience handling redundancy claims, these are the most common problems:

Using the wrong weekly pay figure. Employers sometimes use basic salary rather than the 12-week average, or exclude regular overtime and bonuses that should be included.

Forgetting the notice period extension. When payment in lieu of notice is given, the statutory notice period should be added when calculating years of service. This is often overlooked.

Applying the wrong age multipliers. The calculation works backwards from the redundancy date. Each year of service is multiplied by the rate that applied to your age during that year, not your current age.

Not counting all continuous service. Employment can be continuous even if there’s been a transfer of business (TUPE) or a gap that’s covered by an arrangement to return.

Missing the time limit. The 6-month deadline for claiming unpaid redundancy pay is strict. Tribunals rarely extend it, so don’t delay if you need to make a claim.