Who gets redundancy pay
You are entitled to statutory redundancy pay if you:
- are an employee (not a worker or self-employed contractor),
- have worked continuously for your employer for at least 2 full years, and
- are dismissed because of redundancy: your job no longer exists, the workplace is closing, or fewer people are needed for the work.
You can lose the right if you unreasonably turn down suitable alternative work offered by your employer, or if you leave before your notice ends without agreement. Some groups, such as members of the armed forces and certain crown employees, have separate schemes.
How statutory pay is worked out
Statutory redundancy pay depends on three things: your age, your length of service and your weekly pay.
| Your age during that year | Weeks’ pay |
|---|---|
| Under 22 | 0.5 |
| 22 to 40 | 1 |
| 41 and over | 1.5 |
Only full years count, up to a maximum of 20, counting back from the date you are made redundant. Weekly pay is your normal gross pay, capped at £751 (£783 in Northern Ireland) from April 2026. The most anyone can get is 30 weeks at the cap: £22,530.
- 4 years aged 41 to 444 × 1.5 weeks6 weeks
- 4 years aged 37 to 404 × 1 week4 weeks
- Total weeks10
Examples at different ages
| Age | Years’ service | Weekly pay | Weeks | Redundancy pay |
|---|---|---|---|---|
| 21 | 3 | £400 | 1.5 | £600.00 |
| 30 | 5 | £900 (capped to £751) | 5 | £3,755.00 |
| 45 | 8 | £650 | 10 | £6,500.00 |
| 50 | 12 | £500 | 16.5 | £8,250.00 |
| 60 | 20 | £1,000 (capped) | 29.5 | £22,154.50 |
| 62 | 20 | £751 | 30 | £22,530.00 |
The calculator includes a year-by-year table so you can see exactly how each year of your service counts.
The weekly pay cap
The cap usually rises each April in line with inflation. For redundancies on or after 6 April 2026 it is £751 a week in England, Scotland and Wales, and £783 in Northern Ireland. If you earn more, statutory pay uses the cap, not your actual pay.
“A week’s pay” is normally your gross contractual pay for your normal working hours. If your hours or pay vary, it is the average of the 12 weeks before your notice. Overtime only counts if your contract requires your employer to offer it and you to work it.
Notice and notice pay
Redundancy pay is separate from notice. You are entitled to the longer of your contractual notice or the statutory minimum:
- 1 week if you have worked for 1 month to 2 years,
- 1 week for each full year if you have worked for 2 to 12 years,
- 12 weeks if you have worked for 12 years or more.
You can work your notice and be paid as normal, be put on garden leave, or receive pay in lieu of notice (PILON) as a lump sum. Notice pay is always taxed like salary, with Income Tax and National Insurance, even if it is paid as a lump sum after you leave.
Tax on redundancy pay
The first £30,000 of redundancy pay and other genuine termination payments is tax-free. Anything above that is taxed at your normal Income Tax rates, but no employee National Insurance is due on it.
| Payment | Income Tax | Employee NI |
|---|---|---|
| Statutory and enhanced redundancy pay, first £30,000 | No | No |
| Redundancy pay above £30,000 | Yes | No |
| Notice pay, including pay in lieu | Yes | Yes |
| Holiday pay owed | Yes | Yes |
| Final salary, bonus and commission | Yes | Yes |
Your P45 and tax code
Payments made after your P45 has been issued are taxed using code 0T on a non-cumulative basis, so no tax-free allowance is given against them. If that means too much tax is taken, you can claim it back from HMRC, or it is refunded through your next job.
You can usually pay part of a redundancy payment into your pension through your employer, which can save tax on any amount above £30,000. Ask before the payment is made.
Enhanced and settlement payments
Many employers pay more than the statutory minimum, for example by ignoring the weekly cap, using a multiple of weeks, or adding a fixed sum. Check your contract, staff handbook or any collective agreement.
If you are offered a settlement agreement, you give up the right to make claims against your employer in return for a payment. You must get independent legal advice before signing, and employers usually contribute to the cost.
A fair redundancy process
- FirstConsultation
Your employer should explain why roles are at risk and listen to your views. If 20 or more people are affected, collective consultation rules apply.
- NextFair selection
Selection must use fair, objective criteria. Choosing someone for a reason such as age, pregnancy or union membership is unlawful.
- ThenAlternatives
Your employer should consider suitable alternative roles. You have a 4-week trial period in a new role without losing redundancy pay.
- FinallyNotice and payment
You receive written notice, your redundancy pay and your final pay.
Employees on maternity, adoption or shared parental leave, and pregnant employees, have priority for suitable alternative vacancies during the protected period.
After you leave
- Keep your P45: your next employer or Jobcentre will need it.
- Check whether you can claim New Style Jobseeker’s Allowance or Universal Credit. Redundancy pay can affect Universal Credit if your savings go above £6,000.
- If your employer does not pay, claim through an employment tribunal within 6 months.
- If your employer is insolvent, apply to the Redundancy Payments Service.
Ready reckoner: weeks of pay
Multiply the number of weeks by your weekly pay, up to the cap, to get your statutory redundancy pay. A dash means the service is not possible at that age.
| Age when made redundant | 5 years | 10 years | 20 years |
|---|---|---|---|
| 30 | 5 | 9 | – |
| 40 | 5 | 10 | 19 |
| 50 | 7.5 | 14.5 | 24.5 |
| 60 | 7.5 | 15 | 29.5 |
A full leaving package
- Statutory redundancy16.5 weeks × £751 cap£12,391.50
- Enhanced payment£5,000.00
- Notice pay in lieu12 weeks × £800£9,600.00
- Holiday owed5 days × £160£800.00
- Estimated tax and NI on notice and holiday pay−£3,154.20
The £17,391.50 of redundancy pay is all tax-free, because it is under £30,000. The notice and holiday pay are taxed like salary; here they push the year’s income past £50,270, so part is taxed at 40%.
Benefits and pensions
Redundancy pay counts as savings, not income, for most means-tested benefits. Universal Credit ignores the first £6,000 of savings, reduces your award between £6,000 and £16,000, and stops above £16,000. New Style Jobseeker’s Allowance is based on your National Insurance record, not your savings, so redundancy pay does not affect it.
If you are 55 or over (57 from 2028), you may be able to take pension benefits, but think carefully before doing so: taking taxable income from a pension can reduce how much you can later pay into pensions with tax relief. Paying part of a large redundancy payment into a pension through your employer can save tax on anything above £30,000.
Northern Ireland
The rules are the same in Northern Ireland, but the weekly pay cap is higher: £783 from April 2026, so the maximum statutory payment is £23,490. Claims go to an industrial tribunal, and advice is available from the Labour Relations Agency.
Alternative jobs and trial periods
Your employer should offer any suitable alternative job they have. If you accept a new role with different terms, you have a 4-week trial period to see whether it works. If it does not, and you leave during the trial for a good reason, you keep your right to redundancy pay.
Whether a job is suitable depends on things like pay, hours, location, status and your skills. If you unreasonably refuse a suitable offer, you can lose your statutory redundancy pay, so put any concerns in writing.
When your pay varies
If you work regular hours for a fixed salary, a week’s pay is simply your normal weekly gross pay. If your hours vary, it is your average weekly pay over the 12 weeks before the day you were given notice, ignoring weeks when you were not paid. If you work shifts at different rates, the average hourly rate over those 12 weeks is used.
A week’s pay is based on your normal contractual pay, so a pay cut or short-time working just before redundancy can reduce it.
Large-scale redundancies
If an employer plans to make 20 or more people redundant at one site within 90 days, collective consultation rules apply. Consultation must start at least 30 days before the first dismissal (45 days for 100 or more), with a recognised union or elected employee representatives, and the employer must notify the government.
If an employer fails to consult properly, the tribunal can award a protective award of up to 90 days’ pay for each affected employee, on top of redundancy pay.
Before you accept a package
- Ask for a written breakdown of redundancy pay, notice pay, holiday pay and any other payments.
- Check your weekly pay figure and years of service against your own records and payslips.
- Find out whether the enhanced scheme uses your actual pay or the statutory cap.
- Ask how pension, company car and private medical cover will end, and whether you can keep them.
- Check when each payment will be made and which tax year it falls in.
- If you are offered a settlement agreement, take independent legal advice before signing.
Timing can matter for tax. A payment made just after 5 April falls into the next tax year, which can help if your income will be lower then. Ask whether the date can be agreed, especially for notice pay or bonuses that are taxed at your marginal rate.